Chapter 836 – The ones holding them back
“Guangzheng, thanks for your hard work. We had successfully entered the European markets.” Feng Yu and Fu Guangzheng were smoking cigars and drinking champagne.
All the Chinese beverage sales in the US and Europe were handed over to a company, Beverage Major League, and Feng Yu is the owner of this company.
This company is not a company that focuses on making profits. It is set up to market the Chinese beverages into the overseas markets, and this is the reason why Feng Yu did not ask Fu Guangzheng to invest.
But Feng Yu had acquired 5 bottling factories in the US and Canada, and Fu Guangzheng bought a few bottling factories in Europe. Fu Guangzheng also felt Chinese beverages can establish a foothold in Europe.
If the Chinese dairy products were able to secure a place in the overseas market, Feng Yu and Fu Guangzheng would continue to acquire dairy product factories in the western countries.
“This is nothing. But can those Chinese beverage companies afford the losses? They will surely suffer massive losses this year, and they might not see any profits next year.” Fu Guangzheng reminded.
Opening new markets require huge capital. Not only the companies had to incur the marketing fees, but they also have to pay the supermarket chains, high transportation, and storage costs.
There is a heavy price to pay for introducing new products into the market, and not everyone can see the returns. In Feng Yu’s previous life, Coca-Cola had failed in introducing their tea beverages in China after investing a significant amount in marketing. Coca-Cola had strong distribution channels and used aggressive advertising, but they were no match for Kang Shifu and other Chinese Tea Beverage manufacturers.
“This BML company is not earning a single cent from them. If they are not willing to take the losses, I will also not force them. At least, Jianlibao, Qili, and some tea beverages are doing well. Just these brands alone are worth what I am doing.”
Problems arise in alliance easily. Those companies were given advantages, but they will feel that they had lost out.
“The problem is you are not making money from them. The more you are not making money from them, the more they are asking. They do not care what you are thinking. After all, you are a shareholder of Lehaha and Jianlibao. You say you are doing this to introduce Chinese beverage brands to other countries, but they will think you are making use of their brands to increase the competitiveness of Jianlibao and Lehaha. If not, why the promotions for their brands are not giving out electronic products and cars as prizes?” Fu Guangzheng shook his head.
“Those prizes are sponsored by me, and they are not paying for them. It is my choice which brand I want to sponsor, and this has nothing to do with them. Why should I help them?”
Feng Yu finally understood why people say businessmen are greedy and ungrateful. Although he was using those brands to increase the Chinese beverages’ competitiveness, those brands also stand to gain from this.
Those companies do not care about opening the Western countries’ markets. They thought they would make high profits if they could export their products.
But now, they were making losses despite having high sales. Their brand awareness had increased, but what’s the use of high brand awareness without profits?!
Feng Yu was frustrated with these short-sighted people. Luckily, Zhong Qingxian and Li Jingwei supported Feng Yu as they understand the importance of market share and branding.
It’s fine to suffer losses in the initial phase. Zhong Qingxian and Li Jingwei were prepared to see losses for the first 2 to 3 years. But once they were established in the western countries’ markets, they can recover all their losses in the future.
Lehaha and Jianlibao’s profits from their domestic market can ensure they will not have cashflow problems. Among the companies in the alliance, Taiwanese brands, Kang Shifu and Tongyi, created the most noise. They felt their tea beverages were not marketed well enough, and Feng Yu was discriminating against them for being Taiwanese brands.
Discriminating them? If Feng Yu was discriminating them, they would not even qualify to enter this alliance.
Kang Shifu and Tongyi might be successful with their instant noodles, and Tongyi is currently one of the world’s top instant noodles company. But these two companies’ beverages were not doing well.
Both companies only have tea beverages, but its taste cannot be compared to Lehaha, Le Bashi and Jianlibao’s products. They did not spend much money and they should be glad that the supermarket chains were willing to sell their products. They still demand the advertisements to feature them? We asked you to participate in the Another Bottle campaign, why did you all refuse?
These two companies felt since they were not participating in these promotions, Lehaha, Le Bashi, and the rest of the companies should not do these promotions, as it will cause infighting.
At this time, these two companies increased their productions and start to fight for market share in China. They started selling their products to the various villages, counties around the cities and priced their products 50 cents cheaper than Lehaha, Le Bashi, etc. tea beverages. Your products are selling at 2 RMB? We will sell ours at 1.50 RMB!
Feng Yu cannot stop them from doing this, but the problem is these two companies start to lower their supply of goods to the US!
Their excuse was they had to supply goods to the Europe supermarket chains, and the demand in China had increased. Their production cannot keep up but promises their supplies will resume the following month.
These two companies could not make money in the US, and even though they were selling their products cheaper in the Chinese market, they could still see profits as the transportation and storage costs were much lower.
Even idiots know which side to choose. They had also gotten what they wanted. They had entered the US and Europe market and had an increase in their sales.
These two companies want to wait out in the US market. If they can still get the same sales figures without advertising, they will see the profits.
It would be great if their sales can increase.
What these two companies are doing is to drag things out. They want to enjoy their brand exposure and refuses to pay the advertising cost and lower their supply to minimize losses. This way, they will increase their brand awareness in the overseas market.
By placing their products besides the famous brands, their brand awareness will surely increase.
Based on the alliance agreement signed, any companies that cannot keep up with the supply will have to withdraw from the US and Europe markets. But Kang Shifu and Tongyi did not follow the rules and refuses to withdraw from the alliance.
Feng Yu was furious with these two companies. He felt these two companies should be given a warning. There are many tea beverages in the market, and since you two don’t follow what was agreed upon, then don’t blame me for attacking your products in China!
Feng Yu called Zhong Qingxian and Li Jingwei. He asked them to warn Kang Shifu and Tongyi. They must provide the required volume of goods, or they will be pulled out of the Western countries’ market and have to pay compensations.
But before Feng Yu could act against these two Taiwanese brands, the two Cola giants start to retaliate.
