Chapter 904
Three-Party Conspiracy, Defection from the "Century Group"
Although they are both from the "Century Series".
But without a doubt, there is a distinction between "biological sons" and "adopted sons".
Century Langke is Lu Yang's latest wholly-owned subsidiary, with a 100% equity stake. Undoubtedly, it is another newly recognized "son".
What about BBK?
Without a doubt, he is merely a "godson," because: firstly, Lu Yang is not the founder of BBK Electronics; the founders are Duan Yongping and his team; secondly, Lu Yang is not its controlling shareholder, nor even the largest shareholder, but holds less than 25% of its shares as an angel investor.
In this situation, would anyone do something that would harm their own son's interests and give those interests to their godson?
Therefore, the three-month period, which seems to be a response squeezed out by Deng Guoshun and Cheng Xiaohua under pressure and difficulty by Lu Yang, is actually the biggest concession that Lu Yang could make out of consideration for Duan Yongping.
Unfortunately, Duan Yongping was not satisfied.
He's not stupid.
I know there's something fishy going on here.
Maybe they already knew he would come knocking, and they had already discussed it internally, just to delay him for three months.
However, on the surface, he remained calm and composed.
However, after attending the celebration banquet...
Stepping out of the Century Tower.
Leave the opulence and hustle and bustle behind you.
A cold wind blew.
"Hmph..." A short, cold laugh escaped Duan Yongping's nostrils, carrying a heavy sense of sarcasm and a hint of barely perceptible weariness.
He turned around, his gaze sweeping one last time over the towering Century Tower, which now seemed particularly glaring to him.
"Shen Wei." His voice was deep and clear, as if tempered by the cold wind, without a trace of warmth. "Didn't you say that Li Zekai, the little superman from the Li family in Hong Kong, has always wanted to see me?"
Upon hearing this, Shen Wei's spirits lifted instantly, and his eyes flashed with ecstatic joy.
He knew his boss all too well! He knew exactly what this signal meant!
The boss has finally made up his mind!
"Yes, boss!" Shen Wei immediately stepped forward, his voice trembling with excitement, but his tone was resolute. "Young Master Li has indeed expressed a strong desire to cooperate on multiple occasions through various channels! He highly values BBK's strength and potential in the mainland consumer electronics field! I will make arrangements immediately to facilitate a meeting between you and Young Master Li as soon as possible!"
He practically patted his chest in assurance, as if afraid the opportunity would slip away.
Chen Mingyong stood to the side, his lips moving as if he wanted to say something.
His brows were furrowed, and his face was full of worry.
Cooperating with Hong Kong capital, especially giants like the Li family, is tantamount to inviting a wolf into the house, and it also means standing completely on the opposite side of the Century Group.
Those within the "Century Group" knew all too well the power and methods of President Lu.
But when he saw Duan Yongping's unusually calm yet turbulent profile in the cold wind, felt the resolute and chilling aura emanating from his boss, and recalled Lu Yang's performance of calling him "biological son" and "adopted son" in the corridor, as well as the almost humiliating "charity" of "three months" given by Deng Guoshun and Cheng Xiaohua under their hints... he could only sigh deeply and swallow the words that were on the tip of his tongue.
A hint of resentment and unwillingness also began to grow in his heart.
Yes, both being from the "Century Group," President Lu went too far this time, and his intentions were far too biased!
A few days later, in Dongguan City, at the BBK Industrial Park.
A low-key yet luxurious Rolls-Royce Phantom slowly drove in, and Li Zekai, dressed in a well-tailored Italian bespoke suit, stepped out of the car with a radiant expression.
With a confident smile on his face, his sharp eyes scanned the vibrant, modern electronics industrial park.
Compared to his grim expression when he saw the demolition of the executive house at the Repulse Bay Estate in Hong Kong last time, he seemed like a completely different person now.
Duan Yongping personally greeted him in front of the office building, his face displaying the standard warm smile of a businessman, but deep in his eyes lay a calm scrutiny.
The two shook hands and exchanged pleasantries, the atmosphere seemingly harmonious, but both knew perfectly well that this was a negotiation full of calculations and mutual benefit.
Inside the reception room, the delicate aroma of tea wafted through the air.
After a brief exchange of pleasantries, Li Zekai got straight to the point, demonstrating the efficiency and directness characteristic of Hong Kong businessmen.
“Mr. Duan, let’s be frank. I have a very positive outlook on BBK, especially in this era of explosive growth in consumer electronics.” Li Zekai leaned forward slightly, his gaze fixed intently on Duan Yongping. “My company, PCCW, is willing to invest HK$200 million (approximately RMB 170 million) in BBK as a strategic investor, acquiring a 30% stake. This investment will fully support BBK in expanding into new business lines, especially… the MP3 market.”
He deliberately emphasized the words "MP3 market," implying something was amiss.
Duan Yongping picked up his teacup, gently blew away the foam, his movements unhurried. His smile remained unchanged, but his tone carried an undeniable firmness: "I appreciate Young Master Li's sincerity. Two hundred million is indeed a huge sum. However…"
He put down his teacup, looked up to meet Li Zekai's gaze, and said, "30% of the shares is too high. BBK is my life's work and the foundation of the entire team's efforts. I can only accept 20% at most."
Li Zekai's smile faltered slightly.
20%?
This is much lower than his expected bottom line.
This Duan Yongping is indeed no pushover.
He quickly weighed the pros and cons in his mind: 20% was lower than expected, but it was enough to make him a major shareholder of BBK, with considerable influence. More importantly, it represented Duan Yongping's determination to align himself with him! The key to this move was to undermine that Lu guy, not to immediately take control of BBK.
"President Duan's control over the company is admirable." Li Zekai quickly adjusted his expression, and his smile became flawless again. "20%... Although it's a bit lower than I expected, since it was President Duan who asked, I, Li Zekai, will give him face! Consider it making friends!" He displayed a generous attitude.
"Thank you for your understanding, Mr. Li." Duan Yongping nodded slightly, then changed the subject, revealing another core purpose of his trip, "However, investment is only the foundation of cooperation. I have an even more important request, and I hope Mr. Li can lend his full support."
"Oh? Mr. Duan, please go ahead." Li Zekai sat up straight, adopting a posture of attentive listening.
“Flash memory.” Duan Yongping uttered these two words, his eyes sharpening. “Young Master Li must have seen Century Langke’s self-developed flash memory technology; it’s the core barrier to their ‘Waterdrop’ MP3 player. We can’t get their stock, at least not in the short term, in sufficient quantities at a competitive price. So, we need to find another source.”
He looked directly at Li Zekai: "I hope that you, Mr. Li, can use your extensive overseas connections to introduce BBK to Intel, the true giant in the flash memory field! We need a stable, large-scale, and competitively priced supply of flash memory chips! Price is key. If the procurement cost is too high, even if the product is made, we will have no chance in a price war and will be unable to shake 'Waterdrop's' position." Duan Yongping's request was very clear and crucial.
This is directly related to whether BBK can bypass Century Langke's blockade and quickly launch competitive products in the MP3 market.
Li Zekai was taken aback at first, then his eyes lit up with surprise, followed by a hearty laugh: "Hahahaha! President Duan! Great minds think alike! Intel? No problem! What a coincidence!"
He leaned forward, with an excited air about sharing a secret: "To be honest, Mr. Duan, Mr. John Carter, the head of Intel's Asia region, is an old friend of mine! Just last month, we were still in in-depth discussions about Intel's parent company's strategic investment in my PCCW Digital in Hong Kong. It's progressing very smoothly, and we can say that it has entered the final stage!"
Li Zekai's tone was full of confidence and a sense of control: "Mr. Carter has always emphasized that Intel's development strategy in Asia is to find the strongest and most promising local partners. My PCCW is undoubtedly the top platform in the telecommunications and digital fields in Hong Kong and even Southeast Asia. As for Mr. Duan's BBK..."
He paused, a hint of barely perceptible superiority in his smile. "Mr. Carter may not have had a deep understanding of the mainland market, especially private enterprises, and may have underestimated BBK's strength. But that's alright!"
With a wave of his hand, he exuded an air of magnanimity: "With my introduction and guarantee, Mr. Carter will definitely give President Duan face! I'll arrange it immediately! A three-way meeting! Yingke, BBK, and Intel! I believe that with President Duan's strength and BBK's potential, plus my Yingke's support in channels and international resources, we will definitely be able to persuade Intel and reach a cooperation plan that satisfies all three parties!"
Li Zekai's promise was firm and unwavering.
He seemed to have already envisioned the beginnings of a new alliance, orchestrated by him to connect and integrate Hong Kong capital, mainland manufacturing giants, and international technology oligarchs. This alliance would pose a powerful challenge to Lu Yang's Century Group!
This is not just an investment, but a crucial step for him to fight back against Lu Yang and rebuild his prestige in Hong Kong and the mainland market!
Seeing the glint in Li Zekai's eyes, Duan Yongping felt somewhat reassured.
Although they knew the other party had their own plans, the power and connections Li Zekai was demonstrating were exactly what BBK urgently needed.
He raised his teacup: "Then I'll trouble you, Young Master Li! I'll offer this tea in lieu of wine and await your good news!"
A few days later, in Shenzhen, at the Shangri-La Hotel's penthouse suite.
The atmosphere of the talks was far less relaxed and smooth than Li Zekai had anticipated.
John Carter, head of Intel Asia, a tall, middle-aged man with a typical Anglo-Saxon serious face, scrutinized Duan Yongping with a critical eye.
His attitude was polite but distant, and deep in his eyes was the condescending assessment that multinational executives typically have of local companies in emerging markets.
“Mr. Li, Intel highly recognizes your achievements with PCCW in Hong Kong. This is the basis for our willingness to consider strategic cooperation.” Carter’s voice was steady, with a distinctive American accent. “However, Mr. Duan’s BBK…”
He turned to Duan Yongping, his tone carrying a hint of skepticism, “Intel has always been very cautious in choosing partners, especially in strategic collaborations like supplying core components. What we need are ‘Champions’ with absolute leadership and extensive channel coverage in the target market. In the mainland market, especially in the core consumer electronics sector that we value, is BBK’s influence and scale…excuse my frankness, but is it still somewhat weak? Can it shoulder the heavy responsibility of promoting Intel flash memory products on a large scale in the mainland?”
Carter's words were direct, the subtext being: BBK is not qualified. He prefers to distribute products in Hong Kong and Southeast Asia through Li Ka-shing's PCCW, or to find a larger partner with stronger official backing in mainland China.
Li Zekai's smile was somewhat stiff. He hadn't expected Carter to be so disrespectful, questioning BBK's strength right in front of him.
Just as he was about to speak up in defense of Duan Yongping, Duan Yongping raised his hand in a gesture of respect. Instead of showing any anger at being slighted, a calm and confident smile appeared on his face.
“Mr. Carter,” Duan Yongping began. His English wasn’t particularly fluent, but his pronunciation was clear, and his tone was steady and powerful, carrying an undeniable confidence. “I fully understand Intel’s caution as an industry giant and its high demands on its partners. But I think you may have some informational biases regarding the landscape and potential of the mainland market, especially the consumer electronics market, and the role that BBK plays in it.”
He calmly took out several pre-prepared documents from his briefcase and pushed them in front of Carter: "This is a report on BBK's market share in its three core product lines—telephones, VCD players, and educational machines—over the past three years, issued by the internationally authoritative research institution Nielsen. The data shows that BBK occupies a top-three position in the mainland market share in these three areas, and its leading advantage is very obvious."
Carter's gaze swept over the data charts in the document, and his brow twitched slightly.
Duan Yongping continued, “Market share is only one aspect. More importantly, BBK has a comprehensive marketing network and service system that covers the whole country and reaches down to the county and town level. We have more than 3000 core distributors, tens of thousands of sales terminals, and a marketing team that is recognized in the industry as the most efficient and effective. I believe Mr. Li has also heard about this.”
He glanced at Li Zekai at the opportune moment, and Li Zekai immediately nodded in agreement: "That's right! President Duan's marketing team is famously powerful in mainland China!"
"Secondly," Duan Yongping shifted his focus to the MP3 market, "Mr. Carter must have been aware of the sudden emergence of the 'Waterdrop' MP3 player. The market buzz it generated proves just how huge and largely untapped the blue ocean market for flash memory music players is in mainland China! And BBK, as a leading brand in the mainland consumer electronics sector, possesses strong brand appeal, mature distribution channels, and a loyal user base. Once we launch MP3 products based on Intel's high-quality flash memory chips, leveraging BBK's existing system, we can quickly and comprehensively bring these products to market, maximizing the market value of Intel flash memory products!"
Duan Yongping's tone was persuasive as he looked Carter straight in the eye: "By choosing BBK, Intel will gain a powerful ally with unparalleled channel execution capabilities in the mainland market, a deep understanding of local consumer needs, and a rising momentum! This is far more helpful for Intel to quickly open up and dominate the huge flash memory application market in mainland China than finding a larger but slow-responding partner, or a partner with an official background but lacking market vitality!"
He paused, then offered his most crucial bargaining chip: "Of course, we are also well aware of Intel's technological leadership and cost structure. BBK is willing to place very sincere, large-scale, long-term purchase orders in exchange for Intel's more competitive support in terms of supply prices! What we want is a win-win situation, to jointly explore and share this huge market that is about to explode! Not to have our product competitiveness stifled by excessive costs, allowing 'Waterdrop' to dominate the market. I believe this is definitely not a situation that Intel wants to see."
Duan Yongping's remarks were logically clear, supported by compelling data, and went straight to the heart of the matter.
He not only demonstrated BBK's strong capabilities, but also accurately described the huge market prospects brought about by the cooperation. He also cleverly took advantage of Intel's potential concerns that "Century Netac's self-developed flash memory USB flash drives may form a new monopoly," and finally concluded with a commitment to large-scale procurement and a highly competitive price demand.
Carter's expression shifted from initial serious scrutiny to earnestness, and finally to a thoughtful look.
The Easterners before us are demonstrating not only data and strength, but also a profound understanding of the market and a strong, determined entrepreneurial spirit.
This is quite different from the temperament he has observed in other Chinese entrepreneurs.
A brief silence fell over the room.
Li Zekai looked nervously at Carter, then at Duan Yongping, his palms slightly sweaty.
Finally, Carter leaned back in his chair, a formal, approving smile on his face. He extended his hand: "Mr. Duan, your statement is very persuasive. The strength and potential your company has demonstrated, as well as your understanding of the market, have exceeded my expectations. I think we can indeed discuss the specific details of the cooperation in more depth. Intel is willing to support a determined and capable partner to jointly develop the mainland market."
Duan Yongping felt a great weight lifted from his shoulders, and a sincere smile appeared on his face. He reached out and shook hands firmly with Carter: "Thank you very much for your trust, Mr. Carter! It's been a pleasure working with you!"
Li Zekai was overjoyed and immediately raised his glass: "Great! To our three-way cooperation, to our shared future, cheers!"
The subsequent negotiations went exceptionally smoothly. With Duan Yongping demonstrating his capabilities and Li Zekai mediating, the three parties quickly finalized a cooperation framework:
Investment Agreement: Li Zekai's PCCW Digital invested US$20 million (approximately RMB 1.66 million), representing 2000% of BBK's total share capital after the capital increase.
Intel's investment and supply: Intel also invested $20 million, acquiring a 2000% stake. At the same time, Intel pledged to supply BBK with the flash memory chips and other core components it needed in the long term at a price significantly lower than the international market price at the time (approximately 25% lower than the average market price).
Channel support: PCCW leverages its telecommunications and digital channel advantages in Hong Kong and Southeast Asia to help BBK MP3 players and other products open up the Southeast Asian market.
Strategic synergy: The three parties will establish a regular communication mechanism to conduct in-depth collaboration in areas such as technology, market, and supply chain.
As each clause of the agreement was confirmed and initialed, Duan Yongping, Li Zekai, and John Carter raised their glasses once again.
The champagne bubbles rose and burst on the crystal-clear glass, making a soft hissing sound, reflecting the meaningful smiles on the faces of the three people.
A new tripartite alliance, aimed at countering the Century Group, began to take shape amidst the clinking of glasses.
Meanwhile, behind this capital feast, a cold statistic is quietly changing: after introducing a total investment of US$4000 million from PCCW and Intel, and after BBK completed this capital increase and share expansion, Lu Yang's original 25% stake in BBK was inevitably diluted significantly.
After complex equity calculations, Lu Yang's shareholding in BBK Electronics plummeted from 25% to 15%, making him no longer the second-largest individual shareholder. He was even far behind foreign investor Intel and Hong Kong investor PCCW, ranking only fourth among shareholders. (End of Chapter)