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Extraordinary Genius Chapter 609 – To be the market leader (Part 2 of 2)
Feng Yu's goal seems to be set too high, but this goal was not too far for Lehaha. The current market leader in China's beverage market was still Jianlibao. Lehaha had already overtaken other compet.i.tors like Coconut Tree, Lebashi, etc.
As for the overseas brands like CocCola. Etc. was still not very popular in China. Although they were still making profits, their earnings were not very high. Their brands were also not very well known. The overseas companies did not try to increase their brand awareness in China as they felt the Chinese could not afford to drink soft drinks every day.
The other Chinese beverage juggernauts, like Jiaduobao (JDB Group) and Fen Huang from Feng Yu's previous life still had not appeared. The Rising Sun group were only popular in their own province. Huiyuan does have some progress, but they were only focusing on the Shangdong and Jingjinji regions. Their sales were far from Lehaha.
If Lehaha suppressed Jianlibao, they would be the market leaders. But Lehaha, even when they added in their Children's supplement sales, they were still far from Jianlibao. It was also because of Jianlibao that CocCola and Pepsi could not expand its market share in China. When it comes to carbonated drinks, the Chinese top pick was still Jianlibao.
Last year, Jianlibao had set up a soccer youth team and sent them to Brazil for training. They wanted to groom the next generation of top soccer players. But many of the players had entered the team because of their connections. This was why only a few of the players from the team became top players. This grooming of the next generation's top players was a joke.
This year, Jianlibao had become the leading beverage sponsor of the Asian Games. In the next 4 to 5 years, their sales will increase further and will hold on to the position of market leader firmly. The annual sales of Jianlibao now had crossed the 1 billion RMB mark, and it was still growing.
But Feng Yu remembered that Jianlibao will start to decline after 1998. There were several reasons for this. First, it was the appearance of many types of beverages in the market. There were aggressive marketing, and the newcomers were trying to get as much market share as possible. Jianlibao was the market leader and looks down on these new compet.i.tors. In the end, Jianlibao lost its market share to them, and their brand influences were also affected.
The second reason was compelling. When Jianlibao was at the top, their local government kept taking away their profits and asked Jianlibao to increase their scale. How did Jianlibao increase their scale without their earnings? Loans. They took bank loans and buy out the smaller factories in their province. This increased Jianlibao's scale quickly, but they forgot about their fund issue. As their sales decline and affect their profits, the company encountered cashflow problems. They do not even have the funds to continue their operations.
Thirdly, it was Jianlibao's sales model. They were still using their traditional sales model and did not even set up their sales distribution channels correctly. When Jianlibao realized this and wanted to set up their distribution channels, it was too late. They do not have the funds to do it.
Fourth, it was the fall out with the local government. If Jianlibao used their profits to expand and grow, there would not be cash flow issues. But the local government kept taking their profits away and caused the fund shortage in the company. The leader of Jianlibao felt that the local government was interfering too much in the company's decisions and taking too much of their profits. The interference by the local government was the cause of the company's downfall.
There were many reasons for the decline. Feng Yu only knew that Jianlibao had failed to maintain their lead because of the cashflow problems, lack of branding and outdated sales model. Feng Yu does not think highly of Jianlibao's management team because of these reasons.
Of course, the only person from the management team that was considered impressive, was the founder and Chairman, Li Jingwei. He had founded Jianlibao and later founded Li-Ning Company with the world champion, Li Ning. However, Li Jingwei was kicked out of Li-Ning soon after the company was set up. Li Jingwei had good foresight in the current era.
Another reason why Feng Yu did not try to recruit Li Jingwei was because of his age. He was already in his 50s and had made some bad management decisions.
In Feng Yu's previous life, Li Jingwei was also jailed for misappropriation of Jianlibao's fund. He had misappropriated tens of millions during the company's reformation. This person could not be trusted.
Li Jingwei had started a brand but does not know how to manage it. He depended on the government. But as all the state-owned enterprises in China were undergoing reforms, he dragged the reformation to much later than the rest of the companies. During the Reformation, he misappropriated the company's funds and ended up in jail.
If Li Jingwei were as good as Hongtashan tobacco's, Chu Shijian, he would be able to misappropriate the company's funds and still had his workers' support. Chu Shijian was sentenced to life imprisonment for misappropriation of state a.s.sets but got his sentence reduced because of his workers' pet.i.tion to the government. No one tried to help Li Jingwei after he was arrested.
Of course, Chu Shijian had the support of his workers because he had created billions of profits for Hongtashan and all his workers were able to have good lives. Li Jingwei had also helped Jianlibao achieved high gains, but his workers did not benefit from the company's success. When Li Jingwei finally decided to give his workers some benefits, the company does not have the funds to do it. Jianlibao was already on a decline.
Another reason why Feng Yu did not try to buy out Jianlibao now was that he needs to pay at least several billions to buy out the company now. Feng Yu only need to wait for Jianlibao's downfall, and he could buy out the company for a few hundred million RMB.
No matter what, there was no way for Lehaha to overtake Jianlibao now unless Feng Yu used some underhand methods.
It was easy for Feng Yu to cheat Jianlibao, but he did not do it. He rather waits for its downfall and then buys them over.
Furthermore, without using those underhand methods, Feng Yu was confident that he would beat Jianlibao within 5 years!
Jianlibao's biggest failure was not knowing how to manage and make use of its brand to increase their profits. If Feng Yu were to manage Jianlibao, he would introduce all sorts of energy drinks and carbonated drinks, like Red Bull, Mai Dong, etc. These drinks were in-line with Jianlibao's brand image and will help the company bring in lots of profits.
But Jianlibao only has one sports drinks. They did not even introduce other favors and did not put in any efforts on marketing. They do not know the influence of TV advertising.
There was something interesting about Jianlibao too. Jianlibao was currently the brand that was stopping CocCola and Pepsi from expanding in China. But the first bottle of Jianlibao was produced using Pepsi's production line.
That means Pepsi had helped Jianlibao in the past, but Jianlibao turned around and stopped Pepsi's expansion in China. Pepsi was not satisfied with them. This was why when Jianlibao was down-and-out, Pepsi still targeted them.
Lehaha wanted to introduce carbonated drinks was to try to get as much market share as possible, when Jianlibao was still stopping Coco-Cola and Pepsi from expanding. Lehaha can collaborate with Jianlibao to attack Coco-Cola and Pepsi later.
Lehaha will be a newcomer for the carbonated drinks industry. But for the yogurt drinks, Lehaha was the market leader. Feng Yu wants Lehaha to introduced one of the most popular beverage in his previous life, Nutri-Express!
Nutri-Express was just yogurt drinks with some other vitamins added to it. It was not anything special, but Lehaha had hit 4 billion annual sales revenue with this beverage alone!
Bigger bottle of yogurt drinks? Zhong Qingxian was deep in thoughts and nodded. That's right. Why didn't I think of this before? Not only children like yogurt drinks, but adults can also drink it. This will increase the company's profits further!
It was possible to catch up with Jianlibao within 5 years! Why can't Lehaha be the market leader of China's beverage industry?
Translator's notes: An interesting article about Jianlibao's downfall.
Article about the 6 favorite Chinese drinks (Many of the brands mentioned in the chapter were included)
A blog article on Wahaha Nutri-Express
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