Chapter 33 3. "Win-win" for everyone

Behind every successful enterprise, there is a long-term and clear grand strategy.This strategy is based on the core competence, core business and core goals of the enterprise. It surpasses all "tricks", but needs to use every ordinary "trick" to deduce the myth. It does not have to be amazing, but it must be Interlocking.Persisting and correcting it is the arduous process of creating a great enterprise, and it is also the mental journey of an entrepreneur to cultivate resilience and improve himself. In our above descriptions, Wahaha’s capital cooperation strategy has always been the center of discussion, and it is in this process that another striking perspective has surfaced: in fact, we should also seriously interpret Let's talk about Danone's "China Strategy".

This is the other side of the coin, perhaps a strange and novel side for local Chinese companies. Among all the multinational beverage and food giants in the world, Danone is the most junior one.This French company, which was founded in 1966, was originally a professional glass manufacturing factory. It was not until the 1980s that it began to make a difficult transformation under the threat of industrial recession.In most of the acquisitions, Danone has gradually formed its own industrial growth model.The British Economist Intelligence Unit once described Danone’s expansion strategy in this way: first, decisively turn to sunrise industries, and constantly abandon marginal products to strengthen core industries; second, extensively acquire local excellent brands in markets around the world, and implement an inclusive strategy Localization and multi-brand strategy; the third is to position itself as a global company, accurately attack international competitors in any market, and open the door to local brand companies for close integration.

In Danone's brand galaxy, in addition to LU, Evian, Danone and other international brands, there are more regional market brands like Wahaha and Robust. The total number exceeds 30, and Danone's management of these brands It also appears to be very flexible in terms of management, and is basically managed by the original management.Frank Rebold, the former global president of Danone Group, explained this approach: "Danone's development includes people-oriented considerations, and the preferences and eating habits for food cooking and taste are the basis of people's daily life culture." The implication is to determine the brand according to the regional culture.Of course, Danone still has a lot of work to do in the integration of regional brands. In China, how to integrate the two major brands of Wahaha and Robust is a very sensitive and difficult project.

We can find that the operation game in today's business world is composed of three major themes, one is capital, the other is technology, and the third is globalization.In such a game, the decision-making and strategic design of any enterprise must go through the resource allocation and positioning of the three, and take the cultivation of its own core competence as the premise of consideration.As Jack Welch believes, there is no "living space for ordinary commodity suppliers" in today's world, only those market leaders, those who are the leanest, lowest-cost world-class producers, and those with clear technical acumen Only the most powerful enterprises will stand out and become the winners.In other words, only those who control the market can truly control their own destiny.

So, how to judge whether you have control of the market?Welch said, very simple, you must be "Number One, Number Two (first, or second)." Danone's success in the global market can undoubtedly be a footnote for Welch's thesis. Danone claims that it only makes three products in the global market: fresh milk products, water and non-carbonated drinks, and biscuits.At present, it is the global sales champion in the first two fields and the runner-up in the biscuit market.It is conceivable that its core competitiveness is strong.Wahaha Party Secretary Du Jianying once described such a detail to us. At the beginning of 2002, Wahaha’s senior staff visited a global production and research center built by Danone in the suburbs of Paris. The investment was as high as 300 million euros, and thousands of scientists were there. To carry out the work, the annual investment in scientific research exceeds more than 100 million euros.This center studies only 3 products: fresh milk, water and non-carbonated drinks, biscuits.Among them, there are thousands of topics about drinking water.

Each of Danone's three core products is like a sharp knife made of refined steel, which can be inserted into any new market with almost no resistance.One case is enough to witness: Danone has always been on the sidelines of the US market, which has the strongest consumption power and the most powerful competitors. It was not until 1997 that it was determined to enter. However, it took only 3 years. By 2000, Danone was It became the second largest bottled water company in the United States. Danone can be said to have no distractions in the cultivation of core strength, and its determination is beyond imagination.

Danone has invested heavily in the beer market, and has successively acquired the famous Haomen Beer and Dongxihu Beer in China. But it soon discovered that while beer still brought in huge profits, Danone's chances of becoming a global leader in the beer industry in the long run were slim.So it categorically announced its withdrawal from this market, and sold all the beer factories in its hands within three years. The year Danone came to China coincided with the time when Wahaha was listed and founded. In 1987, it held 90.3% of its shares and established a joint venture with Guangzhou Milk Company to establish Guangzhou Danone Yogurt Co., Ltd.However, by around 1993, Wahaha had developed into one of the most dazzling beverage and food companies in China, while Coke's performance in the Chinese market was lackluster.Its first move - active milk yoghurt failed in Maicheng due to its high price and storage costs; its leading brand Evian mineral water in the international mainstream market can only be sold in China due to its high price. It is popular in four-star and above hotels and high-end bars; its "Xianqu" biscuits and other snacks are selling well, but it has always been tepid due to the limited total market.It was in this dilemma that Danone suddenly changed its strategy.

Since the early 1990s, in line with its global development strategy, Danone China has quietly started its acquisitions in China. Especially through the joint venture with Wahaha, it suddenly found another shortcut to open up the Chinese market—by purchasing , Participate in high-quality local companies to achieve the goal of quickly entering high-end card slots. On the official website of Danone Group, we can clearly find the market path that Danone can frequently annex in China—— In 1992, Shanghai Danone Biscuit Company was established as a joint venture, holding 54.2% of the shares; In 1994, Shanghai Danone Yogurt Company was established as a joint venture, holding 45.2% of the shares;

In 1996, Wuhan Oulian Dongxihu Beer Company was established as a joint venture with the brand "Xingyinge", holding 54.2% of the shares; In 1996, Tangshan Oulian Haomen Beer Co., Ltd. was established as a joint venture with the brand "Haomen", holding 63.2% of the shares; In 1996, a joint venture with Wahaha Group; In 1998, Shenzhen Yili Food Co., Ltd. was established as a joint venture with the brand "Yili", holding 54.2% of the shares. In 2000, Danone made a sudden effort in the Chinese market, attacking from all sides.Firstly, in March, it controlled Guangdong Robust; in November, it took a 5% stake in Guangming Dairy, the leader of domestic dairy products; 50% of the shares of the drinking water company and 10% of the shares of the Zhengguanghe online shopping company.

Behind every acquisition is actually a thrilling game between Danone and local companies and other multinational companies. In this process, Danone's flexible strategy, accurate timing and soft "body" are worth recalling. Nestlé of Switzerland and Danone are deadly rivals in the European market, and they are still fighting fiercely in the Asian and South American markets.Nestlé had been negotiating with Meilin Zhengguanghe, which has the largest drinking water market share in Shanghai, for as long as 4 years. When it came time to sign the contract, they couldn't agree on a 1% stake.Nestlé hopes to acquire 51% of the shares of Merlin, while Merlin insists on selling 50%.It was at this critical moment that Danone broke out from the inclined road, agreed to all of Merlin's demands, reached a joint venture agreement with lightning speed, and snatched away the delicious food that Nestlé had already reached.

The joint venture negotiations with Robust are similarly dramatic.Nestlé and Robust have already talked about the edge of the signing table. He Boquan said that "except that the Robust brand will not be sold for the time being, everything is easy to negotiate", but Nestlé insists on "purchasing the brand first, everything is easy to negotiate." In such a stalemate again, Danone appeared at the right time and succeeded in one fell swoop. All kinds of performances highlight that this is a modern company with absolutely clear strategic intentions and very flexible tactical means.Regardless of holding or participating in shares, Danone's consistent style is to keep quiet and hide behind joint ventures.In many cases, it does not even get involved in the management of Chinese brands and joint ventures.In fact, about 70% of the Danone Group's global turnover also comes from the local leading brands that Danone holds or participates in various countries around the world, and profits from the strategic investment in local leading brands.It doesn't seem to care about "brands", "products" or even management and management rights. Its only assessment standard for joint ventures is profitability.Zong Qinghou enjoyed the national flag raising and red carpet hospitality at Danone, while He Boquan's team had no choice but to withdraw from Robust. To a large extent, it was the capital side's evaluation of their different profitability.Until now, the daily contact between Danone and the Wahaha joint venture company is limited to board meetings every quarter, and entrusting the well-known PricewaterhouseCoopers accounting firm for routine financial audits twice a year. Obviously, Danone's China strategy is quite distinctive, and it can even be regarded as the most efficient one so far.Its strategy is very similar to playing Go, throwing a piece to the east and taking a step to the west. It seems to be careless, but over time it has become a giant.In less than 10 years, Danone's share in China's beverage and food market has quietly surpassed that of other players, and its remarkable experience is obviously a strategic success. In China's beverage and food market, Danone may be the least well-known of all national brands, but it is undoubtedly the biggest winner. "Sun Tzu's Art of War" states, "Supporting soldiers to attack and plan", "Soldiers who defeat others without fighting are good at what they do."Lao Tzu said, "The Great Dao has no form".Danone's plan is almost there. Zong Qinghou has always had a clear understanding of "capital is king".He clearly knows that foreign capital is a double-edged sword, "it can carry a boat, but it can also capsize it."He believes that as a joint venture, playing the capital card is actually a two-player game, not a patent in the hands of foreign companies. The two giants in China's beverage and food industry—Wahaha and Robust have successively entered into joint ventures with Danone. The two very different endings vividly reflect the differences in the game skills between local companies and multinational capital. With a little comparison, we can observe that one of the turning points in the 10-year business war between Wahaha and Robust is precisely due to the power of capital.The two companies were founded only two years apart. Throughout the first half of the 1990s, the two companies competed in the leading products of fruit milk and calcium milk at that time. In 1996, after the joint venture between Wahaha and Danone, with strong international capital as the support point, they successively launched the Chinese people's own "Very Coke" with great momentum, as well as advanced production lines of pure water, dairy products, tea beverages and other world-class technical standards. In the market share, the annual sales quickly soared to nearly 8 billion yuan in a few years.However, Robust's annual sales have hovered at more than 1 billion yuan for a long time, and the gap with Wahaha has widened. In the end, the entrepreneurs "leave get out of class" because of capital talk. Success is also capital and failure is also capital.But it is not difficult to decipher the life genes of "success" and "failure" as long as we carefully investigate the capital insider of Robust and Wahaha—— Robust: In March 2000, under the pressure of competition, it entered into a joint venture with Danone. The joint venture is equivalent to Danone's purchase of shares in Robust's parent company.Danone holds 92% of the shares and has an absolute right to speak; the local government of Xiaolan Town, Zhongshan City accounts for 5%, and five entrepreneurial veterans including He Boquan only account for 3%. Wahaha: Judging from the capital relationship between it and Danone, it is by no means as simple as a 1+1 joint venture.From the analysis of financial data up to the end of 2001, the Wahaha capital circle has the following three levels.First, on the basis of the first 5 joint ventures, Wahaha invested part of the fixed assets or funds of its subsidiaries, and successively established 15 production-oriented joint ventures with Danone, of which Danone holds 51%.The second is that Wahaha and Danone cooperated with third parties distributed all over the country to establish 7 production-oriented joint ventures.In the first and second capital circles, Danone's cumulative investment of more than US$100 million accounted for 47.75% of the total registered capital.In addition, there are 20 other companies in Wahaha’s third capital circle, all of which are wholly owned by Wahaha or cooperate with third parties other than Danone, but Wahaha is the major shareholder.Adding up the three levels, Danone's investment only accounts for about 32% of the 42 companies in the entire Wahaha Group with a registered capital of 3.5 billion yuan. According to Zong Qinghou, Wahaha "has never made a joint venture with Danone as a whole, but only engaged in several projects together."Moreover, Danone's investment is only limited to Wahaha's production field, and the "Wahaha" brand and the large-scale and effectively operating Wahaha marketing network are not within Danone's tentacles.To use an image metaphor, Danone is like paying money to build a number of "production workshops" together with Wahaha. The sales company affiliated to Wahaha Group "buys" products from the joint venture production workshops, and Danone gets a share from these independently accounted production workshops. 51% of their profits (Danone's dividend ratio is lower than 51% in joint venture production workshops in the second capital circle). In May and June 2002, Wahaha entered the long-rumored children's clothing industry in a big way, and began to set foot in diversified business fields other than the beverage industry that had been entrenched for many years. On June 26, the first Wahaha series of children's clothing samples and orders held in Hangzhou, 2,000 representatives of franchisees flocked from all over the country, and according to reports, more than 8,000 people signed up for franchisees.Behind the excitement, the careful media discovered that Wahaha initially chose Hong Kong Dali Group as a partner in this project with an initial investment of 100 million yuan. Soon after, this partner, which accounted for 49% of the shares, withdrew due to various changes and changed It is solely owned by Wahaha.Since it is a brand-new field, the risk of entry is not small, but if everything develops according to the plan, and the sales revenue of each store is calculated at 500,000 yuan, the annual sales of 2,000 specialty stores will reach 1 billion yuan. Possibly a substantial share. Wahaha children's clothing surfaced This time, the old man Danone is just a bystander in this investment pie. This is a very peculiar joint venture relationship. Danone realized a key step in the "China layout" in its equity participation in Wahaha, and Wahaha realized the marriage of local enterprises and multinational capital in such a joint venture. In terms of the specific business operation concept, Danone has always adhered to its original intention of the joint venture - to focus on profit growth, to expand steadily in the beverage industry and not to set foot in other fields.Wahaha, on the other hand, has another set of growth concepts. It effectively utilizes Danone's capital and expertise in production and research, and at the same time gives full play to its local advantages in marketing and industrial development.In the seven years since the joint venture, Wahaha's product sales have jumped from about 1 billion yuan to nearly 8 billion yuan, and it has always firmly grasped its own development initiative. With this "one car, two tracks" joint venture concept are inseparable. Some experts in the industry have carefully studied the capital structure between Wahaha and Danone, and they are full of praise, calling it "the mantis catches the cicada, and the oriole follows".Zong Qinghou did not quite agree with this statement.He said that Danone is a rational and excellent collaborator. To be precise, the capital relationship between the two parties should be that there is me in you, and you in me, which are mutual checks and balances.What Wahaha should strive to do is to be responsible to investors, to allow shareholders to have good returns, and ultimately to achieve a win-win situation. In addition, it is worth recording that when Wahaha married Danone, the "four basic principles" adhered to by Wahaha set a precedent in the history of joint ventures in China.Robust also tried to "copy" the Wahaha model during the joint venture, and Danone made two promises: one is to maintain the Robust brand, and the other is to maintain the Robust management team.However, this promise could not be kept in just over a year. The answer is simple. Any game between the operator and the capital is based on the "sustainable profitability" as the final bottom line. If you lose the right to speak in this regard, then even the best promises may come to naught at any time.At this point, there is absolutely no fluke.