Chapter 1506
Strategic Investment
Many people feel that the math they learned in school is useless.
Zhang Yuan disagreed.
For example, geometry clearly states that triangles are the most stable shape.
The same applies to life.
For example, if a couple has another child, it can enhance the stability of their family.
But that's not entirely true.
If it's still just the two of them, and they have a beautiful young daughter, then... then... then it won't be so good.
However, to be fair, people's bottom line will be constantly lowered.
When you have a daughter, people will say you are not faithful to your family.
If you add two more, people will say you're a repeat offender.
When you have three, four, five, six, or seven babies, people will advise you that you just need to remember to go home.
When you add sixty or seventy more, you'll be even more impressive. People won't just stop advising you; they'll admire you because you're a gourmet.
Because he is a true gourmet, Cai Lan, who is known as one of the four great talents of Hong Kong.
Now, Zhang Yuan faces a common dilemma for a production company.
That is, how to cooperate with cinemas.
Because of China's unique market system, cinema chains in mainland China are exceptionally powerful.
The rule in North America is that for top-tier blockbusters, the theaters only receive 30% of the box office revenue in the first week, while the remaining 70% goes to the distributors, producers, and distributors.
If it's someone of Cameron's caliber, theaters might even accept taking only 10% in the opening week!
In the next one to two months, the score will be around 46 or 55, and the theatrical releases will still receive less or half of the revenue.
For broadcast periods exceeding three months, theaters typically receive 55% to 60% of the revenue in order to spread out costs.
Domestic films are typically shown for four to five weeks. How can you expect theaters to only gross 10% in the first week?
After all these years of ups and downs and several increases in the revenue share, in reality, mainland producers only get 33% to 35% if they don't distribute the films themselves.
You still have to pay taxes.
You can earn an extra 5 or 6 percent by issuing it yourself.
The cinema chains are indeed making a killing.
Especially the major cinema chains!
Smaller cinemas can negotiate prices individually, with fluctuations of around 3%.
Big cinema chains, like Wanda, think that film producers are just begging on their knees.
They even felt that 55% was too little.
Because they have a real estate company mindset.
They think the land is theirs, the staff is theirs, the water, electricity, and gas consumption are all charged to them, and they even have to do ground-level advertising for them.
How come it's only 6%?
They felt that they were the ones who were at a disadvantage.
You just focus on making the film; we, the theater chain, have a lot to consider.
Zhang Yuan felt this even more deeply after having dinner with people from Wanda.
Being a good person is hard, but making money is even harder.
They might not be targeting him; they just think they're awesome.
So the question is, how do we handle and resolve this?
I can't just sit here and wait to die.
Today they take five cities, tomorrow they take ten. They keep holding you hostage, especially when something big happens. What if they deliberately stop giving you screenings?
A perfectly good film can be ruined just because one or two people say the wrong thing and upset the other.
However, it's impossible for me to run a movie theater chain.
This is a thankless and arduous task. Not only is it a very heavy asset project with a huge burden, but it also requires a large management team, resulting in very high labor costs.
In addition, prime locations in major cities have already been taken, so development can only be done in third-tier or lower-tier cities.
Even if I succeed, what percentage will I actually achieve?
Even if they work themselves to the bone, they still can't reach a 10% market share in theaters, and if the market cools down or an unexpected situation occurs, they can easily be dragged down by this huge burden.
If you have to close down due to the pandemic, and still have to repay tens or hundreds of millions of yuan in loans every month, you'll be driven crazy with anxiety.
If I were to get as anxious as Big Dog Brother again, I'd have a heart attack and die.
Therefore, he made up his mind to ask the Triforce for help.
Compared to investing in cinemas, investing in Meituan is definitely a lower-cost, higher-return investment.
When faced with a situation where major cinema chains are at a significant disadvantage, the only way to break the deadlock is to introduce a third party to disrupt the market.
Regardless of whether the addition of this third party will create another money-making opportunity.
That's better than being completely dominated.
The three sides suppress each other, just like Tom, Jerry, and Spike fighting each other.
Wanda, as a long-established company, still operates in a very old-fashioned way.
We live in the internet age now. Even with the emergence of apps like Maoyan and Taopiaopiao, how many people will still buy tickets offline?
Once consumers get used to buying tickets online, ticketing platforms gain the ability to compete with, and even manipulate, and suppress some smaller cinemas.
You disagree?
They'll block your cinema chain directly at the software level, making it impossible for audiences to buy your tickets!
This is the only method Zhang Yuan can think of that can help him in the long run.
There's no other good way, because the cinema industry is a mature industry, and it's too difficult to shake it on your own.
The only way to make an impact is to open up new avenues.
So we have to do it, even if it means selling everything we own!
He sincerely recounted his "suffering" to Wang Xing and his wife, his emotions were full and his words were highly infectious.
This reminded the couple of the cold shoulders they had faced during their numerous entrepreneurial ventures.
And after hearing this, their first reaction was, "That makes sense!"
now it's right.
I was wondering why someone who was filming suddenly came to my door.
It turns out it was all for the movie.
From this perspective, not only does it seem reasonable, but you two also think he has great foresight.
They came up with the idea of using online group buying to compete with cinemas.
At least we share the same ideals and want to change the world.
"Hoo..." Zhang Yuan said, taking a deep breath as if his emotions had been released.
"I'm sorry, I lost my composure a bit."
"It's rare to finally get everything out in the open; I've been holding it all in for so long."
“I understand, we can see that some large corporations are indeed very arrogant,” Mrs. Wang comforted her.
“Our company does group buying, which means we have to deal with all kinds of businesses. Many big restaurants and time-honored brands are incredibly arrogant and look down on our website.”
"We don't see it as mutually beneficial; we think we're trying to take advantage."
"A bunch of people say they don't need advertising, that plenty of people come to eat because of our brand."
Wang Xing nodded frantically beside him.
At that time, group buying was just emerging in the country. How to develop the market?
It's the most basic method: salespeople going door-to-door!
It requires a large ground sales team to support it, resulting in high labor costs.
It's inevitable to encounter long-established restaurants that don't give you a friendly welcome.
Those who have been to these state-owned enterprises and their legacy of bureaucratic practices understand this clearly.
If you're not polite to your customers, why would you be polite to them?
In the 70s, large characters were posted on the walls of supply and marketing cooperatives: "Salespeople are not allowed to beat customers."
This needs to be reminded...
Finally, the reason Meituan was able to win the battle of the hundred group stores was because of its exceptionally strong ground sales force.
Although he did not have the upper hand in the competition at first, he eventually succeeded in seizing the market by increasing sales volume.
The reason for the strong ground promotion is Jack Ma!
When Meituan was on the verge of collapse, Alibaba provided it with over $100 million in funding. At the same time, Ma Yun also assigned her "Alibaba Iron Army" management team to Meituan.
They are the veterans who helped Alibaba pave the way and build its empire back then.
This group is the cream of the crop; they are the strongest team in the country when it comes to ground promotion.
The involvement of these individuals, coupled with Alibaba's massive funding, helped Meituan secure the victory.
Since Alibaba will eventually intervene when Meituan faces difficulties, which will take about a year and a half, will Alibaba accept his proposal for financing at this time?
Wang Xing is no fool; with his level of industry recognition, there are plenty of people willing to pay him.
However, there are two points. First, as Chen Rui said, people don't care about small amounts of silver.
Let alone a few million, he might not even be willing to accept a single financing of tens of millions of US dollars.
Because it can't burn for too long.
Another point is Wang Xing's own thoughts.
How did he lose Renren.com, the website he founded?
After being acquired by Chen Yizhou, it was agreed that he would continue to serve as CEO.
However, as soon as the deal was completed, he was quickly stripped of power and soon ousted from the company he had founded by the other party's team.
"A fall into a pit, a gain in your wit." How could someone with the brains that got into Tsinghua University through a special admission program fall into the same trap again?
Although he accepted funding from Alibaba, he remained wary of them.
I'm afraid they'll use the same tactics Chen Yizhou used again.
After all, Jack Ma doesn't have a good reputation.
Moreover, Wang Xing's precautions were correct, because Alibaba's real intention in investing was to turn Meituan into a part of Alibaba's empire, rather than an independent company.
Ultimately, this is what caused the two sides to break up.
Alibaba forced Meituan to accept Alipay as its payment method, attempting to effectively bind the company to Alipay.
Wang Xing thought to himself, "If we do it this way, then 8-9% of Meituan's cash flow will have to go through Alibaba's accounts first."
With all the money in your hands, do I still have any autonomy?
So he used the tiger to devour the wolf, and with the help of the penguin's little horse, he drove away the big horse that wanted to eat him.
Otherwise, how did Alibaba's later Ele.me and Taopiaopiao come about?
It's a one-on-one competition targeting Meituan and Maoyan.
Seeing this, Zhang Yuan became certain that the other party would not place all their bets on Alibaba alone.
Only in this way can he have the opportunity to do what he wants to do.
Before Alibaba fully intervened, no one thought Meituan could win the group-buying war.
People are optimistic about the two companies that are right before and after him: Lashou.com, which has the most money, and Dianping.com, which has the most popularity.
The other party was quite interested in Zhang Yuan's arrival and his interest in their new business expansion, particularly in film and television group buying.
My only concerns are his motives and the amount of money he's using.
Now, his purpose has become clear through his sincere description.
They were resentful and unwilling to accept defeat, and wanted to challenge the traditional industry, which the couple accepted.
So what's left is...
"I still have doubts about the funding."
“Wang Xing didn’t mean to doubt you,” his wife quickly added, “A person introduced by Chen Rui is bound to be good.”
"Uh...yes." The big-headed man nodded as well.
"But you don't have as much successful internet investment experience as those investors before you."
“I heard you’re a shareholder of Youku, is that right?” his wife interrupted again.
It's actually a reminder.
"Oh." Wang Xing understood; he wasn't aware of this matter.
"Sorry, sorry, I'm so ignorant." He then immediately greeted them.
"It's alright, your doubts are just a sign of caution."
“Logically speaking, you should be the ones coming to me, not the other way around,” Zhang Yuan said, shaking hands with the other party again.
"But that doesn't matter. I believe that proactive people have more opportunities."
"Unlike those middle-aged and elderly people who care about face and pomp."
"Hehehe..." the other party chuckled in response.
"In short, I think you should give me a prospectus for financing."
"There can be several different funding targets and rights issue levels."
"We can discuss this and see each other's sincerity."
"I'll be direct, it still comes down to this: the minimum is $100 million, otherwise there's no point in raising funds," the other party said.
"My last deal was 5000 million."
“Since I dared to come, I’m not afraid of your price.” He put his hand on the other person’s shoulder and gave him a confident smile: “I’ll handle the money.”
"Just decide how you want to spend it."
When he left, the couple saw him off together.
Although these two are exceptionally intelligent, Zhang Yuan's confident demeanor, ingrained from years of performance, is still incredibly powerful.
Just listening to his clear, gentle, and magnetic voice, coupled with the sincerity in his eyes, makes the other person feel very good.
This is called being pleasing to superiors; being good-looking definitely has an advantage.
Otherwise, why would law firms and financial institutions always choose young and beautiful women when looking for business partners or assistants?
Even if they don't do such high-end business, 4S stores selling luxury cars can sell a few more cars with beautiful women.
After leaving the other party's company and getting into his car, he didn't breathe a sigh of relief until the other party had completely driven away.
That was also a performance, and it was even more difficult than performing in front of a camera.
After all, there's no way to do it again after a few takes.
Anyone who hears the figure of one hundred million US dollars would be speechless.
But this investment, like the investments in Tudou and Youku back then, is a strategic investment.
We have to grit our teeth and go for it!
This concerns my influence within and even outside the industry for many years to come.
I can't be like my peers, either investing recklessly or only knowing how to scheme for a few cents.
After resting for a while, I started the car and slowly drove home.
I had just arrived home when I received a transoceanic phone call.
"Hi Zhang, long time no see, how are you?"
It was a call from Smith, the guy in charge of overseas market expansion at Legendary Pictures.
"I'm doing great, how about you?"
"Haha, I'm great too, and we'll see each other soon."
After the other party communicated with the company last time, the boss, Tuer, said that he would send an inspection team to China to discuss cooperation matters.
Now, the inspection team has finally been formed.
Zhang Yuan thought to himself, "You guys are really slow at getting things done."
He even suspected that these guys had gone on spring break and hadn't been to work for a month or two.
"Welcome very much."
“I knew you’d welcome me, and I’m the one leading the team this time,” Smith said with considerable pride.
"That would be even better, I'll take you to try all the delicacies of China."
"I want to try more than just Chinese cuisine."
"I've heard that Eastern women have particularly smooth skin."
“WELL.” Zhang Yuan suppressed his displeasure and replied leisurely, “You’ll have to explore and practice it yourself.”
Hahaha... The other party let out an arrogant laugh laced with lewdness.
Zhang Yuan thought to himself.
Ok.
I not only want to eat, but I also want to play.
The implication behind those words was that they wanted me to make some arrangements.
It seems this Smith really thinks he's Commissioner Smith. (End of Chapter)