I'm back in 1990

Chapter 538: The Future Market Battle

I highly recommend "1990, I'm Back"! Click to enter the story world.

"Old Chiang! Our country is currently negotiating with the WTO and is expected to join soon. At that time, the domestic retail market will be opened to foreign companies. What are your thoughts on this and what countermeasures do you have?"

Huang Xiaochuan immediately put Jiang Bixing to the test, which was necessary, since Jiang Bixing was now in charge of the huge Times Supermarket retail group. If he couldn't even answer this question, Huang Xiaochuan planned to replace him.

However, having been in charge of Times Supermarket for so many years, Jiang Bixing naturally has his own way of dealing with this issue.

"I recently led a small team on a cross-border market research trip abroad, and I discovered that foreign-invested retail businesses have some unique advantages."

For example, Walmart's satellite supply chain and Carrefour's global fresh food cold chain system allow these two retail giants to reduce procurement costs by 40% to 50% through economies of scale. I think we also need to establish a digital supply chain system to achieve real-time data sharing with suppliers.

Furthermore, overseas retailers are adept at using capital operations to achieve disruptive growth. For example, E-Mart in South Korea proposed a "three-year loss strategy." Therefore, to cope with the impact of these overseas retailers, I suggest establishing a risk-resistance fund in advance. However, as you know, Chairman, our company has been following your instructions, resulting in a consistently low gross profit margin. Without your support, this would be absolutely impossible.

Huang Xiaochuan smiled. Old Jiang was getting smarter and smarter. He even knew the trick of "the squeaky wheel gets the grease" to deal with him. But it didn't matter. He had originally planned to support him financially anyway.

Although Huang Xiaochuan did not express his opinion on the spot, Jiang Bixing, who had known Huang Xiaochuan for many years, knew that the matter was settled as soon as he saw Huang's smile, and immediately felt much more relaxed.

He then continued, "I also studied ST's warehouse membership system and 7-Eleven's fresh food and ready-to-eat model. I found that the core of future competition is the reconstruction of consumption scenarios, rather than a simple price war. I plan to pilot the supermarket + community kitchen and eco-workshop model to increase service items and improve service quality to increase customer loyalty."

"In addition, I plan to set up health check points for the elderly in each store, providing free services such as blood pressure measurement and blood sugar testing for elderly customers. I also plan to open up a square dance area in front of the store to provide a place for the elderly to participate in activities."

Another point is the partnership system. My plan has already been submitted; I don't know if you've seen it?

Huang Xiaochuan nodded: "I know. Cao Charlie forwarded your proposal to me, and I've already agreed to it. You should see the approval document tomorrow."

Jiang Bixing's proposed plan is called the Partnership System Iterative Plan. The main content is to give store general managers a portion of virtual equity, who will enjoy the right to share in the store's sales revenue. Moreover, they will receive a large pension after retirement, with the amount ranging from hundreds of thousands to millions of yuan depending on their performance. In short, the better your performance during your tenure, the more dividends you will receive, and the more pension you will receive when you retire from Times Supermarket. This pension is not the same as the pension from the social security department; the two can coexist.

Moreover, this means that, according to the internal promotion channels of Times Supermarket, every grassroots employee has the potential to become a store general manager, which gives grassroots employees a goal to strive for.

Huang Xiaochuan was quite satisfied with Jiang Bixing's answer, which showed that he had put a lot of effort into this position and had not relied on his alumni relationship with Huang Xiaochuan to hold the position without doing any work. It was precisely because of his efforts, coupled with Huang Xiaochuan's unreserved financial support, that Times Supermarket was able to open more than 100 stores in just a few years.

This is still Huang Xiaochuan's strict requirement that the property rights of newly opened stores must be owned by himself, which means that Times Supermarket is the landlord of each store.

However, this results in a large amount of capital being tied up in fixed assets. In addition, labor costs are generally 1.5 times higher than the local average, making Times Supermarket's gross profit margin unbearable to look at.

So if Huang Xiaochuan hadn't been constantly injecting capital into the industry, it would have been impossible to open dozens of stores in a year.

While the two were discussing the future development direction of Times Supermarket, Walmart and Carrefour's overseas business divisions were also studying the relevant reports that they had paid a lot of money to have investigated by a business research company.

During the WTO accession negotiations, China Merchants Group pledged to remove restrictions on foreign-invested retail businesses. Prior to this, foreign companies had to enter the mainland market through joint ventures, and their equity ratios, geographical locations, and business scope were all restricted.

However, under WTO rules, China Merchants Bank will gradually allow foreign investment to take a controlling stake or even operate as a sole proprietorship, and will relax restrictions on the number and geographical scope of stores, until the retail industry is fully liberalized.

At this time, the Chinese market had enormous potential, with GDP growth exceeding 10%, and consumer demand shifting from subsistence to quality, providing ample room for the development of foreign-invested retail businesses.

Originally, these foreign-funded retailers wanted to fill the gap in China's large-scale chain supermarket warehouse retail sector by leveraging their mature supply chains, standardized management, and brand effects. However, an investigation revealed that a huge chain supermarket had emerged in China and was building its first warehouse retail supermarket, "tis superarket," in Shanghai.

This was clearly a competitor that needed to be taken very seriously, so all the major retail giants investigated this Chinese local retail company and did a lot of underhanded things, such as poaching employees. But strangely, their usually effective financial offensive failed.

After they received the detailed investigation results, they found the company's development model to be somewhat puzzling.

In their view, the company's costs for opening stores, operating costs, and labor costs far exceeded the warning line, so they naturally assumed that it might be a retail company with state-owned background. However, in fact, it is a retail company registered in Hong Kong and developed in mainland China.

These retail giants were immediately bewildered: where would the funds for expansion come from? They initially assumed it must have come from a large amount of bank loans, but upon investigation, it was astonishing—the company hadn't taken out a single loan!

Could it be that they're extending the payment terms with suppliers and using other people's money for working capital operations?

Upon investigation, it was found that the supplier's payment terms were very reasonable. Based on the different types of goods, such as groceries and fresh produce, Times set reasonable payment terms and made timely payments without any delays. This led many suppliers to want to establish a cooperative relationship with Times. Unfortunately, Times has very high requirements for suppliers and products.

The reason why opening a store in the era was so expensive was that their first requirement was that the property must be their own. Otherwise, they would rather not open a new store, even if they were not charged a penny of rent for the first five years.

Furthermore, Huaxia recently implemented a pension, medical insurance, and housing provident fund system, and this company has provided all of them to all its employees without exception, and in full. Moreover, their salaries from top to bottom are the highest in the same industry in the city. Countless people want to join this company, no wonder the department managers and store general managers I contacted are unwilling to switch jobs.

Ultimately, several world-renowned retail giants reached the same conclusion: this was a formidable competitor, and if they entered the mainland market, they would inevitably face a fierce battle for market share.