2003: Starting with Foreign Trade

Chapter 664 Differentiated Competition

At three o'clock in the afternoon, the roar of the engine interrupted Tan Lihua, who was tending to the flowers and plants in the yard.

When it rains in Ningbo, it can last for more than a month, and when it doesn't rain, you can go for months without seeing a single drop of rain.

Tan Lihua, who started her retirement life ahead of schedule, went from being unaccustomed to it at first to now being quite content.

I spend my days tending to the flowers and plants, fishing, dancing in the square, and grocery shopping and picking up the kids with my wife. This is a pretty good life.

Unlike people like Gu Hongshun who have experience in business, as long as their health permits, they want to find something to do even when they are idle, and see what ways they can make money.

These days, Mr. and Mrs. Gu spend more time managing their agritainment business, and they are full of energy.

Tan Lihua and his wife were both state-owned enterprise workers. From the moment they started working, they were always thinking about what it would be like to retire. After getting through the adjustment period, they were able to easily adjust their mindset. Zhang Suzhi was like that, and so was he.

"Why are you back so early today?"

It's Tan Jincheng who's back. It's been almost a month. This son runs to Meishan Island every day, leaving early and returning late, always on time, just like a proper office worker.

"Something came up here later, so I came back early."

Tan Lihua thought for a moment and replied, "Is it that Singles' Day?"

"Yes, Dad, you know that too."

Comrade Tan smiled. How could he not know? The Zhang couple had been talking about Singles' Day the most lately, and his son was busy with it.

They were preparing inventory, contacting couriers, and making emergency preparations—basically, they seemed to be taking it very seriously.

Tan Lihua nodded: "Then I'll pick up Jin Yue today. You go and do your work."

"Okay, don't cook dinner for us. Qingqing will be going to the company later too."

Seeing his son's energetic and enthusiastic demeanor, the old father was extremely pleased. His son had finally managed to build the car he had been dreaming of, and it seemed to be very popular.

"Should we also spend money to buy a few cars to boost his sales?"

Five brothers-in-law, two brothers, and a sister—whether they can drive or not is another matter, but if they're going to give gifts, they can't show favoritism.

Goodness, that's over a million! But he's not short of money, so let him give it away; it'll support his son's career.

Putting down his work, Tan Lihua said to Li Yaohui, who was standing next to the car, "Little Li, can you do me a favor?"

Tan Jincheng went home to wait for Gu Qingqing to return from school. The two of them were going to go to Orange Technology together in a little while. Gu Qingqing hadn't been to Orange Technology since she stepped down from her position.

In addition, her personal shareholding is only 4.25%, and she can liquidate her entire stake and cash out of Orange Technology at any time.

Sun Tongyu personally invited me to visit Orange Technology this time.

In 2008, Jack Ma insisted on establishing Taobao Mall. However, under immense pressure, Taobao Mall, which did not have an independent domain name, ended after only six months of trial operation by dissolving the business unit and merging into Taobao.

Until August of this year, Taobao Mall was reinstated, and Taobao's CFO Zhang Yong concurrently served as the general manager of the mall. This was followed by the collective resignation of several senior executives on September 9.

Sun Tongyu, the former president of Taobao, was well aware of just how intense the power struggle was.

Standing outside the situation, Sun Tongyu could see the changes in his former employer more clearly. The changes in business were just the surface; in reality, it was more about the power struggle among the shareholders.

The online store was reopened, and with the mass resignation of senior executives and the massive Double Eleven promotion, it's clear that Jack Ma won the first round.

However, Sun Tongyu was fully aware of the dangers involved. What did September represent for Ali? It was the anniversary celebration. This year marked the tenth anniversary of Ali's founding, and Ali had held a grand tenth anniversary celebration back then.

According to the agreement, starting in October 2010, Yahoo, which holds a 39% stake in Ali, will increase its voting rights from 35% to 39%, while the corresponding management voting rights will decrease from the current 35.7% to 31.7%.

If that's the case, the company risks changing hands.

Also in September of this year, Yahoo unexpectedly sold its 1% stake in Alibaba, citing the ridiculous reason of wanting to boost its own stock price, a move that caught Alibaba's management off guard.

"What are you thinking about?"

When Tan Jincheng and Gu Qingqing entered Sun Tongyu's office, Sun Tongyu was still deep in thought and didn't even notice them.

"Ah, Mr. Tan and Mr. Gu are here. Mr. Gu, it's been a long time."

"haven't seen you for a long time."

Shaking his head, Sun Tongyu didn't hide his inner thoughts: "I'm thinking about what happened at my old employer this past year."

"Oh, you mean Yahoo? Don't worry, it's just past its prime, the Jack Ma will win."

Tan Jincheng said indifferently, "As for why I'm so sure? That's simple, I already knew the outcome."

"Mr. Tan, you're so confident? Speaking of which, you're truly farsighted. Neither Flashpoint nor Orange Technology has any equity dispute." Sun Tongyu was surprised that Tan Jincheng was so certain. In his view, such a struggle for company control was extremely dangerous, and the management and founders were at a disadvantage, both in terms of shareholding and future agreements.

"Hmm? You're overthinking it. If someone offered me $1 billion back in 2005, I'd give them 39% of the shares, let alone 39% of the company."

That was in 2005, not 2015!
In 2005, 1 US dollar was roughly equivalent to 8.2 yuan. However, in terms of actual usage, the two were not even in the same league. Yahoo, with its deep pockets, offered 10 billion US dollars in one go. Who wouldn't be tempted?

If someone gave me $20005 billion in 10 to build a Khumba car, I'd just sit back and relax.

Sun Tongyu smiled, knowing that his boss was joking. How could he not know how much his boss valued equity? FlashTech's open and covert shareholding definitely exceeded 50%.

Even for an internet company like Orange Technology, his shareholding and associated voting rights can absolutely guarantee that he has complete control over the company.

Equity arrangements that used to seem out of place for internet companies during the financing process now appear to save a lot of trouble.

However, it's also true that a company that is short of money and could go bankrupt at any time could not resist the temptation of $10 billion, especially since Yahoo was at its peak at that time, and what it brought was not just $10 billion.

"Actually, Mr. Ma did the right thing. Things are different now. Yahoo's existence has become an unstable factor for Ali's development. Nobody wants a de facto ruler to sit on their head and have their success stolen in the end."

What was a very worthwhile deal in 2005 has, by 2009, seen the two companies drift further apart strategically, and Yahoo's global performance in recent years have changed so drastically that the harmonious and mutually beneficial relationship of the past is long gone.

If the struggle for controlling stake is not resolved in the early stages of growth, it will only become more and more difficult for the company to develop in the future.

The capital market is all about competing interests. Sun Tongyu understood the meaning behind his boss's words, just like how Orange Technology and his boss no longer include Qiming Venture Partners in their industrial investments.

Qiming Venture Partners did provide significant assistance to Orange Technology during its initial funding round, but as the company grew, Qiming Venture Partners could no longer keep up with its pace.

Over the years, Qiming Investment's investments haven't yielded much profit, and its network is far inferior to Tencent and Sequoia Capital. It's unrealistic for Tan Jincheng to bring him along for every good opportunity out of old feelings.

Even Zhang Xupeng's relationship with Tan Jincheng was limited to the apparel business. The development of Flashcar had nothing to do with Zhang Xupeng. The small number of shares he held in the parent company were obtained by exchanging a large number of Jinpeng shares.

Sun Tongyu's relationship with Orange Technology is actually a collaborative one, and he will leave the company one day when he has completed his mission.

Before 2007, Sun Tongyu might have had some illusions, but after that, he didn't. In the business world, there is really only profit. The difference is that some people part ways amicably, while others make things ugly.

The "almost together, almost apart" ending, like that of President Tan and President Zhang, seems to be the best outcome.

"So, how are things going? What preparations have you made for this direct confrontation with your former employer?"

Tan Jincheng was too lazy to continue the discussion, as the topic was somewhat gloomy.

When it comes to business, Sun Tongyu is not afraid at all. He smiled and said, "We have made all the necessary preparations, and we are not afraid of them. However, boss, it's a bit like you're aiding the enemy by having GXG participate in Taobao's Double Eleven."

"Haha, how can this be considered aiding the enemy? There will be more competition like this in the future. I'm just giving you an example in advance."

"Just kidding. Orange Products Club is actually a bit different from Taobao Mall. Our model is similar to JD.com's self-operated model. Taobao Mall is not our competitor."

"However, there is still a high degree of overlap in our business operations, so you need to be prepared to deal with it and leverage your strengths."

Yes, the models are different, but their businesses overlap significantly. They both mainly sell apparel, and this brand is currently one of the most profitable in the online shopping industry, with large sales volume and high profits, comparable to Jingdong's 3C products.

"What does President Gu think?"

Sun Tongyu had his own ideas, but he still wanted to hear the former CEO's opinion, as he was well aware of Gu Qingqing's abilities.

Gu Qingqing smiled and said, "President Tan still holds the title of president. I don't even work for the company anymore, so what opinions could I possibly have?"

"Just chatting."

Sun Tongyu insisted, and Gu Qingqing couldn't refuse: "Let's focus on the differentiated market, just like Yuechi's SUV. Although the SUV market is not as big as the sedan market, it can still be very promising if done well. We are definitely not qualified to compete directly with Taobao. What we need to do is to leverage our strengths and take differentiation to the extreme."

What is differentiation? Orange Products offers brand-name flash sales, allowing you to buy top-tier brands for less money and satisfy your shopping needs.

On the other hand, Orange Goods, which maintains a strategic partnership with SF Express, must be superior to any seller on Taobao Mall in terms of logistics and transportation, not even GXG.

OrangePin could also leverage its logistics capabilities. During major e-commerce events, the volume of deliveries and pickups by couriers increases exponentially. OrangePin has two years of experience in this area and can outperform its competitors.

The internet is a public space where even the smallest things can be magnified. In time, Orange Products won't need to do its own public relations; netizens will be able to thoroughly expose its merits and demerits.

"Speaking of differentiated competition, congratulations to the boss of Yuechi for its great sales."

The Yuechi A1 has recently gained popularity after Tan Jincheng was listed among the top 30 on the Forbes list, and sales are getting better and better. The 4S store in Beicangwei is packed with people every day.

The world's youngest billionaire, and a self-made man at that, Mr. Tan doesn't care or want to publicize it, but the buzz surrounding him is simply unstoppable.

Some state media outlets have also joined in, adding fuel to the fire. Don't you Americans often boast about the American Dream and how outstanding your young people are?

We have that too!

(End of this chapter)