Chapter 786 Advantages of Channel Monopoly

Chapter 786 Advantages of Channel Monopoly

Chapter 786 Advantages of Channel Monopoly

Even though it had a big reputation, Best Buy had not been able to make a profit, which made Citibank afraid to lend too much;

This is actually human nature, and Yang Wendong understands it;

What he is waiting for now is the birth of new-age electronic products such as personal computers, home game consoles, and portable music players. These markets will be huge in the future, and Best Buy, as the largest electronic supermarket chain in the United States, will definitely be able to get a share of them.
Right now, he just needs to endure for a few more years before he can see the light at the end of the tunnel. He has been planning for so many years just for this day.

The most important thing about this trip to the United States is to meet with Reagan. At present, he is still the governor of California who has just retired. The presidential election has not yet been announced, but some powerful people know about it;

At this time, investing there, although not necessarily providing timely assistance, is at least one of the earliest investors.

At the same time, Reagan's future policies are also in line with the capitalists' investment in the United States and match the interests of Yang Wendong's group, so naturally more sponsorship is needed. At least in the future, sensitive issues will not be involved. It is enough for Reagan to help himself appropriately or not interfere.
In addition, the current US national policy is to support free trade and encourage foreign investment. If it does not touch some special industries, the risk is not great.
In the following days, Yang Wendong went to New York and met with Walter Reston, CEO of Citibank;
“Walter, long time no see.” Yang Wendong said with a smile and shook hands;

His group has a lot of cooperation with Citibank in many fields and countries around the world, so naturally he knows the other party's CEO, and the two have met several times before.

Walter also shook hands and said, “Eric, it’s been a long time. Your business is getting bigger and bigger.”

"Haha, compared to the scale of Citibank, it's still far behind." Yang Wendong said with a smile;
The scale of Changxing Group in Hong Kong and even in Asia is not small now, but there is still a huge gap compared with the world's top banks. In traditional industries, only a few such as Hyundai Motor and state-owned enterprises in various countries have been able to overtake in human history. The others all rely on the future electronics industry and the Internet.

If we can seize the opportunities of electronic software in the future, we may be able to surpass Citigroup. Otherwise, it will be very difficult to rely on industries such as real estate, shipping, and food.

Walter said, "That's different. Citibank has a history of more than 20 years, and your company is less than years old. You are so young, and there will be plenty of opportunities in the future."

"Yes, there will indeed be great opportunities in the future, but these opportunities also require cooperation with banks like Citi." Yang Wendong also ended the business flattery and entered the formal topic.

Walter motioned for the two to sit down and said, “Eric, we are very happy to cooperate with you. I wonder which projects you are talking about?”

Yang Wendong said: "Normal projects are easy to talk about, but I mean Best Buy."

Other projects, whether it is KFC in Hong Kong or the United States, the business itself is a positive cycle, and the enterprise itself has been able to continue to make profits;
Even Red Bull, although it is also making losses, once the financial statements are taken out, professionals will know that it is deliberately spending a lot of money on advertising in order to compete for the market, and it has great potential in the future;
But Best Buy is different. Every supermarket this company built lost money, and more than 100 of them lost hundreds of millions of dollars. This amount of money is so huge that even Citigroup could not afford it. After all, they are unwilling to provide long-term sponsorship for a company with no future.

Walter took a deep breath and explained, "Eric, although you have guaranteed Best Buy before, this project is really losing too much money. Do you still want to continue to invest money in it?"

"Yes, next, I will invest more and build more Best Buys, and it would be best if we could cover every major city in North America." Yang Wendong said with a smile;
"Why? Why are you so optimistic about this project?" Walter asked puzzledly: "Although Best Buy does solve the after-sales and convenience problems of people buying home appliances, it has a large investment and low returns. There is no benefit for this kind of project, right?"

Yang Wendong handed over a newspaper cutout and said, "Because of it."

"Is this, an Apple computer?" Walter is considered one of the top business executives in the United States and knows something about the recently famous Apple computer.

Yang Wendong said: "Yes, I am optimistic about the personal computer industry. It is just the beginning now. I believe that with the iterative development speed of the electronics industry, personal computers will be available in every household in the future.
It is a brand new market worth at least $100 billion. If this market is built, it will inevitably require a large number of sales outlets and after-sales services, which is Best Buy's specialty."

"One hundred billion US dollars? Is that too exaggerated?" Walter was also shocked by the data.

Yang Wendong shook his head and smiled, “It’s not an exaggeration. The average price of a computer is one thousand dollars. There are 3 million people in the United States. Although not everyone will buy one, don’t forget that there is still a demand for office computers.
In addition, this is just the computer itself. The demand for various accessories is also huge.”

Walter said, "That's the total market in the United States. It's impossible for everyone to buy it every year, right?"

Yang Wendong said: “It is indeed impossible, but in this case there are still tens of billions of dollars, but it will take a long time to develop to this level;
Moreover, with the development of the electronics industry, it is not possible that only personal computers will be born. Various other entertainment electronic products will gradually appear, and even traditional home appliances will need to be updated.
The simplest example is color TV. Now that remote controls have come out, how many families have replaced or purchased new color TVs just for the remote control function? "

Walter thought carefully for a while and said, "Eric, what you said makes sense, but in this case, doesn't it mean that when you founded Best Buy seven or eight years ago, it was for today?"

Yang Wendong shook his head and said, “That’s not the case. I don’t know much about personal computers, but I am sure that with the development of the electronics industry, there will be more and more electronic products in the future, and home appliances will also need to be updated;
Honor Electronics, which I own, is also involved in this, but one company can’t participate much, so I founded Best Buy to focus on operating a supermarket for electronic products.”

"Haha, awesome. I admire you." Walter nodded in approval. "Your business logic is very similar to the gold rush in North America. When countless people were gambling and panning for gold, some smart people were building roads, because no matter who dug up gold or other mines, they had to use roads to transport the wealth out.
Nowadays, no matter who sells personal computers or other electronic products well, they all have to go through sales channels and provide the most troublesome after-sales service. However, you have gradually solved these problems. From now on, everyone will be demanding of you. "

"So, Citibank should support me even more, right?" Yang Wendong asked with a smile;

Before the emergence of online shopping, Best Buy basically monopolized the sales channels of some electronic products, especially after-sales service. This was a problem for many product sales companies, but Best Buy could easily solve it. Every profession has its own specialty, and Best Buy specialized in this direction. Although it could not eat the whole cake, it could eat a little bit of every cake. In fact, it was not just electronic products, but some other industries also implemented similar strategies, such as the Hong Kong film industry. No one could guarantee that they would make money by making a movie by themselves, but if they controlled countless theaters, they would be able to sit on the Diaoyutai.

In the future, he will do something similar when he enters the mainland. In many industries, if you want to be the boss alone, you need the right time, right place and right people. There is a lot of chance, but as long as you control the channels, you are halfway to success.
Walter came back to his senses, thought for a moment and said, "Eric, I personally agree with your business strategy very much, but banks have their own rules. For such a large venture capital investment, I also need guarantees from your other investments."

Yang Wendong asked in return: "Will Hong Kong's property assets work?"

He also understood that it was impossible for a bank to make a huge loan just because of a "possibility". Savings banks would not participate in too many such risky investments. Investment banks like Goldman Sachs might really be optimistic, but the investment required shares.

"Hong Kong is too far from the United States. Even if your assets in Hong Kong are worth a lot, you will get a big discount if you mortgage them with us. It's not cost-effective." Walter shook his head and said, "Unless you mortgage them to a local bank in Hong Kong and then transfer the funds to the United States."

Yang Wendong shook his head and said, "This is not convenient either. It involves a large amount of money. Local banks will also ask where it is going. Those people don't understand electronic products, so they are probably even more worried."

In fact, he didn't want to mobilize funds from Hong Kong, otherwise there would be no need to go through so much trouble;
A lot of the idle funds in Hong Kong will have special uses in the future, including funds from the United States, which have begun to prepare for the second oil crisis;
If a large amount of capital is required to build a property, it is better to use bank funds if possible. This is normal business behavior.

Walter smiled faintly and said: “In fact, you still have a commodity in your hand that can be mortgaged.”

"What products?" Yang Wendong asked back.

Walter said, "The copyright of the movie 'Jaws' that you invested in previously has a considerable income every year and can last for many years. I heard that you are also planning to shoot the second part. These can all be mortgaged."

"Doesn't your bank accept mortgages from the film industry?" Yang Wendong asked.

In the early years in Hong Kong, HSBC had three areas where it would not lend money: first, movies; second, shipping; and third, aviation.

The film industry is too unstable. A well-received film may flop, and vice versa. There is no logic at all, so banks naturally don’t like this.

In the United States, the situation is even more exaggerated. The investment in each Hollywood movie is hundreds of times that of Hong Kong movies. Once, 4000th Century Fox lost million US dollars and almost went bankrupt because of the filming of "Cleopatra".

In this case, few banks dare to lend to the Hollywood Group unless the amount is small and there is a suitable and stable property mortgage;

Walter smiled and said, "We do not accept loan collateral for ordinary movies, but the performance of Jaws has come out, and the sales in the surrounding market are also quite good. The performance of the second film should not be too bad.
So relatively speaking, if the collateral has a sufficiently stable value and a low risk, then we are naturally willing to accept the collateral;
If you want to make a new movie now, we are not sure at all. In this case, it is naturally impossible to borrow money unless there is other collateral. "

"So that's how it is." Yang Wendong nodded: "Okay, how much is the mortgage? I want to gradually borrow 1.5 million US dollars from you within 5 years."

Walter thought for a moment and said, “This amount is definitely too large, but your Best Buy was not built all at once, but step by step;

In this case, we need to internally review the peripheral revenue of your "Jaws" movie. If there is no problem, I can borrow 2 million US dollars each year in the first 3-3000 years;
As you said before, the personal computer industry is on the rise, and we should be able to see this in the next few years, and Best Buy's performance will also improve. Once this happens, regardless of whether the copyright of Jaws has any other residual value, we can support Best Buy's expansion."

"Three years? Okay, that's no problem on my end." Yang Wendong nodded and agreed;

In three years, Apple could be listed on the stock market. According to its past performance, its shares would be worth hundreds of millions of dollars. Three years later, personal computers would become the focus of all news and IT companies.

If Best Buy had not been in a hurry to build and occupy the market first, then after a few years, the funds in various aspects would have been much more abundant;
First you monopolize part of the market, and then you will have a huge influence on all electronics companies in the future, no matter whether it is Apple, HP, or IBM. The personal computers you produce must have after-sales service, right?

And building it yourself? Even for a company as wealthy as IBM, that is unlikely. It would be most convenient to outsource it.

Similarly, if Best Buy cultivates the habit of users to come to it to browse all kinds of electronic products in one stop, then it will have a certain degree of monopoly in the sales end;

Traditional supermarkets, such as Wal-Mart, will give up a certain amount of space for various electronic products even if they value the sales market of electronic products, but after all, it is still limited. Each brand may only have a few on the shelves, and it is difficult for Wal-Mart to handle various brands in terms of after-sales service;

This is the advantage of professionalism. If you are one step ahead and set the right goal, it is not impossible for others to surpass you, but the cost will be very high, so high that even the capital level may think it is unnecessary.

Even in the Internet age, after-sales service still needs to be done offline, which is able to maintain long-term monopoly advantages;
Of course, it is not absolutely invincible. When electronic products become dirt cheap and are updated quickly, consumers may just throw them away when they are broken, and there will be nothing we can do.
However, this will be a long time in the future.

PS: Please give me a monthly ticket
(End of this chapter)