I'm in the county town, and you say I'm a big shot?

Chapter 682 681 Internal Rift—The Bottomless Pit of Costs and the Life-or-Death Debate on Strategic Direction
In the meeting room, the nine directors sat upright, a far cry from the relaxed atmosphere that followed the agreement reached with the Jinghai City government.

"Everyone has seen the draft agreement signed by Deng Ye's team and relevant departments in Jinghai City. Now, let's share our opinions."

There was a moment of silence in the conference room. After a while, Gan Jiawei spoke up. He did not answer Fang Qingye's question directly, but looked at Wang Chenyang sitting opposite him.

"Chenyang, you are the company's CFO. If we implement this plan, how much will our company's annual cost increase?"

Wang Chenyang's expression was not good. He glanced at Fang Qingye, who was sitting at the head of the table, and said with difficulty:

"According to our calculations, if the plan is fully implemented, just clarifying the identity information of all riders and completing their compliant social security enrollment will directly evaporate more than 5600 million yuan of the core local business's operating profit (OP) in the first year due to our direct technology investment, human resources costs, and additional social security expenditures."

“5600 million may not seem like much,” Gan Jiawei continued, “but have you noticed that the estimated net profit for the Jinghai region in 2015 is only around 5700 million? That means if this plan is implemented, the Jinghai region’s profit will be almost negative!”

"But this is just a pilot program!" Gan Jiawei raised his voice. "If it's rolled out nationwide, all of Ele.me's local business operating profits will be wiped out!"

Gan Jiawei's words sparked a lot of discussion. In fact, those present had also noticed this problem from the initial plan and the reports provided by the finance department, and the joy of reaching an agreement with Jinghai City vanished instantly.

“We can appropriately increase revenue streams, including commissions and advertising fees,” Wang Chenyang argued.

"Increase?" Gan Jiawei sneered. "Since our merger with Meituan, we have gradually reduced subsidies for merchants and consumers, resulting in a decline in the number of merchants and consumers in the first half of 2015! Don't think that Ele.me can rest easy just because it has swallowed Meituan. There are still Baidu Waimai and Taodiandian in the market!"

Eleme is acquiring Meituan!
While this is indeed the case, company executives rarely dare to say it in public.

"Gan Jiawei, watch your words!" CEO Zhang Xihao reprimanded him without any politeness.

Gan Jiawei glanced at Zhang Xuhao, but said nothing.

“Jiawei has a point.” The speaker was Zhou Junchuan, the executive director, who was sitting next to Gan Jiawei.

Although Zhou Junchuan was a director, he rarely spoke up at board meetings, so his opening remarks naturally attracted everyone's attention.

“Local business operations are our core business, accounting for 70% of our company’s total revenue. If we implement this plan, the profit that Ele.me has worked so hard to achieve will suddenly turn into a loss, which is not a good thing for either the company itself or its investors.”

The investors themselves!
Zhou Junchuan's words are clearly a reminder that we must consider the interests of investors!

"That's what I mean too," Gan Jiawei added. "We can't just consider the riders' interests; we must put the company's and investors' interests first!"

"I have never considered local business operation profits, especially food delivery profits, as Ele.me's core profits." At this moment, Fang Qingye, who was sitting at the head of the table, slowly spoke.

His words surprised everyone present.

Local business operations refer to "food delivery" and "in-store consumption," including commission income and marketing and technology service fees: restaurants pay advertising or promotion fees to Ele.me in order to get better rankings and more exposure on the app.

From Ele.me's inception to its eventual merger with Meituan, this has always been the company's top priority for its operations team. But today, Fang Qingye stated: "I have never considered local business operating profits as Ele.me's core profit!"
How could this not surprise everyone? "Since we're on this topic, I'll digress a bit today," Fang Qingye said eloquently.

"Ele.me's core business, food delivery, isn't primarily about generating huge profits, nor is it likely to do so. Its main purpose is to build an ecosystem and create demand. Meanwhile, in-store dining, hotels, and travel are probably Meituan's most profitable business segments! Additionally, our pilot P2P lending platform is also a key area for Ele.me's future profit growth!"

Fang Qingye wasn't making things up; in reality, Meituan ultimately made a profit using this very strategy!

Simply delivering food doesn't make money.

Fang Qingye's words sparked another round of whispers among the crowd. At this moment, Zhou Junchuan hesitated for a moment before speaking again:
"But Chairman Fang, according to the data provided by the finance department, revenue from in-store, hotel and travel services only accounts for 30% of Ele.me's total revenue, and P2P lending is just starting out. Moreover, the government has already tightened its control over P2P lending."

"That's right, Mr. Zhou is right. We can't bet on uncertain profit projects in the future and take on the heavy burden of social security! That would be irresponsible to both the company and investors!"

Fang Qingye frowned slightly upon hearing this.

These two seem to be putting on a charade today, singing in unison.

When did you become so close?

He looked at Gan Jiawei and said, "Mr. Gan, you keep mentioning investors. Is it your personal 0.1% stake in the company, or are you representing Alibaba?!"

As soon as Fang Qingye finished speaking, everyone else looked at Gan Jiawei.

Although people privately believe that Gan Jiawei represents Alibaba, it has not been said publicly, and there has been no public authorization from Alibaba.

Gan Jiawei paused for a moment, but then resolutely said, "I represent myself and Alibaba! Alibaba will soon authorize me, and all the information will be provided to the board of directors soon."

“Very good.” Fang Qingye chuckled: “Our board of directors now has representatives from the two major internet companies, Tencent and Alibaba. I also hope that the directors of the two companies can provide strategic opinions and suggestions to Ele.me. Just on this matter…”

Fang Qingye suddenly turned to look at Michel: "Mr. Michel, what are your thoughts on this matter? Or rather, what is Tencent's stance on this matter?"

Milside paused, then habitually rubbed his big nose before saying, "But personally, I really admire your apparent attempt to meet the needs of everyone—the government, the riders, and the idealism of your 'social responsibility' vision."

"But as the executive shareholder, Tencent's representative has to remind you that your approach is somewhat risky, and we can find a more prudent solution."

Neither of the two major companies supports it!
"Mr. Michel, this plan is the best solution that Deng Ye's team and the Jinghai Municipal Government could come up with after arduous negotiations." Fang Qingye's tone was calm yet firm.
"It does increase costs for the company, but we should see that it is very beneficial to building Ele.me's brand value! I want the whole society to see that Ele.me is a very responsible company! This is very important in China, especially in the future!"

"As for protecting investors' interests, I will explain this to the heads of major investment companies such as Ma Yun and Ma Huateng."

Fang Qing insisted on forcing a vote to pass!

(End of this chapter)