Chapter 539 – Multilateral cooperation (Part 1 of 6)
Supermarkets appeared in China after the Chinese economic reform. But at that time, it was known as the “Self-service market.” The first supermarket was in Foshan, Guangdong under the name of “Friendship Store.” Because at that time, Guangdong province was one of the first test sites of the market economy. Other than cooking oil and food had limited supply, all the products could be bought using the money. Of course, the products were more expensive than using food tickets.
At that time, the supermarkets were very rundown. There were no display shelves and cashiers. Even the shopping carts had to be imported.
Luckily Foshan was very near to Hong Kong. All these items could be imported from Hong Kong. Using the imported items as samples, the small factories start to manufacture them. This lowered the cost significantly. If not, the cost of the shelves, trolleys, etc. would be 3 times more expensive.
But now, there were lots of supermarkets and supermarkets were no longer called “Self-service market.” They were called a supermarket. China had already implemented price changes, and a few years ago, the policy of unified and fixed state purchases of farm produces were abolished. Most major cities’ household still had lots of food tickets left.
This year May, food tickets will be gone, and the era of using food tickets to purchase food in China was over. Chinese no longer need to use cash and food tickets to buy their food.
This marks the end of China’s planned economy. China will be entering the era of the market economy. This was the best time to set up supermarkets in China.
Although there were a lot of supermarkets in China now, their scale was still small, and there were still no chain supermarkets. Also, these supermarkets were selling mainly food products. Only a handful was selling daily necessities. The varieties of products in the supermarkets could not be compared to the supermarkets in the future years.
Feng Yu felt his supermarkets would emerge from the rest and capture the market with just the imported daily necessities products the Fu Family and the Li Family could bring in!
“Brother Fu, Brother Kai, what do you think we will need the most when we set up this supermarket? Set aside money. The money will never be a problem for us. I can even use my connections to help us get low-interest loans.” Feng Yu felt that it would be better for spilled up the work clearly.
Fu Guangzheng looked at Li Zekai. Both the Li Family and the Fu Family had supermarket business, but at the same time, both of them had nothing to do with this business.
Li Family’s supermarkets were managed by Li Zeju, and the Fu Family’s Supermarkets was managed by Fu Rongbing. Fu Guangzheng had nothing to do with it.
Of course, both of them could help to pull strings and at the same time be the shareholders. But to set up supermarkets in China, Feng Yu was the most important person.
Fu Guangzheng understands Feng Yu very well. Feng Yu had suggested this, and he will want to have the most significant share. He will also be the one who will invest the most. Also, Feng Yu had connections with food and daily necessities suppliers. His Tai Hua Trading was working with a few hundred suppliers. This would save them lots of work.
Li Zekai remembered his father telling him that Feng Yu had met with Mr. Deng personally and this person was very influential in China. It was an excellent opportunity for him to be friends with Feng Yu.
Li Zekai firmly believes that his father would support him and lend him a considerable sum of money if he were to tell his father that he was going to set up supermarkets with Feng Yu. His father might even give him the contacts of their suppliers and lend him some staffs who were specialized in the Supermarket business.
“Government policies, capital, locations, channels, and management. I think these 5 elements are the most important. What government policies? This supermarket will be a joint venture between China and Hong Kong, and if Brother Feng uses your connections with the higher-ups, the Government might let us enjoy some government subsidies. Will this be a problem?” Fu Guangzheng looked at Feng Yu.
“No problem. What are the policies you? Just tell me, and I will settle it.” Feng Yu nodded. Although he does not know what government policies they need, Master Lu should be able to help. Master Lu’s uncle was a member of the planning committee, and he will be promoted to the head of the committee soon.
Feng Yu could also contact the local government through his distributors. If all else fails, then he can throw money at them! The one thing that Feng Yu had the most was money!
“As for the start-up capital, the 3 of us should not be enough. I think we should divide it into 6 portions. Other then the 3 of us, we should invite my third uncle, Young Master Li should also get someone from his family. The remaining portion can be used to reward those management staffs.” Fu Guangzheng continues.
“Are we splitting the portions equally?”
Feng Yu raised his eyebrows. Equal share? Are you telling me that I will own only one-sixth of this business?
Fu Guangzheng waved his hand: “Brother Feng is the most influential in China, and he will be handling all the supplier channels there. He was also the one who proposed this. Why not let him invest the most and own the biggest share?”
Tsk tsk. Brother Fu was right. What he said was reasonable!
“How much should we invest and what will be the scale of our supermarket enterprise? Also, what is the name of our supermarket?” Li Zekai asked.
The name of the supermarket was very important. Why did Feng Yu insist Li Shiqiang name his logistics company as Wind and Rain Logistics? Why did Feng Yu use Wind and Rain or Aiwa in all his new products? Even when he set up new companies, he also named it as Wind and Rain Electronics or Aiwa Electronics, etc.
This was brand management. The brand would link all the products and resources together to achieve higher profits. This was to increase brand awareness and increase brand value. Feng Yu could make use of his brands to earn more money.
For example, two cars with the same technologies and quality. But one of them was the Porsche brand, and the other was Honda. The Porsche brand would cost several times more than Honda!
It was easy to create a brand, but it was hard to manage it. All of them believed that this supermarket will be profitable and will be influential. This was why the name was very important.
If possible, Fu Guangzheng would want to use his Third uncle’s supermarket brand. Li Zekai would also wish to do the same. They were looking at Feng Yu. Since Feng Yu was the one who suggested this venture, he had the most significant say in this.
Feng Yu had also thought about using this supermarket to develop his brands. But it was not possible for him to use his own brands. Wind and Rain Supermarket? Zhang Ruiqiang had mentioned several times to him that Wind and Rain do not sound auspicious.
Aiwa Supermarket? Aiwa was the brand of electronics products. It’s not suitable too.
Tai Hua was the most suitable among all of Feng Yu’s brands. Other than Tai Hua Trading, there was also Tai Hua Agricultural Products. There should be agricultural products in a supermarket.
Also, Tai Hua had the word Hua in it. Hua means Chinese, and people would relate it with China.
“I think the supermarket should be called Tai Hua Supermarket. I can invest more. As for the scale, the initial phase should have at least 20 supermarkets in all the major cities. I can also let CCTV news to report on our supermarkets. It’s fine if we can set up the supermarkets in the existing shopping malls. If not, then we have to build it up from scratch. We need to take note of the time.” Feng Yu said his opinion.
“20 supermarkets at once? Is the scale slightly too big?” Li Zekai frowned and asked.
Fu Guangzheng laughed: “He is like this. He likes large scale ventures. He calls this a strategic move. I think it’s fine. You have never been to China. China is developing very fast, and the population of the major cities is very high. If we have enough funds, we should be setting up more than 30 supermarkets for the initial phase!”
Feng Yu looked at Fu Guangzheng. My best buddy……
Li Zekai looked at Fu Guangzheng without saying a word. You think you are great just because you are familiar with China? Are you discriminating those who had not been to China?!
Translator’s notes:
Chinese economic reform
https://en.wikipedia.org/wiki/Chinese_economic_reform
Friendship store