In Hong Kong, we build a global business empire

Chapter 719 Strike the snake at its vital point; either don't do it at all, or do it thoroughly!
The panicked voice of the general manager of ParknShop supermarkets under Hutchison Whampoa came from the other end of the phone: "Mr. Li! Something bad has happened! Dairy Farm International, a subsidiary of Hongkong Land Group, just announced that all of their Wellcome supermarkets will be offering massive price reductions on more than 200 kinds of daily necessities and fresh food for a month, starting the day after tomorrow!"

Promotional flyers have already been distributed in multiple locations throughout the city, offering average price reductions of 30%, with some items even below our purchase price!

Upon hearing this, Li Jiacheng's lips twitched, as if he wanted to say something, but he didn't know what to say.

After a while, Li Jiacheng muttered, "A 30% discount, a whole month-long promotion period, they're insane!"

ParknShop, a supermarket chain under Hutchison Whampoa, was founded in 1973. Now, eight years later, it has become the second largest supermarket chain in Hong Kong after Wellcome, with stores opening one after another throughout downtown Hong Kong and Macao.

Previously, the company had discovered that Wellcome Supermarket, a leading supermarket chain in Hong Kong, was targeting them. Wellcome Supermarket was also involved in the area surrounding the newly opened ParknShop supermarket.

I never imagined it would escalate to such a huge extent.

A 30% discount! Even their supermarkets don't have that much profit margin.

In other words, if ParknShop supermarkets follow suit, then they will have to lose money to do business.

If they don't keep up, the result is predictable: most of the customer traffic will inevitably be drawn away by Wellcome supermarkets under the Hongkong Land Group.

If the promotion period is three to five days, or even a week, they can still manage.

But this took a whole month.

Cruel, too cruel.

At this moment, ParknShop supermarket is in a very passive position.

If Hutchison Whampoa has sufficient funds, it wouldn't matter if they spent some of it.

The problem is that Hutchison Whampoa is not in a good position right now. Its hotel business, dock business, retail industry, real estate industry, insurance industry, import and export trade, etc., have all declined to varying degrees in the past two months, and its cash flow is already tight.

The banks at Huifeng Bank are in a state of panic, with loan quotas being tightened repeatedly. At this time, diverting huge sums of money to fight a price war with no end in sight would be adding insult to injury and could even shake the foundation of Hutchison Whampoa.

"Mr. Li, should we follow suit? If not, then we should prepare for a month of dismal business." The general manager of ParknShop supermarket asked.

This matter has far exceeded his responsibilities as general manager. It's better to leave this to the boss to decide; otherwise, he, as the general manager, will inevitably become the scapegoat.

Following that would result in huge losses;
Not following suit could lead to a sharp drop in market share and potentially long-term losses.

After all, ParknShop has so many chain stores in Hong Kong, and each one is quite large, so rent is a major expense.

Add to that the employees with salaries of over a thousand people every month, and the payments due to customers in the future, and all that pressure is considerable.

Li Jiacheng felt a throbbing sensation in his temples, followed by a sharp headache.

One problem after another arose, leaving even this "superman," known for his composure and shrewdness, feeling exhausted.

At this moment, it feels as if I am trapped in the center of a spider web that is constantly tightening, and every struggle only makes the restraints tighter.

He took a deep breath, forcing himself to calm down, his mind racing as he weighed the consequences of each choice.

We must not panic; it is precisely in times like these that we must remain calm.

He spoke into the phone, his voice unusually calm, even carrying a desperate, resolute edge: "Follow! Why not follow?"

Li Jiacheng's tone was resolute: "They want to wage a price war and try to crush us with money, then let's see who can't hold out first! You need to do three things immediately: First, reduce the price of our largest and most core inventory of 100 products by 35%!"

"Get advertising on RTV (Rediffusion Television), and make the supermarket posters more eye-catching than Wellcome's, to tell all of Hong Kong that ParknShop is the supermarket that truly saves money for citizens!"

"Second, immediately meet with all major suppliers and tell them this is a life-or-death battle! Either they immediately provide us with additional 'market support fees' and temporary special prices to help us get through this, and I, Li Jiacheng, will remember this favor and repay them handsomely in the future. Or..."

He paused, his voice turning icy, "Either wait and see ParknShop collapse, and then face Wellcome, which monopolizes the market, alone, and see how much bargaining power they'll have left!"

"Third, immediately activate the internal 'cost-cutting plan.' Freeze all non-essential expenditures, halve management's bonuses for this month, and notify the logistics and purchasing departments to renegotiate all service contracts and long-term orders. Cut costs and delay as much as possible! Extraordinary times call for extraordinary measures!"

ParknShop supermarkets are one of Hutchison Whampoa's key businesses, and Li Ka-shing could not stand by and watch them be easily defeated by Wellcome supermarkets.

This is not only related to immediate profits and market share, but also to Hutchison Whampoa's overall reputation and cash flow stability.

ParknShop has been developing for nearly 8 years, and its chain stores in Hong Kong and Macau have long become one of Hutchison Whampoa's core businesses, with store revenue accounting for nearly 10% of Hutchison Whampoa's total turnover.

Moreover, ParknShop supermarkets have always been very cautious in their site selection in Hong Kong and Macau, and have a very large customer flow. Their gross profit margin is even close to 20%, making them a very important profit center and stable cash cow under Hutchison Whampoa.

If this business is destroyed, it will not only result in huge direct losses of profits, but will also seriously shake the capital market's confidence in Hutchison Whampoa's overall profitability and management level, which may lead to a series of disastrous consequences such as a sharp drop in stock price, a downgrade in credit rating, and a surge in financing costs.

In other words, this is no longer just a problem for ParknShop supermarkets; it will affect the entire group!

This is the real burden that Li Jiacheng cannot bear.

If Best Choice shows signs of failure, the resulting chain reaction will be unimaginable.

The general manager on the other end of the phone was taken aback by his boss's sudden assertiveness and series of instructions, but he also seemed to have found his backbone and quickly replied, "Yes! Mr. Li, I understand, I'll take care of it immediately!"

After hanging up the phone, Li Jiacheng knew that this was only a temporary stop to the bleeding, and might even be accelerating the loss of blood.

Suppliers aren't fools; it's unknown how effective empty promises and threats will be.
The money saved through internal cost-cutting is a drop in the ocean compared to a large-scale price war.

The real Achilles' heel is funding! The massive cash deficit needs to be filled immediately.

Moreover, ParknShop's competitor is Wellcome Supermarket, whose owner is Lam Ho-yin, who is the richest man in Hong Kong.

Engaging in a price war with the other party is truly like an egg hitting a rock—it's very irrational.

But he had no way out!
He knew that the order he had just given was nothing short of a high-stakes gamble.

The gamble was that the suppliers would be intimidated and provide support, that the company could squeeze out enough cash to sustain itself for a while, and that Lin Haoran would have reservations due to the huge expenditures...

But a voice deep inside him told him that if the other side dared to launch this war, they must have made thorough preparations.

"Sigh!" Li Jiacheng sighed.

If the real estate industry this year were as hot as it was before the beginning of last year, he wouldn't be so worried.

In recent years, Hong Kong property prices have basically doubled or tripled every year. Making money was incredibly easy, which gradually gave him confidence.

At that time, the properties developed by Cheung Kong Holdings were snapped up as soon as the blueprints were released, and huge cash flows poured in, supporting its acquisition of behemoths like Hutchison Whampoa.

Unlike now, with unsold pre-sale apartments and banks reluctant to lend, the once-lucrative real estate business has become a bottomless pit that devours cash.

He leaned back in his chair, closed his eyes, and could almost hear the bustling noise of the sales office last year and see the crazy buyers waving their checkbooks.

That feeling was like sitting atop a golden mountain, looking down upon all living beings.

But when he opened his eyes, the cold reality pulled him back to this stressful office.

As dusk settled outside the window, neon lights flickered, but this bustling scene seemed to be separated from him by an invisible barrier.

……

Meanwhile, just a few hundred meters away from the Hutchison Whampoa Building, laughter was heard coming from an office on the 51st floor of the Kang Le Building.

Lin Haoran and Ma Shimin were both in the office at that moment.

After the Kadoorie family backed down, there were no longer any obstacles to the privatization of the Xiangjiang Hotel.

Now, they have entrusted Galaxy Securities with the full responsibility for this matter. Holding more than 62% of Xiangjiang Hotel's shares, their next step is to gradually increase their holdings. Once they reach 90% ownership, they can then forcibly acquire the remaining shares and complete the complete privatization and delisting of Xiangjiang Hotel.

This process is no longer in doubt; it's just a matter of time.

Therefore, the Xiangjiang Hotel is no longer their focus, even though major media outlets in Hong Kong are still reporting on the matter.

In particular, their deliberate dissemination of the fact that the Kadoorie family sold their shares to them at a 6% discount shocked the entire Hong Kong business community. Everyone clearly saw the heavy price and ultimate fate of opposing Lin Haoran.

This is not only a commercial victory, but also a powerful psychological deterrent.

Lin Haoran wanted to see who would dare to mess with him after this incident.

Just as he said, beat them until they're scared!
If once doesn't work, then twice; if twice doesn't work, then three times. Everyone who provokes us will become a stepping stone for us to establish our authority!

Let them understand that provoking me, Lin Haoran, means facing enormous risks and heavy consequences. Sooner or later, no one will dare to challenge us anymore. "Mr. Ma, do you think Hutchison Whampoa will follow suit with this sudden big promotion at our Wellcome Supermarket?" Lin Haoran asked with a smile.

The news about Wellcome Supermarket today was leaked by Ma Shimin!
Because the boss, Lin Haoran, had previously instructed him to intensify his efforts to suppress Hutchison Whampoa.

Therefore, Ma Shimin decided to start with Wellcome Supermarket.

The reason they dared to offer a 30% discount is quite simple: in addition to having ample funds, they also have another source of confidence, namely the newly established fast-moving consumer goods giant, Langwei Group.

Today, the Langwei Group owns more than 20 brands, including Red Bull, Heineken, L'Oréal Paris, Carlsberg, Kraft Heinz, and Snickers, which in turn have nearly 200 products. It has gradually built itself into a sizable multinational fast-moving consumer goods group.

Many of these products are internationally renowned brands and have now become common products used by Hong Kong residents.

Therefore, he came up with a plan to suppress ParknShop supermarkets. Starting the day after tomorrow, all of his Wellcome supermarkets will launch a large-scale price reduction promotion for more than 200 kinds of daily necessities and fresh food for a month!

During this period, the Langwei Group reduced the price of its products by 15% and supplied them to the entire Wellcome supermarket chain.

While a 15% price reduction will significantly decrease the profits of these FMCG brands under the Langwei Group, the Hong Kong market is only a small part of their overall market.

Spread across the group's global business, this profit loss is almost negligible. In fact, the promotion could be used to further expand market share and brand influence, making it more beneficial than harmful in the long run.

However, for Wellcome Supermarket, this 15% cost advantage, combined with the special promotional funds allocated by the group, enabled them to launch this fierce price war lasting a month with a discount of up to 30% at a much lower cost than other competitors, especially ParknShop.

This is not fair competition at all; it's a one-sided crushing defeat.

When Ma Shimin heard Lin Haoran's question, he chuckled, stood up from his chair, and walked to the round window to overlook the Hong Kong city center as the lights began to come on.

“Boss, he will definitely go with it.” Ma Shimin’s tone was certain, as if stating a given fact. “Li Jiacheng has no choice. ParknShop is an important piece in his retail business and one of the important sources of cash flow for Hutchison Whampoa.”

If he backs down, his market share will collapse instantly, suppliers' confidence will crumble, and neither Huifeng Bank nor Standard Chartered Bank will dare to continue lending him money. That would be a real catastrophe. He has no choice but to bite the bullet and keep going, even knowing it's a self-destructive act.

Lin Haoran nodded. Although he had no management experience, as a business tycoon who was now famous in Hong Kong, he easily understood what Ma Shimin meant.

Ma Shimin continued, "I can even guess his reaction. He will definitely order an even larger price reduction than us, trying to overwhelm us in terms of momentum. At the same time, he will coerce and entice his suppliers, and he will also cut costs internally, trying to squeeze out every penny to fight this battle."

Lin Haoran nodded in satisfaction: "So, what's our next step?"

"Next step?" Ma Shimin smiled slightly. "When all his struggles have become futile, when he has exhausted his last bit of cash flow and credit, that will be our time to reap the rewards."

We can have some mainstream media report on the potential cash flow pressures facing Hutchison Whampoa. This will surely attract a lot of interest and even lead people to investigate further.

In this way, Hutchison Whampoa's cash flow problems will definitely be exposed. Suppliers will scramble to demand early settlement, the capital market will vote with its feet, and the stock price will plummet.

Furthermore, with the current sluggish real estate market, it will be more difficult for them to liquidate their properties. At that point, even if Li Jiacheng had three heads and six arms, he wouldn't be able to turn the tide.

Lin Haoran's eyes revealed a satisfied look. He appreciated Ma Shimin's style of pressing forward relentlessly and leaving no room for compromise.

Although he knew that it was wishful thinking to think that he could defeat Li Jiacheng based on just these few points, how could a business tycoon be so easily defeated?

Li Ka-shing has navigated Hong Kong for decades, weathering many storms. His resilience, connections, and adaptability are unparalleled.

Relying solely on price wars and public pressure in the retail industry might cripple him and put him in a very passive position, but to say that he will be completely defeated or that Lin Haoran will be able to "acquire" his core assets is indeed premature and underestimates the power of "Li Ka-shing".

However, Lin Haoran did not need Hongkong Land Group to completely defeat Hutchison Whampoa.

For Lin Haoran, simply exacerbating Li Jiacheng's cash flow problems and driving down Hutchison Whampoa's stock price would be enough.

Because he is still secretly eyeing Hutchison Whampoa.

The decline in share price is beneficial for Galaxy Securities to acquire more Hutchison Whampoa shares more quickly and at a lower cost.

Increasing the severity of Li Jiacheng's cash flow problems would make it easier for him to make decisions such as "cutting his losses" or introducing strategic investors when facing enormous cash flow pressure.

When Li Ka-shing was facing a cash flow crisis, he only had two choices: either abandon Hutchison Whampoa or abandon Cheung Kong Holdings.

Cheung Kong Holdings is the foundation upon which Li Ka-shing built his fortune and the absolute core of his family business, bearing all his reputation and roots.

In contrast, although Hutchison Whampoa was a large company, it was a spoil of war that he acquired later through a series of capital operations, and its control was not as deeply rooted as that of Cheung Kong Holdings.

When a real crisis arrives and sacrifices must be made, Li Ka-shing will not hesitate to choose to preserve Cheung Kong Holdings.

This is his bottom line, and his lifeline.

Lin Haoran had precisely identified this point.

He didn't need to destroy Li Ka-shing's entire empire immediately; he only needed to continue to exert enough pressure to force Li Ka-shing to make a painful choice between his "eldest son," Cheung Kong Holdings, and his "second son," Hutchison Whampoa.

At that point, Lin Haoran, who holds a large amount of cash and has long coveted Hutchison Whampoa's high-quality port, real estate and retail assets, can transform from a passively suppressed opponent into a potential "savior" or "powerful acquirer" who provides timely assistance.

Originally, because Cheung Kong Holdings held a 40% stake in Hutchison Whampoa, he had no intention of acquiring Hutchison Whampoa.

However, Li Jiacheng's actions over the past few months have indeed angered Lin Haoran.

Even if the other party is a senior Hong Kong Chinese businessman, the fact that they have repeatedly stood against him and even joined forces with British capital to try to form an "anti-Lin alliance" has crossed Lin Haoran's bottom line.

The business world is like a battlefield; it values ​​strength and tactics, not seniority or personal connections.

Since the other party drew their sword first, they can't blame themselves for throwing a heavy punch in retaliation.

Although Lin Haoran was young, he was well aware of the principles of "hitting the snake at its vital point" and "either don't do it, or do it thoroughly."

Previous clashes may have left room for maneuver, but Li Jiacheng's actions this time undoubtedly demonstrate his stubborn hostile stance.

Any mercy or hesitation towards such an opponent would be irresponsible to oneself and one's vast business empire.

His thinking became crystal clear: continue the high-pressure attack until Li Ka-shing's cash flow dries up and his stock price plummets, and then when the other party is at his most vulnerable, either force him to sell Hutchison Whampoa's core assets to obtain cash to save himself, or greatly increase his stake in Hutchison Whampoa through secondary market acquisitions and behind-the-scenes negotiations, and even seek a controlling stake!

Controlling Hutchison Whampoa would mean controlling more container terminals in Hong Kong, a vast real estate reserve, a retail network spanning Hong Kong Island and Kowloon (ParknShop, Watsons), and numerous other valuable businesses.

This will allow Lin Haoran's business empire to expand to an unprecedented scale, truly becoming a unique behemoth in Hong Kong, with no one able to shake its position.

Although Hutchison Whampoa and Hongkong Land have many overlapping businesses, this is not a problem at all.

One plus one sometimes doesn't just equal two; it can also be greater than two!

The synergistic effects and monopolistic advantages brought about by integration will generate tremendous value.

Once Hutchison Whampoa is brought under its control, the container terminal business in Hong Kong will primarily be dominated by companies under Lin Haoran.

Hongkong Land's Kwai Chung Pier 5 and Hong Kong Air Cargo Terminals, along with Hutchison Whampoa's Hong Kong International Container Terminals, practically monopolize Hong Kong's sea and air logistics lifeline.

At that time, pricing power and route selection will be greatly tilted in their favor, and any company that wants to do import and export business will have to deal with Lin Haoran's companies.

This stable cash flow and strategic value are immeasurable.

Secondly, in the real estate sector.

Hongkong Land owns a large number of high-quality office buildings and shopping malls in the core area of ​​Hong Kong Island, while Hutchison Whampoa has a huge land reserve and residential development projects in the New Territories, Kowloon and even non-core areas of Hong Kong Island.

The combination of the two will create a comprehensive range of properties, from high-end commercial real estate to mass-market residential properties, and will result in the largest land reserves in Hong Kong.

Although the real estate industry is about to fall into a real estate crisis, Lin Haoran knows that compared to the future of Hong Kong's real estate industry, the current housing prices in Hong Kong are just at a low point.

They will have greater say in development pace and market pricing, and can even coordinate with each other to use rental income from commercial real estate to subsidize residential development with longer cycles, thus smoothing out cash flow fluctuations.

Third, retail network.

With Wellcome and ParknShop, the number of stores will give them an absolute advantage, completely monopolizing the large supermarket market in Hong Kong. This dual-brand operation will allow for precise targeting of different business districts and customer groups, giving them complete control over Hong Kong's supermarket channels.

At that time, not only will Langwei Group's products be able to enter the Hong Kong market without any obstacles, but any fast-moving consumer goods brand that wants to enter the Hong Kong market will have to consider the whims of Lin Haoran's retail enterprises. Channel fees and bargaining power will be raised to an unprecedented level.

Watsons' drugstore and personal care network can also complement and synergize with Mannings, a brand under Hongkong Land Group.

Once this idea takes root, it quickly becomes incredibly alluring and unwavering.

Previous crackdowns may have been punitive and aimed at establishing authority, but from now on, the goal of the operation has been upgraded to a precise capital hunt aimed at annexation and plunder.

(End of this chapter)