Extraordinary Genius - Chapter 666
Chapter 666 – Adolf’s frustrations
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The President of Carrefour Asia, Adolf, looked at the reporton the table. He was in a bad mood.
What happened? How come there was such a company in China?This company had set up a supermarket chain with so many branches!
Adolf could not understand why this company did not rent theshopping spaces but bought the whole mall. They used the supermarket as itscore and set up a hypermarket. Wasn’t this Carrefour’s usual practice?
Adolf sent someone to investigate Tai Hua SupermarketCorporation. It was similar to Carrefour. The operating model, the revenuesources, management model, etc. were almost identical to them.
To claim that Tai Hua Supermarkets were imitating Carrefour,it was also not true. After all, Tai Hua Supermarket had strong financialbackings. Almost all supermarkets’ marketing and promotions strategies in theworld were about the same. But Tai Hua Supermarket’s plans were one notchhigher.
Carrefour in the current era was not as big as the futureyears. Although Carrefour also has promotions every day, it was nothing whencompared to Tai Hua Supermarket.
Tai Hua Supermarket’s products were much more diversified.Their fruits and vegetables were better than Carrefour supermarkets.
Carrefour was only researching the Chinese market initially.France and China’s government were not close, and there were not manycollaborations between both nations. This might be due to China’s relationshipwith Germany. The whole world knows that France and Germany did not have aharmonious relationship in the past.
But now, relationships between France and China had improved,and Carrefour had decided to enter China’s market within the next two years totest the market. But they realized they were late. When they were stillscouting for suitable locations, Tai Hua Supermarket had appeared suddenly.
This Tai Hua Supermarket Corporation was too crazy. Whowould set up so many hypermarket branches at once? They were not worried aboutmaking losses?
Carrefour dug into Tai Hua Supermarket’s background andfound that Hong Kong’s Superman Li had shares in it. Superman Li was a well-knownbusinessman around the world. He was very influential in Asia and was extremelywealthy.
Superman Li was not the only shareholder in this business.He still has many partners, and one of them was a big boss in China. Thiscompany’s financial backing was strong and does not need to worry about theirfunds. The properties in China were also cheap. They do not need a lot of fundsto set up one big supermarket.
Carrefour knew that based on Tai Hua Supermarket’s scale andproducts, each branch needs at least 200 million RMB to set up. This was alsoone of the reasons Carrefour did not enter China immediately.
This was a substantial investment, and Carrefour could notpredict the returns. The risk was too high.
But Tai Hua Supermarket Corporation start-up capital was nothigh, and even if funds were injected into the company, it should not be a lot.If every branch cost 200 million RMB, 20 branches will cost 500 million USD!This was based on the current exchange rates. If it were based on last year’sexchange rate, the amount would be higher!
This was a substantial investment.
But Adolf did not know that Tai Hua Supermarket market’sproducts were all on credit terms. All they need was to place some deposits andpay the supplier at the end of the month. One branch does not even cost 20million RMB to set up. If not, Tai Hua Supermarket’s initial investment wouldnot be enough to support 20 hypermarkets at once.
The initial investment might not be enough to even set up 20big supermarkets or have enough funds to bring in the products!
Adolf suspects that Tai Hua Supermarkets had support fromthe Chinese Government. If not, why would the opening ceremony of theirsupermarkets be reported on the national TV station? Since when did the ChineseGovernment do free publicity for businessmen?
After Tai Hua Supermarkets opened, it was very popular.Adolf did not expect this, and he couldn’t understand the reason behind thepopularity. How did such a backward country, which had undergone reformationfor a few years, have such high purchasing power?
Adolf did not know that although the Chinese were notearning high incomes, the population was high and the Chinese love to join inthe crowd.
The supermarket was a crowded place. The shoppers were freeto roam about in it, and the store assistants will not chase them out. Theycould also get good bargains there. These reasons attracted lots of shoppers.
Every time Tai Hua Supermarket announces new promotions,there will be a large crowd. The current promotion slogan was enough to attractlots of shoppers.
Shop at Tai Hua, you will have more pay!
Tai Hua Supermarket items were cheaper. If every family wereto get their groceries from Tai Hua Supermarket, the amount they saved wasequivalent to having a pay increment.
This slogan attracted lots of shoppers who do not have a highincome. They would travel a bit more or ride a bus for over an hour to shop atTai Hua Supermarkets.
There were slogans like “Everyday sales, Everydaydiscounts.”, “Clear pricing, variety of products.” and “Shop in Tai Hua and feel good.” appearing inthe newspaper and radio advertisements. Tai Hua Supermarket also hired people togive out flyers in crowded places, and bus stops.
Within a month, almost all the residents in the cities,where Tai Hua Supermarkets were located, knew about Tai Hua Supermarket. Eventhose residents from cities where Tai Hua Supermarkets do not have branchesalso understand about the supermarkets. This was because they saw thesupermarkets on the news.
Adolf was regretting. If he knew that setting upsupermarkets in China would be so easy, he would have scouted for locationsearlier. Maybe by now, Carrefour would have a few branches in China now. The siteof some of Tai Hua Supermarket branches was located at the locations his teamhad in mind. This made him more frustrated.
Adolf had thought that its competitors in China would onlybe Walmart. But this Tai Hua Supermarket was a more significant threat.
Adolf knew a local enterprise had more advantages thanforeign companies. He was not familiar with the local culture, and thegovernment policies will protect the locals.
Now, it was more difficult for Carrefour to enter China.Even if they managed to penetrate the Chinese market, the results would not belike other countries.
This Tai Hua Supermarket Corporation was not to be triflewith. Adolf could only hope that Tai Hua Supermarket was only targeting theChinese market. If it expands overseas, they will be another strong competitorto Carrefour. They will be one of the obstacles to Carrefour expansion.
Adolf reported this to his headquarters. It will be up tothe headquarters to decide when Carrefour should take the risk and enter theChinese market or take and wait and see approach. If Tai Hua Supermarket startsto expand further, Carrefour would have missed this opportunity to enter China.But all these will be up to the higher management.
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