The development process of a normal manufacturing company is to first establish a foothold in the local market, use the local market to gain development, obtain technological progress, gain quality experience, etc., and then, when it has a certain degree of confidence, it will develop overseas.
Haier is a good example. It first develops domestically and then begins to expand overseas when it reaches a certain scale.
The larger the local market, the larger the company can achieve, and the more certain it is that it can succeed in overseas markets and become a large international company.
Hong Kong's manufacturing companies obviously do not have this condition. The local market is so small that there are basically no local brands, and they basically supply OEM products to foreign countries. In the 21st century, except for those manufacturing companies that seize the opportunities in the mainland market, other Neither can survive.
Midea will naturally rely on the mainland in the future, but if it wants to enter the mainland market, it will have to wait until at least the 1990s, which is still almost 20 years from now. Then it must rely on the mature European and American markets.
However, the more high-end products are, the harder it is to break into mature markets, such as automobiles. After the European and American markets stabilized, basically only two or three new players appeared in 50 years.
In the 1970s, large appliances such as air conditioners and refrigerators were still a popular industry. There were a large number of well-known brands in RB, the United States, and Europe. It was difficult for an unknown Hong Kong brand to enter this market. This was different from Red Bull. Red Bull itself is in the untapped energy drink market. It is the originator of this industry. After becoming an instant hit, it has no worries about sales. However, if you deliver large appliances to the doorsteps of European and American supermarkets, they will not dare to do so. Introduction, because of this kind of high-priced and high-tech products, users basically only look at the brand, and other brands are prone to quality problems, which will cause trouble for supermarkets.
Even Samsung took ten years to establish its own home appliance channels in the United States. The most difficult thing is to enter a supermarket of a certain size. In a certain market and a certain amount of time, it can gain market recognition. , coupled with certain special advantages, such as price, you can successfully enter other supermarkets and slowly gain a foothold in foreign markets.
So it is the hardest to enter for the first time, but it becomes much easier after that.
Under normal circumstances, it is impossible for Midea's air conditioners and refrigerators to enter large-scale supermarkets in the United States. Simple electric fans have a chance, but if Chen Zhiwen has a supermarket of his own, then the problem will be perfectly solved.
But there are American supermarkets of a certain scale that Chen Zhiwen cannot afford even if his assets increase tenfold. But if it is a retail supermarket that can take off soon, it will be different.
After a day and night of flying, Chen Zhiwen came to Los Angeles again. After several months of negotiations, Citibank, Skadden, Sol Pierce, and Chen Zhiwen in Hong Kong finally reached an agreement on the sale price of Fedmart retail supermarket. , the price is US$23 million.
History has changed because of his appearance. Without the experience of the European company that acquired Fedmart and kicked them out of the company, these people would not give up Fedmart, even though Fedmart has been suffering losses for three years.
In the past few months, Chen Zhiwen also learned about Fedmart. The style of this supermarket is actually similar to that of Costco in later generations. The warehouse supermarket is mainly simple and has basically the same business model. What matters is the number of users and the average number of users. Consumption power, supply chain procurement costs, etc.
Fedmart currently has a total of 13 directly-operated supermarkets and 8 franchised supermarkets. Last year, the turnover of the 13 directly-operated supermarkets was US$180 million, and the average sales of a single store was around US$15 million, far exceeding Wal-Mart's 6 million at this time. This is also a characteristic of warehouse chain supermarkets. The turnover of a single store is particularly high. Of course, the area of warehouse supermarkets is also much larger than that of ordinary supermarkets.
Last year, Fedmart's loss was about US$2.5 million. The most fundamental reason was that the American retail giant Kmart supermarket started to open stores near Fedmart, which took away many customers. Pierce's team was inexperienced and conducted many attempts to win back customers. The advertising was put in, but the effect was not good, which actually increased the cost. In order to stop the loss, it opened franchises, but the results were mediocre, which caused conflicts with franchise customers and even got into legal lawsuits.
But for Chen Zhiwen, these are not big problems. As long as he starts to purchase related products from Asia, the cost savings will be enough to cover the annual losses of 2 to 3 million US dollars. He can also make a fortune by operating in Asia.
Conflicts with franchisees can be solved with money, while competition with Kmart can be solved as long as fedmart's procurement costs are reduced. If you can't win, you won't lose.
Now, you can buy a supermarket with a turnover of 180 million US dollars for 23 million US dollars. It can be said that you have made a lot of money. Of course, the most important thing is Pierce's team.
In the presidential suite of the Sheraton Hotel in Los Angeles, after representatives from Citibank and Skadden LLP left, Chen Zhiwen said: "Mr. Pierce, this is my promise to you."
Looking at a document that Chen Zhiwen took over, Chen Zhiwen opened it and read it for a while, then asked: "Is Mr. Chen's request a bit too high? The entire company's turnover must reach 3 billion within ten years." US dollars? Annual profit exceeds 200 million US dollars?"
"Of course there are difficulties, otherwise, 20% of the company's stock would not be so easy to obtain." Chen Zhiwen smiled and said: "According to the requirements in the document, Mr. Pierce's team will obtain a certain amount of stock every two years. As for the stock How much? The document has also carried out step calculations as required. You can take it back and study it. It also defines the amount I need to invest every year. If you have any ideas, you can discuss it with me."
If you want a horse to run fast, you have to provide enough grass. For someone like Pierce who has been entrepreneurship his whole life, he can't keep it on salary. After all, he can get millions of dollars in this transaction. Cash, what allows him to stay with peace of mind, is the company's stock.
Without the company's stock, no matter how much money Chen Zhiwen gave, it might not have any effect. If Pierce hadn't been almost 60 years old and his ambition disappeared with age, 90% of the time he would have used the money to start a new business.
Besides, it is not a problem for a Chinese to open a supermarket in the United States, but if it is very large, it will become a problem. Let a white man stand in the front, wait until it has achieved results ten years later, and then resell it and go public.
What Chen Zhiwen cares about is the huge purchase volume that a large supermarket can bring to him, which will qualitatively improve his influence in Asia.
The first help for him is to allow his Midea appliances to enter the US market. Although this first step requires at least a small market in one state.
