It was almost the end of August. All the shop spaces at Tai Hua Supermarket were rented out. This was much faster than expected.
The main reason was because of the number of shoppers at Tai Hua Supermarket. Soon, Tai Hua Supermarkets branches had become the landmark in their respective cities.
Tai Hua Supermarket had shown its powerful connections and the potential. All these companies were too smart to give up this opportunity.
Someone once said that KFC and McDonalds were successful because of two factors. First was the branding and secondly, the locations.
A simple example would be if KFC and McDonalds opened their restaurants in the villages, they will not make any profits even if the villagers knew these were international fast food restaurants. That’s because there were too few people in the villages and they do not have the spending power.
Why did KFC and McDonald’s franchisees have to hire professionals to pick their locations? That’s because they must make sure that there will be sufficient human traffic, which is the most important. Not everybody will travel all the way to visit your restaurant because your restaurant is an international brand.
To be honest, fast foods does not taste good either. Many shops could also replicate the same taste. This was also why many other fast food restaurant brands were able to grow rapidly. They only need a suitable location and reasonable taste food, and their business will be okay.
Although Tai Hua Supermarkets had rented out all their shop fronts and the rentals were charged annually, but the first year’s rental was very cheap. Both Tai Hua Supermarket and those companies wanted to test the market.
Tai Hua Supermarket Corporation wanted to see how much those companies could earn before they decide if they should raise the rents next year. The companies were also worried about Tai Hua Supermarkets’ crowd would continue. If the crowd dies off after two months, they will be making losses.
With so many shops rented out and the deposits placed by the brands, Tai Hua Supermarket Corporation had amassed a vast amount. But Fu Guangzheng saw the craze over Tai Hua Supermarkets, he felt 20 branches were too little. They should set up more than 100 supermarkets as soon as possible. He wants to have at least 3 supermarkets in every province. Those densely populated provinces and cities should have more branches.
Fu Guangzheng had received news that Carrefour was already in China sourcing for locations. He heard that they will enter the Chinese market next year. Currently, they were only targeting at two cities, Beijing and Shanghai.
Currently, Carrefour still does not think that China was suitable for Hypermarkets. But that’s because they did not see the market potential of the Chinese. China’s population was very high, and these types of hypermarkets will have potential to grow.
When Carrefour opened up their supermarkets in France, France economy was worse than China’s economy now.
Also, Walmart’s Asia person-in-charge had spread words that he is interested in the Chinese market.
If these two big corporations entered China with their hypermarkets, then they will be Tai Hua Supermarket’s strongest rivals.
These were not the only threats. Fu Guangzheng also knew that many people had registered companies in several cities. They wanted to imitate Tai Hua Supermarket’s operating model and set up supermarket chains.
These companies had the backing of their local governments, and they will be able to develop faster than Tai Hua Supermarket.
These companies might not be able to set up many big supermarkets like Tai Hua Supermarket, but they would have no problems if they were to set up only one. If they succeeded, they would set up a supermarket chain.
In Bing City, there was a state-owned supermarket that had started preparations. They were swift. Before Fu Guangzheng could react, they were ready, and the opening was set in October!
Tai Hua Supermarket Corporation had become the public enemy in the industry! If the good locations were taken up by other companies, it would halt Tai Hua Supermarket’s developments.
Fu Guangzheng was anxious because of this. Li Zekai, Superman Li, and Fu Rongbing also saw this problem.
There were a few options for them. First was to increase their investments and use the money to set up more supermarkets.
Second, it will be taking up loans. But Tai Hua Supermarket Corporation had injected a lot of money into the business and had fixed assets, but the brand value was not high yet. The amount they could loan was not a lot.
The third option was to use all of Tai Hua Supermarket’s profits and liquid assets, including the deposits from the brands.
But at this time, Feng Yu came up with another option.
“Increasing our investments is not a problem for all of us. But you all should know that if we were to expand so aggressively, we would not make much money. That means our funds will be locked up for a long time. This is not a good option. We spent a long time to look for the locations of our first 20 branches. If we rushed in to set up more supermarkets, we will bound to make mistakes.”
“We also know this. But our Tai Hua Supermarket Corporation could not rival Walmart and Carrefour. Once they enter the market, they will surely be given some concessions from the government. If they were able to obtain a foothold, they would take away most of the market share. Also, those imitators will take away some of our market shares. If they took away all the good locations, then it will be hard for us to open up our supermarket there. Now, we must speed up our expansion plans and reserved those good locations. At least we should sign some agreements with the local authorities.” Fu Guangzheng said.
“I know what you are talking about. I am not against expansion. I only feel that we do not need to increase our investments. Taking loans is one solution. Although the amount we can get is not a lot, it should be enough for us to open up 10 more Hypermarkets. What I want to say is using Tai Hua Supermarket’s profits and funds is also a good solution.” Feng Yu smiled and explained.
“Brother Feng, we can raise funds within a short time if we utilized the supermarket’s profits and funds. If the company faces cash flow problems, we can inject money into the company. But it will affect our company’s image. People might think that we are a shell company.” Li Zekai frowned and said.
Superman Li had agreed to continue to invest, and Li Zekai was against the idea of using up all of the company’s funds and profits.
“I remember that our Tai Hua Supermarkets still have not introduced membership cards and shopping cards. I think we should exploit the potential of these two types of cards!” Feng Yu mysteriously said.
