Chapter 666 – Adolf’s frustrations
The President of Carrefour Asia, Adolf, looked at the report on the table. He was in a bad mood.
What happened? How come there was such a company in China? This company had set up a supermarket chain with so many branches!
Adolf could not understand why this company did not rent the shopping spaces but bought the whole mall. They used the supermarket as its core and set up a hypermarket. Wasn’t this Carrefour’s usual practice?
Adolf sent someone to investigate Tai Hua Supermarket Corporation. It was similar to Carrefour. The operating model, the revenue sources, management model, etc. were almost identical to them.
To claim that Tai Hua Supermarkets were imitating Carrefour, it was also not true. After all, Tai Hua Supermarket had strong financial backings. Almost all supermarkets’ marketing and promotions strategies in the world were about the same. But Tai Hua Supermarket’s plans were one notch higher.
Carrefour in the current era was not as big as the future years. Although Carrefour also has promotions every day, it was nothing when compared to Tai Hua Supermarket.
Tai Hua Supermarket’s products were much more diversified. Their fruits and vegetables were better than Carrefour supermarkets.
Carrefour was only researching the Chinese market initially. France and China’s government were not close, and there were not many collaborations between both nations. This might be due to China’s relationship with Germany. The whole world knows that France and Germany did not have a harmonious relationship in the past.
But now, relationships between France and China had improved, and Carrefour had decided to enter China’s market within the next two years to test the market. But they realized they were late. When they were still scouting for suitable locations, Tai Hua Supermarket had appeared suddenly.
This Tai Hua Supermarket Corporation was too crazy. Who would set up so many hypermarket branches at once? They were not worried about making losses?
Carrefour dug into Tai Hua Supermarket’s background and found that Hong Kong’s Superman Li had shares in it. Superman Li was a well-known businessman around the world. He was very influential in Asia and was extremely wealthy.
Superman Li was not the only shareholder in this business. He still has many partners, and one of them was a big boss in China. This company’s financial backing was strong and does not need to worry about their funds. The properties in China were also cheap. They do not need a lot of funds to set up one big supermarket.
Carrefour knew that based on Tai Hua Supermarket’s scale and products, each branch needs at least 200 million RMB to set up. This was also one of the reasons Carrefour did not enter China immediately.
This was a substantial investment, and Carrefour could not predict the returns. The risk was too high.
But Tai Hua Supermarket Corporation start-up capital was not high, and even if funds were injected into the company, it should not be a lot. If every branch cost 200 million RMB, 20 branches will cost 500 million USD! This was based on the current exchange rates. If it were based on last year’s exchange rate, the amount would be higher!
This was a substantial investment.
But Adolf did not know that Tai Hua Supermarket market’s products were all on credit terms. All they need was to place some deposits and pay the supplier at the end of the month. One branch does not even cost 20 million RMB to set up. If not, Tai Hua Supermarket’s initial investment would not be enough to support 20 hypermarkets at once.
The initial investment might not be enough to even set up 20 big supermarkets or have enough funds to bring in the products!
Adolf suspects that Tai Hua Supermarkets had support from the Chinese Government. If not, why would the opening ceremony of their supermarkets be reported on the national TV station? Since when did the Chinese Government do free publicity for businessmen?
After Tai Hua Supermarkets opened, it was very popular. Adolf did not expect this, and he couldn’t understand the reason behind the popularity. How did such a backward country, which had undergone reformation for a few years, have such high purchasing power?
Adolf did not know that although the Chinese were not earning high incomes, the population was high and the Chinese love to join in the crowd.
The supermarket was a crowded place. The shoppers were free to roam about in it, and the store assistants will not chase them out. They could also get good bargains there. These reasons attracted lots of shoppers.
Every time Tai Hua Supermarket announces new promotions, there will be a large crowd. The current promotion slogan was enough to attract lots of shoppers.
Shop at Tai Hua, you will have more pay!
Tai Hua Supermarket items were cheaper. If every family were to get their groceries from Tai Hua Supermarket, the amount they saved was equivalent to having a pay increment.
This slogan attracted lots of shoppers who do not have a high income. They would travel a bit more or ride a bus for over an hour to shop at Tai Hua Supermarkets.
There were slogans like “Everyday sales, Everyday discounts.”, “Clear pricing, variety of products.” and “Shop in Tai Hua and feel good.” appearing in the newspaper and radio advertisements. Tai Hua Supermarket also hired people to give out flyers in crowded places, and bus stops.
Within a month, almost all the residents in the cities, where Tai Hua Supermarkets were located, knew about Tai Hua Supermarket. Even those residents from cities where Tai Hua Supermarkets do not have branches also understand about the supermarkets. This was because they saw the supermarkets on the news.
Adolf was regretting. If he knew that setting up supermarkets in China would be so easy, he would have scouted for locations earlier. Maybe by now, Carrefour would have a few branches in China now. The site of some of Tai Hua Supermarket branches was located at the locations his team had in mind. This made him more frustrated.
Adolf had thought that its competitors in China would only be Walmart. But this Tai Hua Supermarket was a more significant threat.
Adolf knew a local enterprise had more advantages than foreign companies. He was not familiar with the local culture, and the government policies will protect the locals.
Now, it was more difficult for Carrefour to enter China. Even if they managed to penetrate the Chinese market, the results would not be like other countries.
This Tai Hua Supermarket Corporation was not to be trifle with. Adolf could only hope that Tai Hua Supermarket was only targeting the Chinese market. If it expands overseas, they will be another strong competitor to Carrefour. They will be one of the obstacles to Carrefour expansion.
Adolf reported this to his headquarters. It will be up to the headquarters to decide when Carrefour should take the risk and enter the Chinese market or take and wait and see approach. If Tai Hua Supermarket starts to expand further, Carrefour would have missed this opportunity to enter China. But all these will be up to the higher management.