Chapter 604 – Partnership with Quanjude Part 1 of 2
Band-aid noticed that their market share was declining. Bing City Pharmaceutical Enterprise was quite aggressive in their marketing efforts. Not only they were advertising everywhere, but they were also trying to damage their branding. The concept of Band-aid = Plasters which they built over the years was shredded to pieces.
But luckily for Band-aid, their brand’s influences were not easily removed from the consumers’ minds. They do not even need to do market research to know that their plasters were still the first choice of consumers.
But little do they know that the village market segment which they had been trying to develop was taken over by Bing City Pharmaceutical secretly. They had lost their advantage of controlling this market segment.
Even the roadside promotions which the management of Band-aid thought it was a joke, had caused their sales to decline. But the management of Band-aid firmly believes that Bing City Pharmaceutical could not do these promotions forever and will never be a threat to them.
This period, Feng Yu did not plan new marketing activities for Bing City Pharmaceutical. The current strategy was the best he could come up with. Feng Yu was now in Beijing speaking to the Beijing City Government leaders about his partnership with Quanjude.
The Fu Family was very efficient. Within a short time, they had bought over popular restaurants in many countries and cities, like Singapore, Malaysia, Macau, Hong Kong, New York, Sichuan, Hangzhou, Jinlin, etc.
The restaurants they bought had good reputations, and each of them had their own specialties. They were also located in good locations.
With all these reputable restaurants forming a partnership with Quanjude was what the Beijing City Government wanted. They do not wish to see those restaurants affecting Quanjude’s reputation.
But there was a problem. After those restaurants combined and formed a company, the company was worth much higher than Quanjude!
If they were to form a partnership, then Quanjude will become a small shareholder. Feng Yu wanted this partnership to create a restaurant chain and make use of Quanjude’s brand and roast ducks to expand and increase the profits.
But Feng Yu will never give up the controlling shares of the company!
The Beijing City Government allowed Quanjude to be a shareholding and let individuals invest in it. The individuals even include funds from Hong Kong. But this was on a condition that the government still holds the majority of shares and had the full control of the company. They do not want others to have control over Quanjude.
Even if the government held the majority of the shares, but if the other shareholders combined their shares, they would take full control of the company. Quanjude will be fully privatized!
“Mayor Liu, we had agreed on the terms and had signed the letter of intent. It is not stated that if my restaurant's overall value is higher than Quanjude, this deal will not go through. This was what you all wanted, and we tried our best to increase our scale to better increase Quanjude’s brand. We had done it, and now you are blaming us for that? Isn't this unreasonable?” Feng Yu was pissed.
Of course, the Fu family did not intend to buy the restaurants in China at first. Feng Yu was the one who suggested it. Feng Yu just want their restaurant enterprise’s value to be much higher than Quanjude.
Feng Yu and Fu Guangzheng both knew that on paper, their restaurants' total value was much higher than Quanjude. But if Quanjude includes their brand value, they will still be higher.
However, Feng Yu and Fu Guangzheng will not let the Beijing City Government knows about this. This Deputy Mayor Liu was not Zhang Ruiqiang. Feng Yu will not give up the opportunity to take advantage of him.
“That’s what we said, and it was stated in the agreement. But your restaurants’ value should not be so much higher than us. If we still want the controlling stake, we will have to invest an additional 100 million RMB? If we had the money, why should we work for you? We can expand ourselves.” Deputy Mayor Liu frowned and said.
2 F&B companies had approached Quanjude before. One of them was a Sichuan company, and it was a shareholdings company where the state owned the majority of the shares. The other company was a partnership company, and it was a private enterprise.
These two companies were quite influential. But compared to Feng Yu and the Fu Family, it was still considered small. Even if both companies combined, the total value still cannot be compared. After all, the restaurants bought by the Fu Family were valued much higher than China’s restaurants. Also, because of Feng Yu’s instructions to acquire the restaurants fast, the Fu Family paid a premium price for those restaurants.
Feng Yu had expected this. If he was major shareholder of Quanjude and someone wants to buy the controlling shares, he will also not agree to it.
Feng Yu had discussed with Fu Guangzheng on how to get Beijing City Government to agree to their partnership. Their solution was to expand the scale further and increase the number of shareholders. Also, they had to show their support for the City Government and let them hold the position of Chairman.
Feng Yu and Fu Guangzheng do not have experience in managing F&B companies. They only want to make money. So, as investors, they only need to attend the shareholders’ meetings and sit back and collect the profits.
Of course, Feng Yu and Fu Guangzheng will not be stupid to give up all their shareholders’ rights. If the City government let an idiot to lead the company, they must have the right to veto.
“Mayor Liu, I think this issue is easily solved. I heard that when we approached the Quanjude company, two other companies were interested in investing in Quanjude. Why not we rope them in for this partnership?”
“Let them invest too? We have almost 20 restaurants, and if we let them in, it will be almost 40 restaurants. Will the scale be too big?” Deputy Mayor Liu was worried that it will not be easy to manage, and they do not have so many roast duck chefs. If this fails, it will be a disaster for Quanjude.
“Mayor Liu, we are only forming a partnership to increase the brand reputation of Quanjude. All of the restaurants involved were profit-making before this venture. After the partnership, Quanjude and Beijing City Government will have no losses. Also, after this partnership is formed, both of us will support the person assigned by the Beijing City Government to be the chairman of the board!”
Fu Guangzheng also expressed that he was on the same page as Feng Yu.
Mayor Liu was quiet. If the City Government could be the Chairman, then they will have control over the company’s strategy and directions. Also, after this partnership, Quanjude will become China’s biggest restaurant chain, and the headquarters was in Beijing. The annual tax revenue will be a large sum.
But at the same time, Mayor Liu was worried. Beijing City Government will own lesser shares. Feng Yu still suggest giving the restaurant managers and the top management of Quanjude some shares as a reward. This was a hard decision to make.
“Mayor Liu, after this partnership, Quanjude Company’s value will not only be the highest in China. It will be the highest in Asia! You are the one who brings about this Asia number 1 restaurant enterprise. Also, the headquarters of this large company is in Beijing. Have you ever thought of this?” Fu Guangzheng suddenly said.
Asia number 1?
Deputy Mayor Liu was attracted by this……. Agree or disagree?