Return to 1958 and build a century-old giant

Chapter 951 Preparations for the Mainland Supermarket Industry

After DYB, things returned to normal in Yanjing.

Yang Wendong also met with Kester, the Englishman in charge of the Mini project in Yanjing: "Kester, you know Volkswagen in Shanghai, right?"

“Boss, hello.” Kester replied, “Of course I know, they’ve already built some cars, and I even went to see them.”

"Okay, that's good. I've reached some agreements with the people and government there." Yang Wendong nodded and said, "I'm thinking of having the suppliers we've been cultivating make parts for them. What do you think?"

Kester thought for a moment and asked, "Boss, if I may ask, why do we do this? SAIC Volkswagen is our future competitor, isn't it?"

Yang Wendong shook his head and said, "They are indeed competitors, but in this industry, have you ever seen anyone who can monopolize it? Besides, the largest source of cars in China is still imports. What we need to defeat first is this market, not SAIC Volkswagen."
Furthermore, if we can establish a supply chain in Yanjing City, then Volkswagen and the Shanghai municipal government can certainly do the same, provided they pay a certain price.

It's only because we already have mature technology, factories, quality management, personnel, etc. in Yanjing that they want to cooperate with us in order to pursue maximum efficiency;
But isn't this also an opportunity for us? Mini's market share in its home market of the UK is not high, which means that this model inherently has significant limitations and its potential is not very high. However, the auto parts industry has virtually no upper limit, something you should know.

When he acquired Mini and when he allowed Mini to invest in mainland China, he already knew that Mini could never become a first-class car company, whether globally or in mainland China.
It was precisely because the British government was aware of this that they were willing to sell it to him; otherwise, he wouldn't have had this opportunity.
At that time, he only wanted to get a ticket to the automotive industry. Although it was not enough, it was better than nothing. After all, he had no hope of acquiring a giant company at that time.
On the one hand, there is a lack of funding; on the other hand, no government would agree to its core enterprises being acquired by foreign capital.
He wouldn't even dare to take on a Chrysler that was on the verge of bankruptcy; he didn't want to experience the fate of the future Alstom CEO.

Kester understood his boss's meaning and said, "Okay, I understand. I will get all the suppliers to cooperate with Volkswagen."

Mini Motors' control over its suppliers goes beyond just industrial orders; it also benefits from early foreign exchange support from Hong Kong capital, including equipment imports and personnel training, which allows it to hold significant stakes in these suppliers.

Although the money came from Hong Kong capital, it was just money; as long as there was a return, that was enough. The management of these supplier companies was naturally handed over to Yanjing Mini Company.

“Okay, a team from Hong Kong will be involved in the specifics of this matter. You can negotiate it yourselves.” Yang Wendong didn’t ask too many questions about the process, and then asked, “Have we started supplying BAIC Jeep yet?”

In Yanjing, there is not only BAIC Mini, but also an American-invested automobile company, AMC, whose products are Jeeps.
Those born in the 80s and 90s should remember that when they were young, two cars were the most famous: the Santana and the Jeep.

Kester shook his head and said, "No, I've been to Jeep a few times. The Americans don't seem to be interested in localization. They just want to import parts from the US, assemble them in the mainland, and then sell them."

Yang Wendong laughed and said, "Alright, if they really don't want to, then forget it."

As in the past, Jeep in the United States never intended to develop the automotive industry properly in mainland China, but instead regarded it as a market where it could dump its products at will.
This practice has severely depleted the mainland's foreign exchange reserves, and eventually next year, mainland customs will block the import of Jeep parts.

The original intention of the mainland was probably to force Jeep to localize its parts as soon as possible, like Santana and other foreign car brands. However, Chrysler, which acquired Jeep, instead used international public opinion to put pressure on the mainland.

This is why Chrysler, a top ten global automaker and a top three U.S. automaker, was barred from the Chinese market in the future. They were simply banned from entering and were denied license plates. Jeep vehicles also gradually declined after 00.

Kester then asked, "Boss, I heard that the mainland has also reached an agreement with Peugeot of France to invest in and build a factory in Guangzhou. Should we also cooperate with them? Like Volkswagen?"

"Peugeot?" Yang Wendong thought for a moment and said, "That's fine, let's treat them the same."

Peugeot was one of the earliest cars to enter the Chinese market, and it was from the same era as the Volkswagen Santana.
Under normal circumstances, it could have become one of the domestic car giants, but the French government made a fatal mistake, and French cars also declined in China.

However, Peugeot didn't have the opportunity. There were still quite a few in Guangdong. In the 90s, GAC would still cooperate with many international car brands and try to build some industrial chains there first, which wouldn't hurt.

“Okay, boss.” Kester continued, “Here are the sales figures for Mini cars for the first half of the year. Please take a look.”

"Hmm, let me see." Yang Wendong took the accounts and examined them carefully. After a while, he said, "1.3 units were sold domestically, and over 8000 units were exported. Is this enough to achieve a foreign exchange balance?"

Kester said, "It's still a bit short. Although we are trying our best to localize, it will still take some time. The main reason is that we can't manufacture some important parts in mainland China and we need to import them from Europe."

However, judging from the current trend, localization is increasing and exports are also growing. I estimate that by next year or the year after, foreign exchange will be balanced.

“Okay, domestically, there is still a lot of concern about foreign exchange balance when it comes to purchasing cars. As long as we do this well, there will be fewer restrictions from the authorities on us in the future, which will be very beneficial for us to take the lead in the market.”

Yang Wendong nodded and said;

Throughout the 80s, any foreign company that wanted to do business in China had to consider the issue of foreign exchange. If it consumed too much of the country's foreign exchange, it would definitely be restricted.

However, foreign investors wanted to enter the mainland market to earn foreign exchange, which created a contradiction, resulting in very few foreign capital investments in the mainland in the 80s.

It wasn't until the 90s, when the domestic and international foreign exchange situation eased, that the country ushered in a period of rapid development.

On October 6, Yang Wendong met with Zhang Guangdou and Director Shao of the Ministry of Forestry again.
Director Shao said, "Mr. Yang, our department has agreed to your intention to jointly invest in zoos across the country. However, this matter still needs to be submitted to the State Council for approval."

"Okay, thank you very much, Director Shao," Yang Wendong said with a smile;

He doesn't use his connections with the central government for many things. He can't possibly tell those people every time he does business in the mainland; that would be too wasteful of his connections.

At his level, he wouldn't resort to personal connections if a problem could be solved with money and proper procedures. Therefore, for normal investments, he would communicate with the relevant people and follow the proper procedures. If the central government agreed, they would agree; if not, so be it. Only when it involved major projects would he personally communicate with the top leadership.

Director Shao added, "In addition, regarding your request about pandas, our department agrees in principle, but pandas are national treasures, so the central government's approval is still required."

It's worthwhile to lease two pandas to Hong Kong, and given the recent relationship with Hong Kong, we can also get a few South China tigers as an extra.
This matter is beneficial to both parties;
But everything still has to be decided by the central government, and the central government may have a different perspective on things than they do.

"Okay, then let's wait for news." Yang Wendong nodded;
He felt there shouldn't be any major problems. The South China tigers he owned were a unique species in the world, and only this number of tigers could successfully reproduce.

Director Shao said happily, "Thank you very much, Mr. Yang. I wonder if we could send someone to Hong Kong to find suitable tigers?"

“Okay, you can go ahead. My South China tigers are mainly kept in Hong Kong,” Yang Wendong agreed.
As an endangered species, South China tigers have been released into zoos in several other countries and regions, but the majority are still in Hong Kong.

I'd rather spend more money to support him in Hong Kong;

In addition, the tigers kept in other countries are all single-sex adult tigers. If they are to be bred, they will be sent back to Hong Kong. The same goes for the cubs, who are kept only in Hong Kong.
This is to avoid the huge loss if any government enacts laws restricting the movement of South China tigers. By doing this, even if other countries do enact laws, all they will get are adult tigers that are infertile.

He even considered buying a large tropical island to house the tigers, but tigers have very high space requirements, and there are only a handful of islands that size in the world. Coupled with the risk of being hunted, the idea was ultimately abandoned.

Director Shao said enthusiastically, "Okay, I'll take some people to Hong Kong right away."

"Hmm." Yang Wendong then looked at Zhang Guangdou and said, "Mr. Zhang, could you introduce me to a leader from the Ministry of Commerce? I'd like to discuss Carrefour's investment in China with him."

“Carrefour? Mr. Yang wants to build a supermarket in China?” Zhang Guangdou immediately realized what was going on and said, “Okay, I will make the contact.”

Yang Wendong said, "Thank you very much, Mr. Zhang."

Zhang Guangdou smiled and said, "Mr. Yang, you're too kind. Over the years, you've been a great help to our Xinhua News Agency in Hong Kong. These small things are just what I should do."

Three days later, Yang Wendong followed Zhang Guangdou to the location of the Ministry of Commerce, where he met and got to know a group of leaders.
After exchanging pleasantries, they entered an internal conference room;
At the start of the meeting, Yang Wendong went straight to the point, saying, "Director Zhao, everyone, I'm here today to inquire whether I can build a supermarket in the mainland."

Many people present fell silent. Director Zhao, who was in charge, said, "Mr. Yang, current domestic laws do not allow foreign investment to build supermarkets in China, except in the four special economic zones."

“That being said, reforms always have to be tried gradually. Aren’t some foreign-invested catering companies already able to invest in China?” Yang Wendong continued, “My Carrefour company purchased hundreds of millions of Hong Kong dollars worth of goods in China every year before the reform and opening up.”

After the reform and opening up, this figure rose even faster, reaching at least one hundred million US dollars last year. If we're just looking at it from the perspective of foreign exchange balance, wouldn't it be fair for me to open some Carrefour supermarkets in China?

Carrefour has long since reached its development limit in Hong Kong, but in recent years it has continued to expand in Southeast Asia;
However, just like Walmart and other supermarkets in the past when they entered markets outside the United States, Carrefour also faced serious difficulties adapting to the Southeast Asian market.

It's not just a matter of operations; there are also various local policy issues, and even powerful companies can't suppress local bullies. Even American companies don't have many good solutions to this problem.
Therefore, if Carrefour wants to gain access to a familiar and stable market, it can only do so in China.

Director Zhao quickly said, "Mr. Yang, first of all, we are very grateful to Carrefour for its procurement in China over the years, but it is not the right time to open up policies to foreign supermarkets."

"Hong Kong capital isn't considered foreign capital, is it?" Yang Wendong asked.

Director Zhao didn't answer immediately, as this question was rather sensitive at this time of year.

Yang Wendong continued, "Director Zhao, everyone, I don't want the country to change the law, but I hope that, like the foreign-invested catering industry, some overseas capital can be allowed to conduct pilot programs in a few domestic cities."

This supermarket is much more complicated than the catering industry. From preparation to opening, it takes at least one or two years to get it done. During this time, various departments in China can also observe it appropriately.
Furthermore, introducing overseas supermarket models can also drive the development of the domestic supermarket industry, right?

"Well then, Mr. Yang, we need to discuss this matter internally." After a brief, quiet discussion with the others, Director Zhao said, "If possible, I wonder which cities Mr. Yang would like to pilot this program in?"

Yang Wendong said, "In coastal or riverside cities like Beijing, Shanghai, Guangzhou, Ningbo, and Hankou, I only need to open one store in each city first."

In fact, even if foreign investment is allowed to build supermarkets in China and overseas, he can only build a few at first.

On the one hand, it is necessary to be familiar with the market; on the other hand, it is also necessary to continuously cultivate talent.

This is the only way to achieve rapid expansion if there is room for expansion in the future;
Whether it's Carrefour in Hong Kong or Walmart in the United States, their progress was slow in the early stages due to various limitations. However, once they were fully prepared, their progress accelerated.

If China had made preparations earlier, it could have started to expand its economy rapidly in the 90s.

“Alright, if it’s just a few supermarkets, it might not be a big problem.” In the end, Director Zhao nodded and said, “Please wait a while, Mr. Yang. I will inform you as soon as I have the results.”

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