Chapter 257 The arrival of the era of competition

Author: Underwater Wild Fish

Chapter 257 The arrival of the era of competition

Chen Zhiwen has no interest in wood processing or furniture processing, and he will not spend money to invest in this industry. At most, if there is an opportunity in the future, he can use foreign exchange to support domestic processing plants in this area, and if he is more aggressive, he can just invest in individual stocks.

Bernie decided to think about it for a few days, so he stayed in Hong Kong. As the host, Chen Zhiwen naturally entertained everyone. All the guests stayed at the Hilton Hotel, and several professional simultaneous interpreters were arranged to accompany them during their visit in Hong Kong.

Seven days later, Bernie negotiated behind closed doors with Chen Zhiwen again, and finally reached an agreement. Chen Zhiwen invested US$300 alone and obtained 35% of the shares, of which 5% of the voting rights were transferred to Bernie. The condition for Chen Zhiwen's acquisition was that he would be given priority in the future.

Investment rights means that when strategic investors are introduced next time, Chen Zhiwen can invest with him, but this only guarantees that the shares will not be diluted. 35% is the maximum number of shares obtained before the listing.

At the same time, Galaxy Trading will use its own resources to find various suitable suppliers in Asia for the joint venture company, including hardware tools, plates and other various home semi-finished products that will be needed in the future.

"Have you thought about the name of your company?" The agreement was agreed verbally and a contract needed to be signed, but it was clear that Bernie hadn't figured out the name of the company yet.

"I thought of a name called home depot, but the name is too common and is a normal English word. I'm afraid it will have a certain impact," Bernie said.

"I'm afraid it's not good to use existing English words as names." Pierce said with a frown.

"Ordinary companies have disadvantages, but home furnishing sales companies are not the fast-moving consumer goods that people talk about, so the impact should not be big." Chen Zhiwen said.

Home Depot is the English name of Home Depot in later generations. Obviously Bernie has already thought of a name, but has not yet decided on it. There is a certain risk in using commonly used English words as a company name, because then others can

The legal use of this name, for example, opponents can make insinuations in advertisements, etc. As long as it is done well, it will not be illegal at all. This is very embarrassing. With the monopoly of Google in the search field, people are used to saying

Google came to replace the search word. At that time, the American cultural department intended to add Google to the dictionary, but Google's company strongly opposed it, and finally had to give up.

For example, Apple chose a generic name, but in this way, if Samsung said "Apple is not good" in an advertisement, theoretically speaking, it would not infringe Apple. Of course, in fact, American fathers may teach their sons how to behave.

The choice depends on the founder and team.

"I think this name will make it easier for customers to know what we do." Bernie said with a smile.

"Develop first and then talk about it. As long as you get bigger and your legal team is strong enough, you won't have to worry about these issues anymore," Chen Zhiwen said.

"That's right, let's call it Home Depot. I will register the company immediately after I return to the United States, and then I will return to Hong Kong to sign a contract with Mr. Chen." Bernie said.

"Okay, set up a company as soon as possible." Chen Zhiwen nodded and said, "If you have problems with leasing properties, you can come to me. I can buy some properties and rent them to you at a low price."

"Thank you, Mr. Chen." Bernie was overjoyed. The rent of the supermarket was a problem that had been bothering him. If he could get some help in this regard, he would be able to save a lot of costs in the future.

"You're welcome. You are the greatest thank you to me for doing a good job in the company." Chen Zhiwen said with a smile.

"With Mr. Chen's funds and resources, I have more confidence." Bernie said with a smile.

"Haha, Bernie, let me tell you, as long as you have the ability, Eric will definitely invest in you." Pierce also said with a smile.

"Thank you also, Pierce." Bernie said sincerely. He came up with Home Depot's future business logic by referring to Costco's operating model. This extremely cost-saving method also referred to Costco's operating model.

The purchasing model is just optimized for the home model, allowing users to assemble it themselves to save the highest transportation and labor costs. In addition, the membership system is to be eliminated. The membership system is only suitable for high-frequency consumption such as lifestyle supermarkets.

After discussing some operational details of Home Depot, Bernie said goodbye and left because he knew that Pierce had other things to talk to Chen Zhiwen.

"Eric, some potato chips were sent to Costco from Hong Kong some time ago. The sales volume is pretty good and the taste is very good. If Hong Kong has enough production capacity, we can consider entering other supermarkets." Pierce laughed.

He said.

In the early days, Pierce would have thought that Chen Zhiwen’s investment in Costco was for the U.S. retail market. But as time went by, after Galaxy Trading gained a foothold with Costco, it began to conquer other retail supermarket chains, making him also

I know, my boss has another purpose.

"Okay, I heard that you tried hundreds of flavors before picking out 7. I have to thank the Costco team for their cooperation." Chen Zhiwen said with a smile and nodded.

This is the benefit of owning your own supermarket, you can be impatient to test, otherwise, even your own Wal-Mart shareholders and Wal-Mart management may not agree to such a request, but test it many times, ship in large quantities, and then obtain user feedback.

, especially Costco has a large number of users, and they are all repeat customers. The several potato chips that can eventually be rolled out within Costco will also have considerable competitiveness in the outside world. Hong Kong's

Cost control is also very low. As long as you spend foreign exchange, it is easy to buy potatoes from the mainland, and transportation costs are also low.

"Yes, if you are interested, you can also make some other snacks, such as biscuits and the like." Pierce said with a smile.

"Forget it for the time being, there are too many such products, let's maintain the previous purchasing model." Chen Zhiwen shook his head and said.

Even if there are professional managers, the company's human resources are limited, especially in the management transfer process. Therefore, 1,000 people can do one business well, but 1,000 people can do 5 businesses well. If

They are all businesses with huge potential, so Chen Zhiwen will use his golden finger to set the direction to avoid huge losses caused by disorderly expansion. But if they are all businesses with low business potential, he cannot participate in them. These businesses,

There is no big advantage at all, but it will make the company bloated.

According to his plan, such goods, light textiles, clothing, and daily necessities will be transferred to the mainland for production in the future, allowing the domestic light industry to obtain a large number of orders. Instead of doing it himself, it is better to let countless domestic companies compete fairly.

Then you can also choose the companies with the best products to support, then invest in them, and just participate in the investment yourself and enjoy part of the returns.

There are tens of thousands of enterprises, whether they are state-owned enterprises or famous enterprises, and they are basically recruited by elites. It is most appropriate to invest in them and let the elites work part-time for themselves.

"Well, this is not a big deal." Pierce didn't care, and said: "Eric, do you remember the last time you went to Costco in New York, I told you that Wal-Mart invested in a store called Sam's

The membership store imitates the Costco model. They have been open for more than a month and are considered very successful."

"So, do you think it will become our competitor?" Chen Zhiwen asked. Although he was the majority shareholder of Wal-Mart, he had made a verbal agreement with Sam Walton that he would not participate in the management of Wal-Mart in exchange for Galaxy.

Trade enters Walmart supply chain.

In the past few years, the two parties have been cooperating very well. Chen Zhiwen didn't bother to ask about Wal-Mart. Galaxy Trading has also relied on this relationship and its very cost-effective products to become one of Wal-Mart's largest suppliers. Everyone gets what they want.

Need, over time, every quarter, Chen Zhiwen, who is thousands of miles away in Hong Kong, will receive a financial report from Wal-Mart headquarters. In fact, it is similar to the listed financial report. The internal only contains the most basic revenue and profit data. Naturally,

Excluding Sam's Club stores, unless the number of Sam's Club stores increases, this business will become independent and issue separate financial reports.

"Not only Wal-Mart, but Wal-Mart's success has also led many other supermarkets in the United States to try to build membership warehouse supermarkets. Celtic is also preparing to build similar warehouse supermarkets in six cities at once. This is what we are more worried about.

place," Pierce said.

"Actually, this is normal. The number of stores we open is increasing, and our influence is growing. Especially when we open a place, the sales of nearby supermarkets are directly and seriously affected. It is inevitable that we will be noticed by large retail groups, not as much as Taipei.

Too worried." Chen Zhiwen said very calmly.

As long as any profitable business gets bigger, it will inevitably attract attention, especially this type of civilian terminal industry. When a large supermarket has opened about 50 branches in major cities in the United States within a few years, each store has an area of

It is still very big and its business is still very good. Retail giants like Celtic and Sears can still hear some disturbances even if they are blind.

As for Costco's business model, as long as you spend some time studying it, you will understand it. If you want to copy it, it is naturally simple.

"Aren't you worried?" Pierce asked.

"There's no point worrying?" Chen Zhiwen smiled and said: "No one can monopolize the retail industry, not even a market segment within the retail industry. We just need to do our own thing well. Now we are good

Shiduo has taken priority in occupying 50 large American cities. Coupled with our experience and supply chain and logistics training, this is already a great advantage, especially our SMS (supermarket management system), which is gradually maturing.

The warehouse surplus cost alone can be reduced by 1.5%. If you have been working in a supermarket all your life, you will know what this 1.5% is."

"The SMS system has indeed achieved more than I imagined, and there is still room for improvement. This is indeed a very big advantage." Pierce nodded and said. When he first wanted to build an SMS management system, he just thought it would facilitate transportation.

But it is unimaginable that when the quantities of a large number of commonly used commodities can be directly queried through large computers, the use will be unimaginable.

Through data, Costco's purchasing department can shorten the purchasing cycle and reduce storage in the warehouse. Although there have been many mistakes in the process, Midea's team at Costco is also optimizing the software based on each problem that arises.

, and the current SMS system only targets hundreds of commonly used commodities. When a larger or even full range of coverage is completed in the future, the cost that can be reduced will be even lower.

"This is just the beginning. Your efficiency is not high yet. After a few years, I will find a way to send a satellite to the space station to cover the entire North American hemisphere. Then all Costco stores, warehouses, trucks and other information can be

If you can query clearly in an instant, that's the real efficiency." Chen Zhiwen said with a smile.

The cost of satellite launches is very high. In the 1980s, it cost 200-300 million US dollars. In the original history, Wal-Mart launched one in the early 1980s. At that time, it was ridiculed as an idiot by other retail companies. But a year later, Wal-Mart

The logistics and warehousing costs have dropped from 8% of the previous total turnover to 3.5%.

Wal-Mart's profits suddenly increased by 4.5%. You must know that the net profits of many retail supermarkets themselves did not reach 4.5 percentage points, especially in the era of severe inflation and skyrocketing gas prices in the early 1980s. Of course, Walton did not

These profits are distributed to itself, but further reduce the prices in the supermarket, forming a stronger competitive advantage, which suddenly makes all other supermarkets dumbfounded.

It's just that companies like these may be able to spend hundreds of millions of dollars to launch satellites, but how to coordinate the launch with the lower level requires a lot of experience. This is a generation gap of 3-5 years. If nothing else, once it is too late,

, it will be difficult to catch up.

"Satellite? The cost is too high. Why not open branches in various places for me? Now I just have to grab time." Pierce said with a smile.

"There will be no shortage of funds to open a new store, but it's still the same principle as before. First cultivate a sufficient operation team. Next year, you can first try to use the company's financial data to find bank financing. I have some connections with Citigroup or JPMorgan Chase.

, it shouldn’t be difficult to get funds, but the interest is a bit high.” Chen Zhiwen continued.

He didn't agree to let Costco get a bank loan before. Firstly, it was because it was kept secret and could be kept hidden from the retail giants for as long as it took. Secondly, because of the rapid expansion at the time and the fact that many supermarkets had just opened, the financial report would not be so good if there were not enough members.

But now as time goes by, neither problem will be a problem, which will naturally allow Costco to develop normally instead of always relying on his capital injection.

Of course, the fundamental reason is that funds need to be prepared recently to go long in the gold bull market. When the 1980 bull market ends and funds return, Costco can still obtain sufficient funds. History has changed, although Costco is now more expensive than it once was.

The development is good, but I don’t know what the future will be like. We still need to do our best to put Costco at the top of the membership warehouse supermarkets, then we will feel more at ease.

"That's fine. If Costco raises funds on its own, should we consider going public? Costco has already met the basic needs for going public." Pierce asked again.

"There is no rush to go public. It will take a few years." Chen Zhiwen thought for a while and said that the current Costco only has potential, but it has not yet reached a very large scale, so it has not touched many people's cheese.

When it is almost big, it is necessary to introduce some strategic investors before going public. Such a big cake cannot be swallowed by one person alone. As long as he has control of the purchasing chain behind it and about half of the shares, he can

That's almost it, and the investors introduced will also be of certain help to Costco in related fields, and everyone will benefit from each other.

"Okay, I plan to continue to invest in 10 new stores on the East Coast. This time, Costco will raise the funds itself." Pierce nodded and said.

"It's okay to give it a try." Chen Zhiwen said. Over the years, Costco has not been short of funds. In fact, it also lacks the test of the market. It doesn't matter if you try it yourself. Anyway, in a little more than a year, there will be no shortage of funds.
Chapter completed!