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It was almost the end of August. All the shop s.p.a.ces at TaiHua Supermarket were rented out. This was much faster than expected.
The main reason was because of the number of shoppers at TaiHua Supermarket. Soon, Tai Hua Supermarkets branches had become the landmark intheir respective cities.
Tai Hua Supermarket had shown its powerful connections andthe potential. All these companies were too smart to give up this opportunity.
Someone once said that KFC and McDonalds were successfulbecause of two factors. First was the branding and secondly, the locations.
A simple example would be if KFC and McDonalds opened theirrestaurants in the villages, they will not make any profits even if thevillagers knew these were international fast food restaurants. That’s becausethere were too few people in the villages and they do not have the spendingpower.
Why did KFC and McDonald's franchisees have to hireprofessionals to pick their locations? That’s because they must make sure thatthere will be sufficient human traffic, which is the most important. Noteverybody will travel all the way to visit your restaurant because yourrestaurant is an international brand.
To be honest, fast foods does not taste good either. Manyshops could also replicate the same taste. This was also why many other fastfood restaurant brands were able to grow rapidly. They only need a suitablelocation and reasonable taste food, and their business will be okay.
Although Tai Hua Supermarkets had rented out all their shopfronts and the rentals were charged annually, but the first year’s rental wasvery cheap. Both Tai Hua Supermarket and those companies wanted to test themarket.
Tai Hua Supermarket Corporation wanted to see how much thosecompanies could earn before they decide if they should raise the rents nextyear. The companies were also worried about Tai Hua Supermarkets’ crowd wouldcontinue. If the crowd dies off after two months, they will be making losses.
With so many shops rented out and the deposits placed by thebrands, Tai Hua Supermarket Corporation had ama.s.sed a vast amount. But FuGuangzheng saw the craze over Tai Hua Supermarkets, he felt 20 branches weretoo 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 denselypopulated provinces and cities should have more branches.
Fu Guangzheng had received news that Carrefour was alreadyin China sourcing for locations. He heard that they will enter the Chinesemarket next year. Currently, they were only targeting at two cities, Beijingand Shanghai.
Currently, Carrefour still does not think that China wa.s.suitable for Hypermarkets. But that’s because they did not see the marketpotential of the Chinese. China’s population was very high, and these types ofhypermarkets 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 thathe is interested in the Chinese market.
If these two big corporations entered China with theirhypermarkets, then they will be Tai Hua Supermarket’s strongest rivals.
These were not the only threats. Fu Guangzheng also knewthat many people had registered companies in several cities. They wanted toimitate 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 bigsupermarkets like Tai Hua Supermarket, but they would have no problems if theywere to set up only one. If they succeeded, they would set up a supermarketchain.
In Bing City, there was a state-owned supermarket that hadstarted preparations. They were swift. Before Fu Guangzheng could react, theywere ready, and the opening was set in October!
Tai Hua Supermarket Corporation had become the public enemyin the industry! If the good locations were taken up by other companies, it wouldhalt 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 increasetheir investments and use the money to set up more supermarkets.
Second, it will be taking up loans. But Tai Hua SupermarketCorporation had injected a lot of money into the business and had fixed a.s.sets,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’sprofits and liquid a.s.sets, 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 notmake much money. That means our funds will be locked up for a long time. Thisis not a good option. We spent a long time to look for the locations of ourfirst 20 branches. If we rushed in to set up more supermarkets, we will boundto make mistakes.”
“We also know this. But our Tai Hua Supermarket Corporationcould not rival Walmart and Carrefour. Once they enter the market, they willsurely be given some concessions from the government. If they were able toobtain a foothold, they would take away most of the market share. Also, thoseimitators will take away some of our market shares. If they took away all thegood 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. Atleast we should sign some agreements with the local authorities.” Fu Guangzhengsaid.
“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 isone solution. Although the amount we can get is not a lot, it should be enoughfor us to open up 10 more Hypermarkets. What I want to say is using Tai HuaSupermarket’s profits and funds is also a good solution.” Feng Yu smiled andexplained.
“Brother Feng, we can raise funds within a short time if weutilized the supermarket’s profits and funds. If the company faces cash flowproblems, we can inject money into the company. But it will affect ourcompany’s image. People might think that we are a sh.e.l.l company.” Li Zekaifrowned and said.
Superman Li had agreed to continue to invest, and Li Zekaiwas against the idea of using up all of the company’s funds and profits.
“I remember that our Tai Hua Supermarkets still have notintroduced members.h.i.+p cards and shopping cards. I think we should exploit thepotential of these two types of cards!” Feng Yu mysteriously said.
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