Rebirth in Hong Kong: From Dessert Shop to Industrial Empire

Chapter 92 Emergency Response (Seeking monthly votes and recommendations to continue reading)

Peninsula Hotel, Luxury Suite.

David Ross slammed the newspaper down on the coffee table, the expensive bone china cup making a crisp sound.

“$20! 0.025 cents! Has Tanaka Ichiro of Suntory gone mad?!” Ross’s face flushed with anger as he pointed at the open Sing Tao Daily.
"And then there's Nestlé! $50! Just for a non-exclusive license? They're setting a price for the entire industry! They're digging a hole for us!"

Chen Ziming took a deep breath, suppressing his anxiety, and advised, "David, calm down. Getting angry won't solve anything."

Nestlé and Suntory's actions have indeed disrupted our rhythm, but more importantly, we must come up with a countermeasure immediately.

Emily Carter immediately added, "Yes, David. Anger won't help. We must contact headquarters immediately and report the latest situation here in detail."

Time is really running out!

Ross's chest heaved violently; he certainly understood that Chen Ziming and Emily were right.

As the vice president of PepsiCo's international business division, he has weathered countless storms and knows that losing control at this moment would be the most foolish thing to do.

"Okay! Contact headquarters. Tell them we need to open up authorization for some core market channels."

Soon the transoceanic call connected to PepsiCo's global headquarters in New York.

On the other end of the phone, PepsiCo's CEO and senior management team were clearly shocked by the news from Hong Kong.

Ross gave a detailed report over the phone on the situation in Hong Kong, Chen Bingwen's intentions, the actions of competitors, and the potentially serious consequences.

He growled, emphasizing, "Open channels! This is the only bargaining chip we can offer that can rival the flexibility of Coca-Cola's bottling plant system and might sway Chen Bingwen."

Otherwise, we will undoubtedly be defeated!

There was a long silence on the other end of the phone.

Ross could hear faint whispers of discussion, but he couldn't make out the specifics.

Finally, the CEO's voice came again, "David, opening up core market channel resources touches the very foundation of PepsiCo's business model and carries extremely high risks. The board of directors would never approve it in such a short time."

This is not just a matter of money; it also represents a potential impact on Pepsi's brand image, channel control, and long-term strategy.

Ross's heart sank.

"After an emergency assessment, headquarters has authorized you to restart negotiations with Chen Ji."

The base fee for patent licensing can be increased to a maximum of $60, with a sliding commission rate as low as 0.02 cents per bottle.

This is the bottom line!

Regarding channels, we can promise that in future cooperation, we will regard Chenji as an important strategic partner and explore deeper possibilities for channel synergy when the time and conditions are right.

However, at this time, no specific, binding commitment can be made to open these channels.

“0.02 cents? A base fee of 60? No distribution channels?!” Ross almost roared, barely suppressing his anger. “Sir! This is simply not enough! Chen Bingwen wants real distribution channels! 0.02 cents is even lower than Suntory’s 0.025! How does this demonstrate our sincerity? How can we counter the conditions Coca-Cola might offer?”

"David!" the CEO's voice rang out again, sternly rebuking, "This is the final decision from headquarters!"
The base fee of 60 is the highest level of sincerity we can offer!
The 0.02 cents figure is a prudent assessment based on our large sales volume!

As for distribution channels, it's absolutely impossible at this stage!

You must do your utmost to secure patent authorization within this framework!
Remember, Pepsi's brand and global influence are a huge asset! Use them wisely! I have faith in your negotiating skills!

The call was disconnected, and a busy tone came from the receiver.

Ross gripped the microphone, his face ashen.

The air inside the suite seemed to freeze.

Chen Ziming and Emily looked at him, their hearts in their throats.

They could already guess the outcome from Ross's expression and stiff posture.

"Fuck!" Ross slammed the receiver onto the telephone, making a loud bang.

"Headquarters refused?" Chen Ziming asked cautiously.

Ross looked up and chuckled self-deprecatingly: "Base fee 60, commission up to 0.02 cents. No distribution channels."

"This is the highest level of sincerity from headquarters."

Compared to Nestlé's 50+ global non-exclusive offers and Suntory's 20+ offers with a 0.025% commission and access to Japanese distribution channels, our sincerity seems like a joke!

Emily frowned: "David, so what do we do now..."

Ross took a deep breath to suppress his resentment.

He knew that anger and complaining would not solve anything.

Headquarters has already set the tone; as the frontline commander, he can only make a final struggle within this extremely unfavorable framework.

"Contact Chen Ji Foods! Tell them we hope to have another urgent consultation with them regarding the bottle cap patent licensing matter. The time will be set by them."

He knew that he had already lost half the battle in this negotiation from the very beginning.

The biggest card in our hand has been ruthlessly taken away by headquarters.

All he can do now is try to leverage Pepsi's brand prestige to win over that incredibly shrewd young man.

Although, the hope is slim.

Just as PepsiCo's David Ross was in a suite at the Peninsula Hotel, feeling angry and frustrated by the conservative decisions made by headquarters, a black Rolls-Royce was smoothly driving toward the Wai Yip Industrial Building in Kwun Tong.

Inside the car, John Thompson, President of Swire Coca-Cola Company’s Hong Kong Island and Southeast Asia region, was resting with his eyes closed.

His expression was completely different from Ross's anxiety, exuding a calmness and certainty.

Just now, he ended an emergency transoceanic call with Coca-Cola's global headquarters in Atlanta.

After learning about the current licensing status of Chen Ji's bottle cap patent, the CEO of Coca-Cola made a decisive decision to authorize John Thompson to represent Coca-Cola in final negotiations with Chen Ji Foods.

“Remember,” the CEO emphasized over the phone, “our core objectives are twofold: First, to ensure that Coca-Cola’s global bottling plant system has the right to use this key patent, thereby enhancing the user experience and consolidating our competitive advantage!”

Second, we must never allow Pepsi to preemptively reach any cooperation agreement that is superior to ours!

Therefore, within the bottom line, you can be flexible!

With the approval of headquarters, Thompson was now full of confidence.

He knew perfectly well that the key to the "channels" that Chen Bingwen most desired was already in his hands.

Conference room on the top floor of Weiye Building.

When Thompson returned with General Counsel Emily Carter and technical advisors, the atmosphere was completely different from the last time.

“Mr. Chen, we meet again.” Thompson extended his hand, his smile much more sincere.

Chen Bingwen met his gaze and keenly sensed Thompson's newfound confidence and composure, different from before.

He smiled and shook Thompson's hand: "Mr. Thompson, welcome."

It seems Coca-Cola has brought a different kind of determination this time?

“Mr. Chen has exceptional insight.” Thompson smiled and withdrew his hand, sitting down with a relaxed posture, revealing the aura of a global beverage giant.

"After careful evaluation, especially taking into account the latest market dynamics in Hong Kong Island,"

He glanced at the open copy of the Sing Tao Daily on the table, "and the competitive landscape we both face, which has authorized me to represent Coca-Cola Company in reaching a final cooperation agreement with Chan Kee Foods."

He got straight to the point, without any beating around the bush, and directly presented Coca-Cola's final solution:
"First, regarding the diamond-shaped anti-slip bottle cap patent package: Coca-Cola is willing to pay a one-time patent licensing fee of $80 to obtain a global, non-exclusive license."

Furthermore, based on the actual sales volume of our respective products, Coca-Cola has committed to paying a royalty of 0.02 cents per bottle for patent usage.

This basic licensing fee is $50 higher than Nestlé's $30 and a full $20 higher than Suntory's $60!
Although the commission of 0.02 cents is slightly lower than Suntory's 0.025 cents, it is tied to a higher-value market.

Thompson didn't pause. He looked directly at Chen Bingwen and offered the most crucial piece of the bargaining chip, the one Chen Bingwen valued most:
"Second, regarding channel cooperation: The Coca-Cola Company has agreed to grant Chen Ji Foods access to its bottling plant distribution network in its core markets in North America and Europe."

Specifically, your company's products include, but are not limited to, the soon-to-be-launched "Jinba" energy drink.

Subject to compliance with local regulations and Coca-Cola bottling plant product quality standards, products may be sold through core channels in the region, such as supermarkets, convenience stores, and restaurants, supplied by Coca-Cola bottling plants.

He then added the core condition:
"Third, regarding channel commissions: Based on the channel services, warehousing and logistics and initial market support provided by the Coca-Cola bottling plant system, Chenji Foods is required to pay a channel commission of 3% of sales."

"It needs to be clarified that this channel access qualification currently only applies to 'Jinba' functional beverages, as well as new products launched by Chenji Foods within the next three years that have been reviewed and approved by Coca-Cola headquarters."

Meanwhile, the specific list of eligible cities, distribution standards, display requirements, settlement cycles, and other detailed implementation rules must be listed in detail in the subsequent agreement appendix to ensure the rights and interests of both parties and the smooth operation of the bottling plant system.

The conditions were clear and straightforward, and almost completely met the core demands that Chen Bingwen had raised last time!

The base licensing fee of $80 is much higher than that of Nestlé and Suntory. The commission of 0.02 cents is slightly lower than that of Suntory, but it is tied to the more valuable European and American markets. The channel commission of 3% is the same as that of Suntory, but the open market is the true global core!

There was silence in the conference room.

Ling Peiyi and Fang Wenshan exchanged a shocked look.

Coca-Cola actually agreed!
And the terms are so generous! This is even better than they expected!
Chen Bingwen didn't show anything on his face, but he was already very excited inside.

The $80 patent licensing fee and the 0.02 cents per bottle royalty on patent use are negligible compared to Coca-Cola's distribution resources in North America and Europe.

What he values ​​most has never been the hundreds of thousands or millions of dollars in cash in front of him!
That money is certainly important; it can solve immediate problems and support expansion.

But Coca-Cola's bottling plant and distribution network, which spans the core markets of North America and Europe, is the strategic resource he truly dreams of and is willing to acquire at any cost!

That's his real goal in this patent battle!
(End of this chapter)