The history of Yichu lotus
Can Yichu lotus bloom all over China
Cao Dong/Wen
----" "Second-heavy" foreign retail companies have also started a crazy "enclosure movement" in China because they believe that they can at least play a role of "queuing up for others," and their position in the queue will determine the final "commission." .
----On September 25, outside the Nanjing Central Gate, in the Jianning Road area, a large number of items covered with military canvas were stacked in the open air, and the warehouse of the West Railway Station Cargo Factory next door was also Tightly guarded, 20,000 to 30,000 barrels of oil and hundreds of tons of rice are piled here, and dozens of staff are busy nervously amidst the whistling of walkie-talkies.
----This is like a grand military gathering, just for the opening of a new supermarket on September 26. At the same time, supermarkets such as Carrefour, Xinyijia, and Times in Nanjing are also facing serious challenges. Various price cuts have attracted long queues of shoppers, bringing a bit of a "pre-war" atmosphere to Nanjing's retail industry in autumn.
----These are several scenes that took place in Nanjing on the eve of the opening of Yichu Lotus's 20th store in China. Yichu Lotus is a retail enterprise under Thailand's Charoen Pokphand Group, which is familiar to Chinese people (Charoen Pokphand Group ranked 329th among the world's top 500 companies in 2002). In 1997, Yichu Lotus entered China for the first time and currently has stores in Shanghai, Hangzhou, and Ningxia. 19 chain stores have been opened in cities such as Guangdong, Han, and Suizhou. This is the first time that Yi Chu Lotus has entered the market in Jiangsu Province.
----Yi Chu Lotus has significantly accelerated its store opening in China since 2003. On July 30, 2003, at the Shanghai Cross-border Procurement Fair, Yi Chu Lotus announced that it would invest 10 billion yuan to open 100 stores across the country in the next 2 to 3 years. In the following 60 days, Yichu Lotus's Tai'an store in Shandong Province on the 18th, Tianjin store on the 19th and Nanjing store in Jiangsu Province on the 20th opened for business one after another. It is said that Yi Chulianhua's goal of opening 24 stores before the end of 2003. This is obviously a staggering speed in the entire Chinese retail industry.
----A multinational company that is not multinational
----Yichu Lotus can hardly be regarded as a multinational retail enterprise.
----In 1997, Yi Chu Lotus had been operating in Thailand for 5 years and owned about 35 supermarkets. But at this time, the parent company of Easy Lotus, CP Group, resolutely sold 80% of all Easy Lotus supermarkets in Thailand to TESCO Group, the largest retailer in the UK, and instead concentrated on China. In the same year, Yi Chu Lotus opened its first store in China in Shanghai, marking the beginning of Yi Chu Lotus' entry into the Chinese market.
----Facts have proved the correctness of Zhengda’s decision. In Thailand, Yi Chu Lotus only started to make a profit when it opened its 17th store, while in China it has already achieved its profit target at its fifth store. At present, Yichu Lotus's annual turnover will be approximately 5 billion yuan by the end of 2003. This result is quite comforting for Yi Chulianhua's own development, but compared with its competitors, it is only a "sub-heavyweight" player at best. Statistics show that at the end of 2002, the annual turnovers of Shanghai Hualian Group, Lianhua Supermarket Co., Ltd., Dalian Shopping Mall Group Co., Ltd., Beijing Gome Electric Co., Ltd., and Beijing Hualian Group Investment Holding Co., Ltd., the top five domestic retail chain companies, were respectively 21.473 billion yuan, 18.33 billion yuan, 12.79 billion yuan, 10.896 billion yuan and 10.3 billion yuan. The multinational retail giant Carrefour's annual turnover in China alone reached 11 billion yuan in 2002. From this perspective, it is easy to understand why Yichulianhua is so active in investing in the Chinese retail market.
----Chia Tai Group, the parent company of Yichu Lotus, is a multinational enterprise founded by Thai-Chinese and is also a typical family enterprise. The business that Xie Guomin, the president of Zhengda Group, took over from his father Xie Yichu was just a small store selling rapeseed with an area of ??only 20 square meters. Today, Zhengda has grown into a company with assets of tens of billions of dollars and subsidiaries all over the world. Multinational groups in multiple countries and regions.
----Perhaps it is a unique Eastern thinking. When Xie Guomin managed such a huge industry, like most domestic family businesses, he pushed his family to the front line of management.
----Yi Chu Lotus President Xie Hanren is said to be busy preparing for a new store in Xi'an recently. Xie Hanren is Xie Guomin's son, while Luo Jiashun, the vice president of Shanghai Yichu Lotus, is Xie Guomin's son-in-law. Obviously, after Xie Guomin formulated the grand strategy of "occupying the Chinese retail market" and the actual tactics of "100 stores in 1,000 days", this decision-making and implementation chain composed of "father and son soldiers" can show the highest efficiency.
----Another advantage of Yi Chu Lotus’ rapid expansion in China is also inseparable from the CP Group. In 1979, CP Group built its first feed factory in Shenzhen Special Economic Zone and became one of the first overseas companies to enter the Chinese market after China implemented reform and opening up. Since then, it has further extended to the livestock and poultry industry, aquaculture and production and processing industries, and even the retail industry. Today, more than 20 years later, CP Group has more than 100 agricultural and animal husbandry investment projects in China, covering all provinces, municipalities and autonomous regions across the country except Qinghai and Tibet.
----CP Group has invested in China for so many years, and its understanding of the Chinese government and understanding of China's business environment are naturally not comparable to those of "foreigners" such as Wal-Mart and Carrefour. When Shanghai first started to develop Pudong, no one wanted to go to Lujiazui. Finally, at the invitation of the government, CP Group invested several billion yuan to develop CP Plaza, which promoted the development of the entire Lujiazui. After the government's "Western Development" policy was promulgated, Zhengda seized the opportunity to let Yi Chulianhua invest 20 million US dollars in Chongqing and quickly established a hypermarket with an area of ??20,000 square meters. It is said that Chongqing is the only one in its 100-store plan. There will be 5 to 6 stores settled there.
----What best reflects Yi Chulianhua’s understanding of China’s business environment is its settlement system. As we all know, the retail giant Wal-Mart has its China headquarters in Shenzhen, and its branches in other places are under the jurisdiction of the headquarters, and their finances must be settled uniformly by the headquarters. This leads to the inevitable flow of taxes from the store location to Shenzhen, which is said to be the same in many cities. One of the reasons for the indifferent attitude towards Wal-Mart's entry. For example, in Shanghai, Wal-Mart actually got ahead of Carrefour to negotiate about opening a store in Shanghai. However, because Wal-Mart insisted on placing its settlement center in Shenzhen, the matter has been unsuccessful, and this has been delayed for 8 years. In the latest urban business plan in 2003, Shanghai will limit the opening of hypermarkets within the inner ring road. Obviously, Wal-Mart is inevitably at a disadvantage in the competition for Shanghai's retail market.
----Yichu Lotus seems to have no idea of ??all this. Almost all of its 20 stores in China resolutely adopt the local settlement method. Although the finance is still managed by the headquarters, the settlement is placed at the location of the store. Sometimes for convenience, a secondary company is opened to facilitate settlement. In this way, Yichu Lotus naturally has a good reputation in the local area, and sometimes it is sidelined. Then no one will care too much.
----For example, the No. 4 Wuzhong Road store in Shanghai, if you don’t observe carefully, few people will notice. In fact, this store has two names: Yichu Lotus and Changfa Shopping Center. The latter is the name used for industrial and commercial registration. But everyone will think that this store is Yichu Lotus store.
----"Now when we choose a location in other places, the local government will give us great convenience and even hold a special investment meeting for us to choose local suppliers." Shanghai Yichu Lotus Vice President Luo Jiashun said proudly.
----Today, China's retail industry is in a critical period of gradual opening up. All foreign-funded enterprises have seen the huge temptation of the Chinese market in the future, but they are restricted by policies and cannot let go. Yi Chulianhua, with the background of CP Group, may be using its status as a "non-transnational multinational company" to achieve a career.
----Why are you in such a hurry?
----The expansion speed of Yi Chu Lotus is indeed astonishing. Wal-Mart, Carrefour, Metro, etc. have also proposed expansion plans, but no hypermarket dares to increase this speed to an average of 30 stores per year. At present, the foreign-funded supermarket with the largest number of stores in China - "Trust-Mart" has more than 70 domestic chain stores. However, it has been under continuous construction since 1997, with an average of more than 10 stores per year. The speed is only equivalent to that of Yichu Lotus. 1/3 of future plans.
----The speed of Yichu Lotus comes largely from its specialized "SETUP" organization, which they internally call the Preparatory Department. The Preparatory Department consists of the Business Development Department, the Design Department, and the Engineering Department. There are many other agencies, and their main job is to race around and enclose the land. Since all Chinese business circles attach great importance to Feng Shui, sometimes Yi Chulianhua simply calls this preparatory department "Feng Shui Group". The President of the Integration Department in charge of the "Feng Shui Group" is the Vice President of Construction of the CP Group - a veteran who has worked for the CP Group for thirty years and is respectfully called Dr. Zheng by the employees. Luo Jiashun said: "I will definitely call him Senior’s”.
----However, there is no real Feng Shui master in this preparatory department. Generally, places considered by Yichulianhua as "good Feng Shui" must meet the following criteria: First, the store location cannot be in a commercial center, and generally must be located at the junction of urban and rural areas. Because the main products of Yichu Lotus are lifestyle products, it is not only costly but also has no economic benefits in a commercial center. The Yichu Lotus store in Zhengda Plaza in Lujiazui, one of the commercial centers of Shanghai, can be regarded as a special case, but this is because it is your own house, so it would be a pity not to use it.
----Secondly, it is necessary to accurately understand the surrounding residential area construction pattern, especially the future pattern. Because it is necessary to consider how high the local consumption power is, and then accurately judge how many stores need to be opened.
----The third thing to consider is logistics. Luo Jiashun said: "If we need to deliver goods from our warehouse to there, do we have the ability to handle it? If so, is there a cost-optimized path?"
----See These three simple rules have become Yi Chulianhua's guide to choosing "Feng Shui". According to Luo Jiashun, the fastest record for Yichu Lotus from the initial location selection to the final opening was 3 months. "We think this is an ideal speed." Luo Jiashun said seriously.
----Why did Yichu Lotus suddenly start to exert strength and "run wildly" all the way after entering China in 1997? According to industry insiders, it is mainly because it has seen its advantages over other foreign investors, and its rush is because in the Chinese retail market, as long as you want to exert your strength, you must keep running.
----In the industry, there is a saying about building stores intensively around a distribution center. That is, when the number of stores reaches a certain scale, the powerful role of the distribution center can be brought into play, and it can Guaranteed price advantage in the market. The investment in this kind of modern distribution center is generally about US$80 million, but this distribution center must be able to support about 120 stores with a radius of 150 to 300 miles before it can show its scale effect, otherwise the distribution center Not only will it fail to reduce costs, but it will increase logistics costs. For example, so far, Wal-Mart has only opened 28 branches in China, which covers an area of ??9.6 million square kilometers. The scale effect of Wal-Mart's distribution center cannot be demonstrated at all. In this way, we can understand why Yichu Lotus currently needs to continue to expand its scale.
----At present, Yi Chulianhua has established a giant distribution center of 50,000 square meters in Shanghai. Full-time responsible for delivering daily goods to many stores across the country, including fresh food, daily necessities and other categories. The Business Development Department of Shanghai Yichu Lotus revealed that all logistics details are handled internally by Yichu Lotus and will not be outsourced. This distribution center can serve 18 to 25 stores at the same time. However, including the stores in Nanjing and Hangzhou, Yi Chu Lotus currently only has 12 stores in the Yangtze River Delta region, which is far below the minimum efficiency of this distribution center.
----East China, North China, and South China are the focus of Yi Chulianhua's layout. Together with the development of the west, there are 4 districts - with Shanghai as the center, radiating out to Guangzhou and Beijing. and three points in Wuhan area. Considering that suppliers are scattered and the highway system is not so developed, the idea of ??one distribution center serving the whole country is not practical. Therefore, distribution centers will be built in the above-mentioned areas. This can serve all 100 stores.
----Luo Jiashun said: "The money you invest in the warehouse will be the most valuable in the long run. If I only have four stores now, it would not be cost-effective for you to build a warehouse at the time, but As we continue to operate, the continuous sharing of costs will definitely help suppliers save money, help us save money, and help customers save money. Once this chain reaction starts, we cannot stop at any link in the middle.
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----Obviously, Yichulianhua’s “enclosure movement” is preparing for the full opening of the retail industry in 2006. Yichulianhua must seize the time in the past few years to complete its expansion in China. "big appearance", so he set the deadline for the 100-store plan within 3 years - before 2006.
----A chess piece with "undetermined functions"
----Yi Chu Lotus is not a pure hypermarket like Wal-Mart. Its development process has been greatly influenced by the diversified development of CP Group. In the final analysis, Yi Chu Lotus's "enclosure movement" is due to the CP Group.
----As a giant enterprise that started out as a small seed shop in Bangkok, agriculture remains one of the largest animal feed companies in the world. At the same time, CP Group also produces countless agricultural and livestock products such as chickens, ducks, pigs, and eggs. It is now one of the largest shrimp producers in the world. Coupled with retail terminals such as Yichu Lotus, it is obvious that Xie Guomin's business philosophy is to achieve vertical integration of business so that the company can make money from every link in the food chain.
----Luo Jiashun mentioned such a group about Yichu Lotus's own brand. Data: At present, the sales of Yichu Lotus's own brands account for more than 10% of the entire store's sales, including food, dry goods, daily necessities and home appliances, except for a small part that is OEM. Most of these self-branded products are products of companies affiliated with the Chia Tai Group, especially agricultural products.
In fact, the agricultural products from the Chia Tai Group are a signature product of Yichu Lotus. Many customers are most satisfied with Yichulianhua’s two types of containers: fruits and fresh produce. As Li Shaozhu, senior executive vice president of Zhengda Group, said at the Kunming Fair, one of the core of doing business is to find complementary advantages. China It is necessary to import tropical fruits such as durian and mangosteen from Thailand. Currently, the average tariff on Thai fruits and vegetables is 60%, while the average tariff on Chinese fruits and vegetables is 20%. What is more important is that after zero tariff in the future, the products produced by CP Group in Thailand will be imported. Of course, those "special fruits" must have good landing channels in China.
----Of course, this is the industry's conventional judgment on the significance of Yichu Lotus to the Chia Tai Group, but this may not be the case. It's that simple. According to industry insiders, "Mart-Mart" from Taiwan is also expanding rapidly (opening new stores) recently, and the reason is that there are many multinational groups (not necessarily retail companies) interested in entering the Chinese market. It has firmly established itself as the leading position in the retail industry in the mainland, so it has stated its stance to "Mart-Mart". When it develops to 100 stores, it will fully acquire "Mart-Mart". Therefore, "Mart-Mart"'s "land enclosure movement" naturally has a certain The color of "mission accomplished"
----Looking back on the history of Chia Tai Group selling 80% of Yi Chu Lotus's shares to TESCO Group, I'm afraid it's hard not to imagine when Yi Chu Lotus will be in the future. When China completes the "100-store plan", when the policy restrictions in the retail industry completely disappear and everyone starts to "play real Kung Fu" and work hard internally, won't the CP Group find another buyer to take over?
----In fact, the reason why a large number of "sub-heavyweight" foreign-funded retail companies have also started a crazy "enclosure movement" in China is because they know that they can at least serve as a substitute. People line up for roles, and their position in the line necessarily determines the final "commission."
----What best reflects Yi Chulianhua’s understanding of China’s business environment is its settlement system. Almost all of its 20 stores in China resolutely adopt local settlement methods. In this way, Yichu Lotus naturally has a good reputation in the local area, and no one will care too much about it sometimes.