The Industrial Giant Reborn.

Chapter 257 The Arrival of the Era of Competition

Chen Zhiwen is not interested in wood processing or furniture processing, and he will not spend money on investment. At most, he will have the opportunity in the future to support domestic processing factories in this field with foreign exchange, and if he is more aggressive, he will just buy 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 them well. All the people who came stayed in the Hilton Hotel, and they also transferred several professional simultaneous interpreters to accompany them in Hong Kong.

Seven days later, Bernie once again negotiated with Chen Zhiwen behind closed doors, and finally reached an agreement. Chen Zhiwen alone invested 300 US dollars and obtained 35% of the shares, of which 5% of the voting rights were transferred to Bernie. Investment rights, that is, the next time when strategic investors are introduced, Chen Zhiwen can invest together, but it is only to ensure that the shares will not be diluted. 35% is the most shares obtained before listing.

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

"Have you thought about the name of your company?" The agreement was finalized verbally, and a contract needs to be signed, but Bernie obviously hasn't figured out the name of the company yet.

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

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

"Ordinary companies have their disadvantages, but home sales companies are not fast-moving consumer goods that people talk about, so they should have little impact." Chen Zhiwen said.

Home depot is the English name of the later generations of Home Depot. Obviously Bernie has already thought of a name, but he has not yet decided on it. There will be certain risks in using common English words as the company name, because in this way, others can Legal use of this name, such as insinuation by opponents in advertisements, etc., as long as the operation is good, it will not be illegal at all, which is very embarrassing. Later generations of Google, with the monopoly in the search field, people are used to saying Gu Ge replaced the word search. At that time, the American cultural department intended to add Gu Ge to the dictionary, but was strongly opposed by Gu Ge, and finally had to give up.

For example, Apple chose a common name, but in this way, if Samsung said "Apple is not good" in the advertisement, in theory, it has not infringed on Apple. Of course, in fact, American fathers may teach their sons how to behave.

How to choose depends on the founder and the team.

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

"Let's develop first. As long as you grow big and your legal team is strong enough, you don't have to care about these issues." Chen Zhiwen said.

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

"Okay, set up a company as soon as possible." Chen Zhiwen nodded and said, "If you have any problems with leasing properties, you can also 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 has always been a problem that has troubled him. If he can get some help in this regard, then the operation itself can 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 just say, as long as you have the ability, Eric will definitely invest in you." Pierce also said with a smile.

"Thank you very much, Pierce." Bernie said sincerely. He came up with the future business logic of Home Depot after referring to Costco's operating model. This method of extreme cost saving also refers to Costco's The purchasing mode is just optimized for the home furnishing mode, allowing users to assemble it by themselves to save the highest transportation and labor costs in the middle, and to get rid of the membership system, which is only suitable for high-frequency consumption such as supermarkets.

After discussing some details of Home Depot's operations, Bernie left because he knew that Pierce had other things to talk to Chen Zhiwen.

"Eric, some time ago Hong Kong sent several types of potato chips to Costco. They sold well and tasted good. If the production capacity in Hong Kong is sufficient, you can consider entering other supermarkets." Pierce smiled. said.

In the early days, Pierce would think that Chen Zhiwen invested in Costco for the retail market in the United States, but as time went by, after Xinghe Trading gained a firm foothold with Costco, it began to attack cities in other retail supermarket chains. Got it, another purpose of my boss.

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

This is the advantage of having your own supermarket, you can test it impatiently, otherwise, even if you are a shareholder of Wal-Mart, the management of Wal-Mart may not agree to such a request, and you will test it many times, ship a large number of products, and then get user feedback , especially Costco has a large number of users, and they are all repeat customers. The few potato chips that can eventually be rolled out inside Costco will also have considerable competitiveness in the outside world. The cost control is also very low. It is too easy to buy potatoes in the mainland as long as you take out foreign exchange, and the transportation cost is also low.

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

"Forget it for the time being. There are too many such products. Let's maintain the previous purchasing mode." Chen Zhiwen shook his head and said.

Even if there are professional managers, the company's human resources are limited, especially in the process of management transmission. Therefore, 1000 people can do a good job in one business, but 1000 people can do a good job in 5 businesses. If They are all businesses with huge potential, so Chen Zhiwen will set the direction with the golden finger of the prophet to avoid huge losses caused by disorderly expansion, but if they are all businesses with little business potential, it is impossible for him to participate. There is no big advantage at all, but it will make the company bloated.

According to his plan, the production of such commodities, light textiles, clothing, and daily necessities will be transferred to the mainland in the future, so that the domestic light industry can obtain a large number of orders. Then you can also choose the best companies for each product to support, and then buy shares. You only participate in the investment and enjoy part of the returns.

Tens of thousands of companies, whether they are state-owned or well-known companies, are basically elites. It is most appropriate to invest in them and let the elites work for themselves.

"Well, it's not a big deal." Pierce didn't care, and said, "Eric, remember the last time you went to Costco in New York, I told you that Wal-Mart invested in a company named Sam The membership store, imitating the model of Costco, has been open for more than a month, and it is very successful."

"So, do you think it will become our competitor?" Chen Zhiwen asked. Although he is the majority shareholder of Wal-Mart, he made a verbal agreement with Sam Walton that he would not participate in the management of Wal-Mart in exchange for Galaxy Trade enters the 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, and Xinghe Trade has become one of Wal-Mart's largest suppliers by virtue of this relationship and its very cost-effective products. Need, after a long time, every other quarter, Chen Zhiwen, who is thousands of miles away in Hong Kong, will receive the financial report from Wal-Mart headquarters. The situation of Sam's Club is not included, unless the number of Sam's Club will increase, this business will be independent and a separate financial report will be issued.

"Not only Wal-Mart, the success of Wal-Mart has led many other supermarkets in the United States to try to become member storage supermarkets. Celtic is also planning to build similar warehouse supermarkets in six cities at once. This is what we are more worried about. place," Pierce said.

"Actually, this is also normal. The number of stores we open is increasing, and our influence is also increasing. Especially when we open a place, the sales of nearby supermarkets will be directly affected. It is inevitable that we will be noticed by large retail groups. Too worried." Chen Zhiwen said very calmly.

As long as any profitable business grows bigger, it will definitely attract attention, especially this type of civilian terminal industry. As a large supermarket, it has opened about 50 branches in major cities in the United States within a few years. The area of ​​each store is It’s still very big, and the business is still going well. Even if retail giants like Celtic and Sears are blind, they can still hear some troubles.

As for Costco's business model, it only takes a little time to study and you will understand it. If you want to copy it, it is naturally easy.

"Aren't you worried?" Pierce asked.

"It's useless to worry?" Chen Zhiwen said with a smile: "No one can monopolize the retail industry, even if it is a segment of the retail industry, it is impossible. We just need to do our own thing well. Shiduo has already occupied 50 large cities in the United States first. With our experience, supply chain and logistics training, this is already a great advantage, especially our SMS (supermarket management system), which has gradually matured. The warehouse cost alone can be reduced by 1.5%, and you have been in the supermarket for a lifetime, and you know what the concept of 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 planned the SMS management system, he just thought it would be convenient for transportation. But unexpectedly, when the quantity of a large number of commonly used commodities can be directly queried through a large computer, the usefulness is unimaginable.

Through data, Costco’s procurement department can shorten the procurement cycle, and the warehouse can also reduce storage. Although there have been many mistakes in the middle, Midea’s team in Costco is also optimizing the software according to each problem that occurs , and the current SMS system is only aimed at hundreds of commonly used commodities. When a wider or even full-scale coverage is completed in the future, the cost that can be reduced will be even lower.

"This is just the beginning. Now your efficiency is not high. 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 will be available. Inquiring clearly in an instant is the real high efficiency." Chen Zhiwen said with a smile.

The cost of launching a satellite is very high. In the 80s, it cost 2-3 million US dollars. In the original history, Wal-Mart launched one in the early 80s. It was ridiculed by other retail companies as idiots, but a year later, Wal-Mart The cost of logistics and warehousing has dropped from 8% of the previous total turnover to 3.5%.

Wal-Mart's profit increased by 4.5% at once. You must know that the net profit of many retail supermarkets did not reach 4.5 percentage points, especially in the era of severe inflation and skyrocketing gas prices in the early 80s. These profits are distributed to themselves, but the prices in the supermarket are further reduced, forming a stronger competitive advantage, which suddenly makes all other supermarkets dumbfounded.

It’s just that companies like them may be able to spend hundreds of millions of dollars to launch satellites, but how to coordinate the launch requires a lot of experience. This is a generation gap of 3-5 years. If there is no accident, once it is too late , it is difficult to catch up.

"Satellites? The cost is too high, why not open branches in various places for me, now I'm running out of time." Pierce said with a smile.

"The funds for opening a new store will not be small, but it is still the previous principle. First, cultivate a sufficient operation team. Next year, you can try to get the company's financial data and find bank financing. I have a little relationship with Citigroup or JPMorgan Chase. , It should not be difficult to get the funds, but the interest is a bit high." Chen Zhiwen continued.

Before he didn’t agree to allow Costco to go to the bank for a loan. First, it was because of confidentiality, as long as it could hide from the retail giants. Second, it was rapidly expanding at that time and many supermarkets had just opened. If there were not enough members, the financial report would not be so good. Now, as time goes by, neither of the two problems 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 to go long in the gold bull market recently. When the 80-year bull market ends and the funds return, Costco will still be able to obtain sufficient funds.History has changed. Although the current Costco is developing better than it used to be, I don’t know what will happen in the future. We still need to do our best to put Costco on the throne of the number one membership warehouse supermarket, so we can feel more at ease .

"That's fine. If Costco raises funds by itself, will it consider going public? Costco has now met the basic needs of 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, the current Costco only has potential, but it has not yet reached a very large scale, and it has not touched the cheese of many people. It is almost too big, so it is necessary to introduce some strategic investors, and then go public. Such a big cake cannot be swallowed by one person alone. As long as you have control over the procurement chain behind it plus about half of the shares, you can It's almost there, and the investors introduced will also help Costco in related fields, and everyone will benefit from each other.

"Okay, I'm going to continue to invest in 10 new stores on the east coast. Costco will raise the funds this time." Pierce nodded and said.

"It's good to try." Chen Zhiwen said, Costco has not been short of funds for so many years. In fact, it lacks the test of the market. You can try it yourself. Anyway, in a little more than a year, there will be no shortage of funds.

(End of this chapter)