Chapter 344 Strategic Cooperation with Shi Ke La

Chapter 344 Strategic Cooperation with Shi Ke La

Chapter 344 Strategic Cooperation with PepsiCo
A few days later, on July 5th.

Zhou Haoran came to Changxing Building and met Yang Wendong: "Mr. Yang, I met with the head of PepsiCo's Hong Kong office yesterday and informed him of our intention.
Because the matter involved is quite important and involves Southeast Asia, he has already called the United States. In a few days, a senior official from the United States will come to Hong Kong to meet with you in person. "

"Okay, I'm free during this period." Yang Wendong nodded in agreement.

Such large-scale OEM cooperation also affects the Southeast Asian region, and it does require people with rights to negotiate.

Zhou Haoran added: “Okay, I have also investigated the situation of the cola industry in Southeast Asia. The entire Southeast Asia region, like Hong Kong, although Coca-Cola also entered early;

But these places are too big, have a large population, a confusing language, and local culture, so even though Coca-Cola entered early, it only gained a foothold in some big cities. More than 90% of the market in Southeast Asia is still blank. "

"It's normal. Hong Kong is a city with such a concentrated population. Any product can be completed in a few months." Yang Wendong smiled and said, "But Southeast Asia is too complicated, much more complicated than Europe."

Even in the mainland in the past, it took 20 years for Coke to go from a luxury product to a daily beverage, and this was the result of unified culture and language.

The economy of Southeast Asia today is probably similar to that of the mainland in the 80s. There is still a lack of media tools and an even higher illiteracy rate. As a beverage from a developed country, it has just started in this market.

Zhou Haoran agreed, “Yes, but the economy in some parts of Southeast Asia is still developing well, and some medium-sized cities are also beginning to rise economically. The demand for foreign imported goods is also increasing, and Coke is one of them;

Coca-Cola is now also expanding into Southeast Asia, but for various reasons, the main production base is still in Hong Kong. Swire produces the beverages and then uses its own fleet to transport them to Southeast Asia.

Pepsi is also trying to compete in this market, but it entered the market late, and even its beverages have to be shipped from Japanese factories, and the transportation is not its own, so the cost is very high. "

"So, for them, cooperating with us is completely beneficial," Yang Wendong said with a chuckle.

Although Hong Kong is a small city, it still has many advantages, otherwise it would not have become a small world factory in the 70s.

The tax rate is very low, the cultural level is high (compared to Southeast Asia), the workers are willing to work hard, the shipping is developed, and the politics is stable. These characteristics are actually similar to those of the mainland in the previous life, and are much stronger than Southeast Asia.

In the 65s and s, many international giants invested in Hong Kong in order to do business in Asia. It was not until the establishment of Singapore in that another group of Chinese, with a more advantageous location, began to compete with Hong Kong.

Today, Yang Wendong has become the largest Chinese-owned conglomerate in Hong Kong. He is good at industry and can be said to be a perfect match for international giants who want to develop the Southeast Asian market.

Zhou Haoran said: "Yes, only our group has the ability to become the second Taikoo."

"Okay, let's wait for Pepsi's people to come over." Yang Wendong thought for a moment and asked, "But if we cooperate with Pepsi now, will Taikoo cut off our supply of white sugar?"

"It's possible." Zhou Haoran replied, "But we don't use a lot of sugar right now, and the sales of herbal tea drinks are definitely not as good as Coke, so don't worry, I can also import some sugar from Taiwan.

If we cooperate with PepsiCo, even if we cannot produce sugar in the early stage, we can still buy it directly from Southeast Asia, where there are still many sugar-making companies.”

"Sugar industry in Asia?" Yang Wendong asked, "I remember Malaysia is a big sugar producer, right?"

When it comes to sugar making, he thinks of the future Asian Sugar King Robert Kuok.

Zhou Haoran said: "It can't be called a major sugar-making country, but there is a powerful Chinese there, named Robert Kuok, who has become very famous in the Asian sugar market through various trade means. He also has a sugar factory, but he mainly imports raw sugar from Thailand and South America and then processes it."

"Malaysia doesn't grow much sugarcane? I thought." Yang Wendong paused and said, "If Robert Kuok can import raw sugar and process it, theoretically we can do it too."

Zhou Haoran said: "Yes, if we expand into the beverage industry, the first step is to build a sugar factory in Hong Kong, and then import raw sugar for processing. There are many sources of raw sugar, so there is no need to worry about being out of stock.

Even if we invest in sugarcane farms overseas in the future, we will not be able to ship the sugarcane here for processing. We still have to carry out a simple extraction process near the farm to extract the raw sugar and then send it back to Hong Kong. This is also what Swire does.”

"Well, OK, then we should also check the information of this sugar factory." Yang Wendong said, "We will have to provide all of this information when we negotiate with Pepsi later. Only if we can reduce costs in all aspects will Pepsi be able to rest assured to give us the production capacity."

"Okay." Zhou Haoran agreed.

In the following days, Yang Wendong, Zhou Haoran and people from the group's headquarters office began to read books on the two American cola giants, the global cola market, and the economic development status of Asia.

Without the Internet, it would be difficult to find these materials. Fortunately, my group has a lot of connections, so I found the books directly from libraries in some Southeast Asian countries, bought them at a high price, and then airlifted them to Hong Kong.
May 5, Hong Kong Kai Tak Airport.

Two white people, a man and a woman, walked out of the airport.

The blonde woman seemed to be still a little uneasy. She said, "David, this airport is too dangerous. I've been to so many cities around the world, but this airport scared the hell out of me."

David, the man with the tangled hair, said with a smile, "Christine, Hong Kong is a small island, so airport construction is definitely limited, but safety is still a good problem, don't worry."

"Since it's an island?" Christine asked curiously, "Why does the headquarters attach so much importance to this cooperation this time?"

David said: "That's because the company we are working with is a large conglomerate in Hong Kong. It is also the largest manufacturing group in Hong Kong and has a large shipping company. This is very consistent with our needs of finding a suitable OEM manufacturer in Southeast Asia."

"The largest manufacturing group? The beverage company?" Christine asked again.

"No." David pointed to the suitcase in his hand and said, "This is the one that made this. The suitcase was invented by this company. The sticky notes and the hooks we use at home are all from this company."

"Oh my God? These were all invented by Hong Kong people?" Christine was surprised.

David nodded and said, "Yes, and not only are their inventions great, their business operations are also great. Before I came to Hong Kong, I looked up a lot of information and found a Hong Kong student who had just come to the United States to learn some information. I will also briefly talk to Li about it. The founder of this company is Wen Dongyang, whose English name is Eric. In 1958, he was still a..."

After listening to this, Christine's eyes were filled with disbelief. She said, "It's really amazing. Starting from scratch in five years. If this happened in the United States, it would definitely become the most dazzling entrepreneurial legend in the media."

"Yes, so the board of directors also attaches great importance to this cooperation." David said: "We are more optimistic that this person will definitely become a top businessman in Asia in the future. Cooperating with such a person will make up for the situation in the Asian market where we are suppressed by Coca-Cola."

"Yeah." Kristen nodded, and then said, "Have you agreed on a time?"

"Two days later." David said with a smile, "We'll take a rest for the night, learn more about the situation here tomorrow, and meet formally the day after tomorrow to discuss cooperation issues."

Two days later, Changxing Building:

Zhou Haoran brought two foreigners and several Chinese people to the top floor conference room and introduced them: "Mr. Yang, this is David, the head of PepsiCo Asia. David, this is my boss, Mr. Eric Yang."

"Hello." Yang Wendong shook hands politely.

David returned the handshake and said with a smile, "It's nice to meet you."

"Then please sit down." Yang Wendong said again.

Afterwards, the assistant asked about everyone's needs one by one and served coffee or tea to everyone present.

The two sides chatted casually before the meeting started. After five or six minutes, they officially got down to business:

David first said: "Eric, the board of directors of PepsiCo is also very optimistic about our cooperation, but we just want to confirm some issues with you."

"Please speak." Yang Wendong asked back.

"We can discuss the funding and details later," David said. "As for the direction of cooperation, we also know that you have your own beverage industry, and even a cola industry, which is in competition with us. In this case, we are definitely worried."

"I understand this." Yang Wendong nodded and said, "But doing OEM for you doesn't mean we can't develop our own beverage industry. Take the cooperation between Coca-Cola and Swire Group for example. Isn't it the same? Swire Group still has its own beverage brand."

David asked: "But Swire Group does not have its own Coca-Cola."

Yang Wendong was also prepared, and said: "In fact, the scale of my cola industry is very small, and you should know that if you are worried, we can make an agreement that I will provide you with OEM markets, but my cola will not enter. How about that?"

"Not entering the OEM market?" David repeated, thinking carefully.

Yang Wendong said: "Yes, for example, if you produce the OEM orders in Malaysia for me, then my cola drinks will not enter this market, and there will be no competition.

But there is a prerequisite. You have to give me a certain percentage of the orders. Otherwise, it would be unfair to give me just a little bit. In addition, we can sign a contract every few years, customize a similar agreement, and then negotiate based on the specific situation. How about that? This will be good for everyone."

Watsons actually has basically no cola industry. If it wants to really develop it, it will be very difficult even in Hong Kong, and it will be even more difficult to export. It is still cost-effective to exchange this for Pepsi orders.

However, we cannot limit ourselves. If our own cola brand rises in the future, we will suffer huge losses if we still have to avoid Pepsi, especially in the future mainland market.

"That sounds good." David said, "What about your other drinks?"

Yang Wendong said, "I will OEM Coke for you, so I will keep my Coke industry away from your market, but I have the freedom to not OEM beverages. I can't OEM you a little bit of Coke production and then you restrict my entire beverage industry, right?"

It is normal for customers to have some restrictions on OEMs, and this is also human nature. As a customer, Changxing Group will not tolerate suppliers making the same products as itself, but there can only be certain restrictions and it is impossible to expand them indefinitely.

For example, Changxing Industrial’s suppliers are also free to make other plastic products.

"I'll write this down first and see what the US side thinks later." David paused, then said, "The second point is, do we build a factory together, or do you build a factory alone and then supply us with goods?"

"What do you mean?" Yang Wendong asked.

David said: "We prefer the latter. PepsiCo will not participate in the investment in Hong Kong, and your company's investment can be calculated into the cost of future beverages and then recovered slowly."

"Okay, I agree to this." Yang Wendong nodded.

Many foreign investors do not like to invest overseas unless they have to. It is better to outsource if possible. Even the early Changxing Industrial, if it was not forced to do it itself and considering future real estate returns, it would definitely try to adopt the outsourcing model.

Investing in a factory is a small matter, it doesn't cost much money, and you can also take the opportunity to hoard land. If you really cooperate, then the real estate prices in Hong Kong will skyrocket in a few decades, and PepsiCo will have to share dividends with you, which will be troublesome.

"Okay." David was overjoyed. He had thought this point was the most difficult to discuss, but he didn't expect the other party to agree so readily. Then he said, "There is a third point. Our US headquarters needs you to provide evidence that you can produce cola at the lowest cost. It would be best if it is lower than Coca-Cola."

"It's very difficult to lower the price than Coca-Cola." Yang Wendong shook his head and said, "The Swire Group has basically controlled the entire beverage industry chain. If I can get orders from Pepsi, I will also learn from them and gradually develop from sugar production to the upstream.

But the prerequisite is that you place an order first, and then I will gradually optimize it, so the initial cost will definitely be much higher than Coca-Cola."

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(End of this chapter)