Extraordinary Genius - Chapter 609
Chapter 609 – To be the market leader (Part 2 of 2)
Feng Yu’s goal seems to be set too high, but this goal wasnot too far for Lehaha. The current market leader in China’s beverage marketwas still Jianlibao. Lehaha had already overtaken other competitors likeCoconut Tree, Lebashi, etc.
As for the overseas brands like Coca-Cola. Etc. was stillnot very popular in China. Although they were still making profits, their earningswere not very high. Their brands were also not very well known. The overseascompanies did not try to increase their brand awareness in China as they feltthe Chinese could not afford to drink soft drinks every day.
The other Chinese beverage juggernauts, like Jiaduobao (JDBGroup) and Fen Huang from Feng Yu’s previous life still had not appeared. TheRising Sun group were only popular in their own province. Huiyuan does havesome progress, but they were only focusing on the Shangdong and Jingjinjiregions. Their sales were far from Lehaha.
If Lehaha suppressed Jianlibao, they would be the marketleaders. But Lehaha, even when they added in their Children’s supplement sales,they were still far from Jianlibao. It was also because of Jianlibao thatCoca-Cola and Pepsi could not expand its market share in China. When it comesto carbonated drinks, the Chinese top pick was still Jianlibao.
Last year, Jianlibao had set up a soccer youth team and sentthem to Brazil for training. They wanted to groom the next generation of topsoccer players. But many of the players had entered the team because of theirconnections. This was why only a few of the players from the team became topplayers. This grooming of the next generation’s top players was a joke.
This year, Jianlibao had become the leading beverage sponsorof the Asian Games. In the next 4 to 5 years, their sales will increase furtherand will hold on to the position of market leader firmly. The annual sales ofJianlibao now had crossed the 1 billion RMB mark, and it was still growing.
But Feng Yu remembered that Jianlibao will start to declineafter 1998. There were several reasons for this. First, it was the appearanceof many types of beverages in the market. There were aggressive marketing, andthe newcomers were trying to get as much market share as possible. Jianlibaowas the market leader and looks down on these new competitors. In the end,Jianlibao lost its market share to them, and their brand influences were alsoaffected.
The second reason was compelling. When Jianlibao was at thetop, their local government kept taking away their profits and asked Jianlibaoto increase their scale. How did Jianlibao increase their scale without their earnings?Loans. They took bank loans and buy out the smaller factories in theirprovince. This increased Jianlibao’s scale quickly, but they forgot about theirfund issue. As their sales decline and affect their profits, the companyencountered cashflow problems. They do not even have the funds to continuetheir operations.
Thirdly, it was Jianlibao’s sales model. They were stillusing their traditional sales model and did not even set up their salesdistribution channels correctly. When Jianlibao realized this and wanted to setup their distribution channels, it was too late. They do not have the funds todo it.
Fourth, it was the fall out with the local government. IfJianlibao used their profits to expand and grow, there would not be cash flowissues. But the local government kept taking their profits away and caused thefund shortage in the company. The leader of Jianlibao felt that the localgovernment was interfering too much in the company’s decisions and taking toomuch of their profits. The interference by the local government was the cause ofthe company’s downfall.
There were many reasons for the decline. Feng Yu only knewthat Jianlibao had failed to maintain their lead because of the cashflowproblems, lack of branding and outdated sales model. Feng Yu does not thinkhighly of Jianlibao’s management team because of these reasons.
Of course, the only person from the management team that wasconsidered impressive, was the founder and Chairman, Li Jingwei. He had foundedJianlibao and later founded Li-Ning Company with the world champion, Li Ning. However,Li Jingwei was kicked out of Li-Ning soon after the company was set up. LiJingwei had good foresight in the current era.
Another reason why Feng Yu did not try to recruit Li Jingweiwas because of his age. He was already in his 50s and had made some badmanagement decisions.
In Feng Yu’s previous life, Li Jingwei was also jailed for misappropriationof Jianlibao’s fund. He had misappropriated tens of millions during thecompany’s reformation. This person could not be trusted.
Li Jingwei had started a brand but does not know how tomanage it. He depended on the government. But as all the state-ownedenterprises in China were undergoing reforms, he dragged the reformation tomuch later than the rest of the companies. During the Reformation, hemisappropriated the company’s funds and ended up in jail.
If Li Jingwei were as good as Hongtashan tobacco’s, ChuShijian, he would be able to misappropriate the company’s funds and still hadhis workers’ support. Chu Shijian was sentenced to life imprisonment formisappropriation of state assets but got his sentence reduced because of hisworkers’ petition to the government. No one tried to help Li Jingwei after hewas arrested.
Of course, Chu Shijian had the support of his workersbecause he had created billions of profits for Hongtashan and all his workerswere able to have good lives. Li Jingwei had also helped Jianlibao achievedhigh gains, but his workers did not benefit from the company’s success. When LiJingwei finally decided to give his workers some benefits, the company does nothave the funds to do it. Jianlibao was already on a decline.
Another reason why Feng Yu did not try to buy out Jianlibaonow was that he needs to pay at least several billions to buy out the companynow. Feng Yu only need to wait for Jianlibao’s downfall, and he could buy outthe company for a few hundred million RMB.
No matter what, there was no way for Lehaha to overtakeJianlibao now unless Feng Yu used some underhand methods.
It was easy for Feng Yu to cheat Jianlibao, but he did notdo it. He rather waits for its downfall and then buys them over.
Furthermore, without using those underhand methods, Feng Yuwas confident that he would beat Jianlibao within 5 years!
Jianlibao’s biggest failure was not knowing how to manageand make use of its brand to increase their profits. If Feng Yu were to manageJianlibao, he would introduce all sorts of energy drinks and carbonated drinks,like Red Bull, Mai Dong, etc. These drinks were in-line with Jianlibao’s brandimage and will help the company bring in lots of profits.
But Jianlibao only has one sports drinks. They did not evenintroduce other favors and did not put in any efforts on marketing. They do notknow the influence of TV advertising.
There was something interesting about Jianlibao too.Jianlibao was currently the brand that was stopping Coca-Cola and Pepsi fromexpanding in China. But the first bottle of Jianlibao was produced usingPepsi’s production line.
That means Pepsi had helped Jianlibao in the past, butJianlibao turned around and stopped Pepsi’s expansion in China. Pepsi was notsatisfied with them. This was why when Jianlibao was down-and-out, Pepsi stilltargeted them.
Lehaha wanted to introduce carbonated drinks was to try toget as much market share as possible, when Jianlibao was still stoppingCoco-Cola and Pepsi from expanding. Lehaha can collaborate with Jianlibao toattack Coco-Cola and Pepsi later.
Lehaha will be a newcomer for the carbonated drinksindustry. But for the yogurt drinks, Lehaha was the market leader. Feng Yuwants Lehaha to introduced one of the most popular beverage in his previouslife, Nutri-Express!
Nutri-Express was just yogurt drinks with some othervitamins added to it. It was not anything special, but Lehaha had hit 4 billionannual sales revenue with this beverage alone!
Bigger bottle of yogurt drinks? Zhong Qingxian was deep inthoughts and nodded. That’s right. Why didn’t I think of this before? Not onlychildren like yogurt drinks, but adults can also drink it. This will increasethe company’s profits further!
It was possible to catch up with Jianlibao within 5 years!Why can’t Lehaha be the market leader of China’s beverage industry?
Translator’snotes: An interesting article about Jianlibao’s downfall.
Articleabout the 6 favorite Chinese drinks (Many of the brands mentioned in thechapter were included)
A blogarticle on Wahaha Nutri-Express
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