Rebirth in Hong Kong: From Dessert Shop to Industrial Empire

Chapter 85 The Shortcut to Zhongnan Mountain (Seeking monthly votes and recommendations to continue reading!)

In Chen Bingwen's view, while bottle cap patents are valuable, they are ultimately a technological barrier.

Pepsi's global channels are a golden route to reach billions of consumers, and a shortcut for Chen Ji to achieve brand globalization and become a truly international food and beverage giant.

No matter how high the licensing fee is, it's just money for "selling shovels," while entering the distribution channels is the ticket to "mining for gold."

Chenji products can be sold continuously through Pepsi's channels, and their potential revenue is several times that of the licensing fee.

This is equivalent to exchanging a technology patent for decades of continuous revenue and brand growth potential.

Upon receiving PepsiCo's request for a meeting, Chen Bingwen immediately devised a plan to secure the greatest possible benefit for Chen's Group.

Pepsi's extensive global sales and distribution network will undoubtedly be Chen Ji's biggest asset.

If we can use the bottle cap patent license to exchange for Pepsi's shared channel resources, or even just channel resources in certain regions.

Therefore, the newly developed "Jinba" functional beverage can leverage Pepsi's giant ship to directly enter the blue ocean of functional beverages in core markets such as North America and Europe.

This is far more meaningful than collecting a fixed licensing fee.

After Chen Bingwen finished speaking, the conference room fell into a brief silence.

David Ross's smile vanished completely.

He leaned back in his chair, deep in thought for a long time, before finally speaking slowly:
“Mr. Chen,” he said, looking directly at Chen Bingwen, “I admire your ambition and, no, I should say, your great courage.”

But we must face reality.

"What you have is a patent package of bottle cap designs that, according to our initial assessment, are indeed innovative and practical."

Frankly, it's great, especially for our goal of improving the user experience.

Ross then changed the subject, saying, "But what you're trading it for... frankly, Mr. Chen, is far beyond the value that the patent itself can represent."

“PepsiCo has established a vast and complex sales and distribution network in more than 120 countries and regions around the world,” Chen Ziming continued, “entering these mature markets, especially the core channels in North America and Europe.”

What's needed is more than just a patent license.

As soon as he finished speaking, Emily Carter, the general counsel sitting on the other side, added: "Mr. Chen, your patent is a valuable asset, and we are willing to have a serious discussion about its commercial value."

This value can be realized in several ways: a one-time buyout, a sales-based royalty licensing fee, or a limited exclusive partnership.

These are all standard and workable paths.

However, sharing channels means that PepsiCo's vast business system will open its doors to Chen Ji's products free of charge, which is not only extremely disproportionate in terms of valuation, but also poses huge obstacles to our internal control and compliance.

We cannot explain this to the board of directors and shareholders.

David Ross nodded slightly, acknowledging Emily's statement. He looked at Chen Bingwen and said frankly, "Mr. Chen, I understand your ambitions."

We have indeed seen the potential of Chen Ji.

However, business cooperation needs to be based on a realistic and measurable exchange of value.

We recognize the value of your bottle cap patent and are willing to pay a substantial price commensurate with it.

However, opening up core channels involves the very foundation of PepsiCo's entire business system, and its value, frankly speaking, goes far beyond what a single patent can cover.

PepsiCo is willing to pay a very competitive price for global exclusive licensing, a figure sufficient to generate a huge return on capital for Chen Ji in the short term.

Ross's stance is very clear: patents are negotiable, prices are acceptable, but distribution channel binding? Forget about it!
Chen Bingwen listened quietly, the faint smile on his face never fading.

He waited until David Ross finished speaking before slowly opening his mouth, "Mr. Ross, I fully understand Pepsi's concerns and position."

As a global giant, you have well-established rules and a massive system to maintain.

He then changed the subject and said with great certainty, "But Chen Ji's position is equally clear and will not change."

“So,” Chen Bingwen paused, then smiled faintly, “it’s not an exclusive patent license, but rather a bundled channel partnership.”

This is the only feasible way to initiate strategic cooperation between our two parties.

If Pepsi does not agree with this approach.”

He paused slightly, his gaze calmly sweeping over the three Pepsi members: "We can only express our regret."

Chenji will continue to seek partners who share our values ​​and are willing to work with us to create a better future.

I believe that in this global market brimming with opportunities, there will always be discerning strategic investors.

After saying that, Chen Bingwen stood up decisively, and Ling Peiyi and Fang Wenshan also stood up immediately.

Chen Bingwen nodded slightly, neither humble nor arrogant, "Although we cannot reach a consensus at present, there are always infinite possibilities in the future."

Goodbye! "

Without any further pleasantries, Chen Bingwen and his two companions turned and left the Peninsula Hotel conference room without hesitation.

The moment the door closed.

Ross growled, rubbing his temples. "God! Is this young man incredibly naive, or does he simply think we're all fools?"

Chen Ziming had been observing Chen Bingwen throughout the meeting. Now, he poured himself another glass of water and said with a serious expression, "David, he's not naive."

He was too ambitious.

He saw that we wanted to improve the user experience, so he tried to use his bottle cap patent to leverage the entire process.

Ross sat up straight and said to Chen Ziming, "Putting aside that young man's arrogant demands, just considering the bottle cap itself, assuming we have to circumvent it or be forced to adopt it, what substantial impact would that have on us?"

Chen Ziming said: "In North America and parts of Europe, bottle caps being difficult to open is one of the top five pain points that consumers complain about, especially among women, the elderly and children."

If competitors adopt Chen Ji's bottle cap patent first.

Preliminary estimates suggest that, in the worst-case scenario, the first year could result in a potential loss of 2%-5% of sales in core regional markets, amounting to an annual loss of approximately US$2500-4000 million.

If we choose to develop an alternative in-house, it is conservatively estimated that we will need to invest an additional $1500-2000 million in research and development, and it will take at least 18 months.

If we ultimately cannot circumvent the restrictions and will need to pay Chen Bingwen patent licensing fees, based on our estimated market value and size, the cost per bottle will increase by approximately 0.05 to 0.08 US cents. Over a standard ten-year licensing period, this would amount to roughly $400 million.

"David, the biggest risk compared to losing sales is losing the initiative."

Coca-Cola's legal team is certainly no less obtuse than we are.

If they were to reach some kind of agreement with Chen Bingwen first, the losses to Pepsi would be catastrophic, and not something that could be recovered in the tens of millions of dollars.

Its potential value loss may far exceed the figures we have currently calculated.

If we agree to Chen Ji's terms and use his bottle cap patent, we'll earn at least an additional $3500 million to $5000 million annually. This doesn't include the intangible benefits such as enhanced brand image, increased customer loyalty, and optimized channel relationships.

“3500 million to 5000 million per year?” David Ross looked at Chen Ziming with disbelief. “How confident are you about that figure?”

Chen Ziming met David Ross's gaze without flinching: "David, this is the most conservative estimate."

Based on our marketing department's in-depth research into the pain points of consumers in core markets in North America and Europe.

The negative experience caused by difficult-to-open bottle caps directly impacts repurchase rates and brand favorability. If Coca-Cola were to preemptively…

He paused, then emphasized, "Then it's no longer a matter of how much money we make, but a permanent loss of market share."

Once users get used to a better experience, trying to bring them back will be astronomically costly.

Emily frowned and said to Chen Ziming, "But opening up core channels involves the entire business foundation of Pepsi!"

The board might not approve an agreement that trades patents for distribution channels, which would be tantamount to handing over the moat that Pepsi has built up over decades!

“It’s not about handing it over, Emily,” Chen Ziming retorted. “It’s strategic collaboration, it’s an exchange of resources.”

What Chen Bingwen wanted was not ownership of Pepsi's distribution channels, but rather access to the market.

We gave him a springboard to enter mainstream channels in North America and Europe, and he gave us a weapon to completely solve user experience pain points and suppress Coca-Cola! It's a win-win situation.

Chen Ziming's words made David Ross frown.

"Do we really have to open up our distribution channels to Chen Ji?"

The CEO's office on the top floor of the Weiye Building.

Chen Bingwen, Ling Peiyi, and Fang Wenshan are reviewing the negotiation process that just happened.

Ling Peiyi said with a solemn expression, "Mr. Chen, Pepsi's attitude is tougher than expected."

He straightened his suit cuffs and laughed, "As expected, the giants have their own arrogance. They think that throwing out a considerable licensing fee will make us grateful, but they forget who holds the initiative."

Fang Wenshan pushed up his glasses and said, "Ross's statement completely went beyond the value of the patent itself, exposing their bottom line."

In their eyes, we were just a small workshop, and the patent was a gold nugget we'd stumbled upon, something we should sell cheaply to them, the discerning big buyer.

"Then let them continue thinking that way."

Chen Bingwen said, "Pepsi's attitude is very clear: they want patents, but they will never easily open up core channels."

The deadlock in negotiations was expected, but it has given us a window of opportunity.

He stood up, walked to the huge map of Hong Kong Island, and pointed heavily at the location of the Sha Tin factory: "Whether it's Pepsi or Coca-Cola, what they value is the tool value of the bottle cap patent."

But Chen's future cannot be limited to selling shovels.

Jinba is our strategic mining machine for leveraging the global market.

Moreover, besides functional beverages, I also plan to develop another product that can break through the limitations of bottled sugary drinks in terms of form and distribution channels.

"Pepsi's hesitation period is the golden time for Jinba to seize the market."

Regardless of which company we ultimately reach an agreement with, before that, we need to get Jinba into mass production, distribution, and market launch.

“Mr. Chen, I understand!” Ling Peiyi immediately grasped the point and smiled, “The bottle cap patent is the key to opening doors, but Jinba is our own gold mine.”

Therefore, Pepsi's disagreement with your conditions at this meeting is actually a good thing for us.

"Yes, not only PepsiCo, but we need to delay as much as possible before Jinba goes into production, so as to make sufficient preparations for Jinba's listing."

On the contrary, we ourselves must also seize the time and complete the necessary preparations and procedures as soon as possible.

"Okay, Mr. Chen."

Ling Peiyi nodded. "I will urge all departments to implement your requirements."

After explaining the tasks Ling Peiyi needed to do immediately, Chen Bingwen looked at Fang Wenshan and said, "Mr. Fang, please also expedite the patent application process!"

"The application has been submitted, and you should receive a response within a week!"

Vincent Fang responded immediately.

the next day.

March 1978, 9, early morning.

In the CEO's office on the top floor of the Weiye Building, Chen Bingwen, as usual, picked up a cup of freshly brewed hot tea and glanced at the newspapers that had been delivered to his desk.

The bold headline on the front page of the *Business Daily* instantly caught his eye:
"Shipping magnate makes his move! Y.K. Pao announces he has acquired a 20% stake in Wharf Holdings, aiming at British-owned Jardine Matheson!"

The subheading below reads: "Jardine Matheson caught off guard as the takeover battle for Wharf Holdings erupts!"

Chen Bingwen's hand, holding the teacup, paused in mid-air for a full three seconds.

coming!

This classic acquisition battle, destined to be recorded in the history of Hong Kong and even the world's business, finally arrived as scheduled after he flapped his wings!

He quickly put down his teacup, picked up the newspaper, and read the report word by word:
"...Sir Y.K. Pao, Chairman of Worldwide Shipping, officially announced at a press conference yesterday that his personal and family trusts have purchased approximately 20% of the shares of Wharf Holdings Limited on the open market through multiple accounts, becoming the company's largest shareholder."

Sir John Paul II stated that the increased stake in Wharf Holdings was based on his strong belief in the long-term value of its core properties. A Jardine Matheson spokesperson responded that they were surprised by Sir John Paul II's move and were urgently assessing the situation, reiterating Jardine Matheson's position as a founding shareholder and long-term manager of Wharf Holdings.

Putting down the newspaper, Chen Bingwen's heart began to pound uncontrollably.

“Bao Yugang has finally drawn his sword,” Chen Bingwen muttered to himself.

He vividly remembers every key moment of this classic takeover battle: Jardine Matheson's hasty counterattack, Y.K. Pao's swift and decisive strike, and the lightning-fast share placement that ultimately secured victory.
This is the fiercest attack launched by Chinese capital against the fortress of British capital, and also the most thrilling arena of competition in the capital market.

With his memories of his past life in his hands, how could he possibly miss this feast?

Chen Bingwen of Wharf Holdings had a glint in his eyes.

If we can make the right entry point, we will not only unlock huge wealth, but also limitless possibilities for the future development of Chenji Foods!

Although he had previously earned more than two million Hong Kong dollars from Wharf Holdings stocks.

But that was just an appetizer before the Wharf takeover battle.

But now, the real meal is just beginning.

(End of this chapter)