National Tide 1980.

However, although Pierre Cardin China has resolved the follow-up issues of the anti-counterfeiting campaign relatively smoothly, it does not mean that they are free from their troubles.

Zou Guodong quickly snapped out of his elation at the remarkable success of his anti-counterfeiting efforts and fell into another seemingly unsolvable anxiety.

It turned out that he had obtained the latest asset statements for the first quarter of this year, and then repeatedly compared the financial data of Pierre Cardin China and Pierre Cardin Japan. The more he looked at them, the more worried he became.

It should be noted that although Huaxia Company's performance has improved rapidly in the past two years, its main clothing business and most of its secondary businesses are thriving.

However, the gap in economic size between China and Japan is still quite significant.

After Ning Weimin took control of the Japanese company, he promptly sold off the company's real estate before the Japanese housing market crashed, and then invested the money in the stock market, successfully doubling his investment.

He not only successfully wiped out the Japanese company's 10 billion yen debt in a short period of time, but also added more than 10 billion yen in cash flow to the Japanese company's books.

He also reduced labor costs by half by laying off more than half of his employees at once.

In other words, this guy has achieved both increasing revenue and reducing expenditure.

He not only increased the Japanese company's net assets by 50% and provided ample cash on hand, but he also halved the company's financial expenses and shed its heavy asset burden.

In such cases, Japanese companies are operating in extremely healthy conditions, and their valuations will increase accordingly.

Even converted to RMB using the official exchange rate of the People's Republic of China, the Japanese company's assets of nearly 20 billion yen are worth no less than 600 to 700 million RMB.

In particular, Japanese companies have begun to establish sales systems in major Japanese cities through self-operated stores, which is showing positive feedback that they are on the right track.

With revenue surging in recent months and no department store commission, the business has been fully revitalized.

It is entirely foreseeable that, with the increase in the number of self-operated stores by Japanese companies, they will be able to resume profitability and restart the process of net asset appreciation by the end of 1991 at the latest.

However, in comparison, Pierre Cardin China's value creation is significantly less due to the limited consumption levels in mainland China.

After all, the profit from selling a suit provided by a Chinese factory in Japan is several times that of the People's Republic of China, and the yen is worth far more than the yuan.

Therefore, even if Huaxia Company can continue to grow at a rate of 15% per year on top of its current annual revenue of 2 billion yen, it would be nothing short of a pipe dream to catch up with Japanese companies within ten years.

In addition, the current Huaxia Company is several times larger than the Japanese company in terms of the number of employees and business scale.

Not only does it have more than 60 exclusive stores in major first-tier cities across the country, but it also occupies strategic locations such as airports and hotels.

Furthermore, it owns its own building and numerous restaurants and beauty salons, with a total of over a thousand employees.

But as I said before, Chinese assets are not as valuable as Japanese assets.

The total domestic assets of Huaxia Company are only worth about 200 million RMB, which is at least twice the value of the assets of its Japanese branch.

Zou Guodong was very clear that although Huaxia Company's development speed was not slow, it was not as good as Japan's in terms of its inherent advantages.

What others achieve in a year, they would need to work for at least three years to achieve.

Moreover, in China, the larger the operation, the higher the financial costs and the greater the business risks.

There can be absolutely no problems, otherwise profits could quickly turn into losses.

Just like the issue of counterfeit goods, if not handled properly, it will only widen the gap between the two sides.

This situation is quite frustrating.

It should be understood that the plan agreed upon by Zou Guodong and Ning Weimin regarding the merger of the Japanese company and the Huaxia company was originally intended to allow the Huaxia company to grow rapidly, eventually catch up with and surpass the Japanese company, so as to achieve control of the Japanese company and thus allow the Chinese side to take a dominant position and lead Japan.

But at the current pace, this goal is clearly a long way off, and this plan is tantamount to trying to swallow an elephant whole.

After much deliberation, Zou Guodong became disheartened and eventually went to Ning Weimin's office, where he had no choice but to tell him the truth.

At this moment, Ning Weimin had just finished coordinating the Beijing amusement park project. Seeing Zou Guodong's solemn expression, he knew that Zou had something on his mind.

"Mr. Zou, why are you so worried? Have counterfeit goods resurfaced in the market?"

Ning Weimin poured Zou Guodong a cup of tea and got straight to the point.

"No, it's about the financial statements."

Zou Guodong sighed and pushed the report in front of Ning Weimin.

"Weimin, take a good look. Our Huaxia Company's financial data is really not presentable."

Ning Weimin glanced at it a few times but couldn't find any major problems. A little puzzled, he asked, "Isn't this fine? Besides, we're raising prices next month. What are you dissatisfied with?"

"Is this alright?"

Zou Guodong got a little excited. "Yes, Huaxia Company is growing, but Japan isn't idle either. Moreover, Huaxia Company has to spend a lot of money every year on combating counterfeits. If this continues, one will gain at the expense of the other. Who knows when Huaxia Company will be able to take control of the Japanese company? Besides, the expectation of price increases has already been released this month. Once the prices go up, sales will definitely decline."

Ning Weimin picked up the report and looked at it again before he understood what he meant.

"Then what do you want me to do? How about... I ask the Japanese side to put the construction of the specialty store on hold?"

Ning Weimin laughed as he spoke.

Zou Guodong blushed; how could he possibly make such a request?

He was well aware that Ning Weimin had already suffered a significant loss in this matter. Essentially, Ning Weimin was voluntarily sacrificing his personal interests to benefit Huaxia Company, while the truth was that they lacked the capability. So, filled with remorse, he quickly explained, "I am ashamed, Weimin, and I'm not afraid you'll laugh at me. I've only just realized that Huaxia Company simply doesn't have the capacity to swallow this piece of cake you've offered. I was a bit arrogant back then. The current reality tells me that, given Huaxia Company's business growth rate, expecting its asset value to catch up with the Japanese company within a few years is probably a pipe dream. I can only disappoint your good intentions."

Zou Guodong was sincerely exposing his shortcomings; he did not intend to deceive Ning Weimin.

However, to his surprise, Ning Weimin's attitude towards these financial data was completely different from his own, and he repeatedly tried to comfort him.

"Mr. Zou, don't jump to conclusions so quickly. What's the rush? It's only 1991. Let's wait two more years and see. I know what I'm doing. Don't worry, Huaxia Company will have no problem catching up with the Japanese company."

"What? Don't be ridiculous, where do you get the confidence from?"

Zou Guodong thought Ning Weimin was just being polite and trying to save face.

"Alright, are you just going to say the nice things? There's no need for this between us."

But what surprised him even more was that Ning Weimin actually had solid evidence.

"Hey, Mr. Zou, you've misunderstood. There's something you might not have considered, and that's the trajectory of national fortunes. We've caught up with a great era. From the day of reform and opening up, our country's economy was destined for vigorous development, while Japan's economy has already peaked and is declining. Although the Japanese market is mature and looks quite prosperous, there's no room for further growth; it's just consuming existing assets, and there are too many economic holes, which could explode from time to time. Therefore, I believe that in the next two years, the economic situations of China and Japan will show a shift from one to the other. Our domestic consumer market will experience explosive growth, and domestic asset prices will also inflate accordingly. Our Huaxia Company will undergo a revaluation, and its financial advantages will definitely become more and more obvious. This is an opportunity and chance exclusively for us, so what are you worried about? I'll put it this way: in a few years, the Japanese market will become our economic colony. Our Japanese branch will become our guide in conquering the Japanese market. It will become a distributor of our goods, nothing more."

Ning Weimin's well-thought-out plan calmed Zou Guodong down considerably, and even made him a little excited.

But reason told him that there were many difficulties and too many variables involved, and it was unlikely that things would turn out as well as Ning Weimin described.

He then sincerely told him, "Everything is a matter of doing your best and leaving the rest to fate. Although I really hope it's as you say, I'm not so optimistic. How about we make a gentleman's agreement with a three-year timeframe? If, after three years, the asset value gap between the Chinese company and the Japanese company is still so large and doesn't narrow, then we can give up on the merger. At worst, we can each contribute capital and establish a joint venture. Changing the cooperation model is not out of the question."

Seeing that Zou Guodong still lacked confidence, Ning Weimin didn't try to persuade him any further.

However, since the other party had already come to his door with financial statements, he also discovered some issues that needed to be addressed as soon as possible.

He then seized the opportunity to change the subject, pointing to the only loss-making side business of Huaxia Company in the financial statements.

"By the way, Mr. Zou, let's talk about something else. Menem's business situation is getting worse and worse. You see, the operating losses are still quite serious. If this drags on any longer, it will really become a burden on the company. Don't you plan to do anything about it?"

Mentioning this matter made Zou Guodong's expression even more awkward.

This French casual dining restaurant, intended as a complement to Maxim's, has struggled to adapt to the Chinese market and finds itself in an awkward position.

After all, Menem doesn't have as many dishes as Maxim's, nor are they as refined. It mainly sells sandwiches, bread, and desserts.

Originally, according to the brand's positioning, it should have targeted employees of foreign-invested enterprises and joint ventures, providing them with work meals.

However, the number of foreigners in Beijing is still limited, and even fewer are from European countries. The white-collar class, which consists of locals, is not very accepting of such French-style casual dining.

Even though the prices of dishes in Menem are only about half of those in Maxim's, they are still higher than Ning Weimin's gingerbread men, and even higher than those in Kentucky, so they are not economically advantageous.

In addition, the management was chaotic and the decision-making efficiency was low. Several stores relied on the store managers to decide the menus on their own, and the service and quality control were carried out independently, without even a unified standard.

So, as you can imagine, it would be strange if business were to be good.

Ning Weimin once suggested that he learn from the operating methods of Gingerbread Man Fast Food, or that the two parties form a joint venture and he send his own people to operate it to improve the business situation.

However, Zou Guodong was convinced that since Menem was doing well in France, it would only take time to cultivate the domestic market, so he did not accept Ning Weimin's offer.

Unexpectedly, even today, Menem has not seen any improvement. The costs of raw materials, labor, and rent are no longer enough to cover the dwindling number of orders, and the company continues to suffer increasing losses.

It has become Pierre Carton's only failure in its business in China, a continuously bleeding burden.

Although it wasn't something Huaxia Company couldn't afford, it was a situation that, while not particularly damaging, was extremely humiliating. Every time it was brought up in meetings, it felt like a slap in the face to the senior executives, and no one could come up with any good ideas to truly change the company's predicament.

For this, Zou Guodong had long regretted it to the core.

At this moment, it was just him and Ning Weimin. He no longer cared about saving face and frankly admitted that he had made a mistake in judgment.

"Sigh, you really know how to bring up the most sensitive topics. What am I doing? I'm at my wit's end. It's all my fault for being too stubborn back then, not understanding the market, and even less understanding myself. We lack experience in restaurant operations, and the Menem model is indeed not suitable for the domestic situation. This year, apart from launching a Valentine's Day set menu and making some money through a gimmick, we've been losing money almost every day."

Zou Guodong's tone was full of regret. He thought Ning Weimin was interested in Menem and wanted to bring up the old matter again to try and get him into his possession, so he took the initiative to propose it.

"Are you still interested in buying these stores? No problem, just say so. I agree, consider it cutting your losses. You have to admit, your understanding of the restaurant industry is far deeper than ours."

However, he was wrong again; this time, Ning Weimin actually refused on his own initiative.

"Mr. Zou, I didn't mean to poach anyone this time. I genuinely want to help the company. After all, I'm still a member of Huaxia Company, and we were just talking about how to help Huaxia Company catch up with the Japanese company. If this business goes well, it'll be some revenue, won't it?"

"Oh?" Zou Guodong looked at Ning Weimin with considerable surprise, and then became quite blunt.

"Then tell me, how do you plan to help me? I'm all ears."

Ning Weimin said seriously, "Have you ever thought about changing the way Menems operates again?"

He paused for a moment, then gradually revealed his thoughts, “I’ve noticed that while there are already quite a few types of Western restaurants in China—French, Russian, Italian, and even American fast food—there’s a real lack of niche shops. For example, there are coffee shops that brew real coffee with pure coffee beans, authentic French bakeries, and stylish dessert shops, among others.”

"For those staying in five-star hotels, this problem may not exist, since most hotels' catering services can meet their additional needs. But for the vast majority of people in China, it seems they are not so fortunate. I still maintain that the domestic consumer group will become increasingly large and younger in the future, and the public's spending power will continue to grow. So it is conceivable that in the future, people's demand for coffee, pastries, ice cream, and other side dishes in Western cuisine will increase."

"To be honest, Menem's isn't entirely without merit; at least the quality of its bread and desserts is quite good. But firstly, it's expensive, with sandwiches often costing five dollars apiece—that's unaffordable for the average person. Secondly, the taste is lacking; Menem's bread is geared towards white people, and baguettes, those kinds of bread that can kill you, only taste good when paired with certain ingredients. How could most people in Beijing possibly understand that? Thirdly, the store's decor is completely uninspired, making it uncomfortable to be inside, so of course customers don't like it."

"Listen to me, how about we transform Menemura from a French casual dining establishment into a business-style café? The main offerings would be coffee, Western pastries, and desserts. If resources allow, we could also add ice cream, but we wouldn't sell main courses anymore; we'd target a casual clientele. Set the prices low, and create a comfortable and stylish environment, somewhere between home and office, catering to the needs of business professionals for conversation and socializing. That way, Menemura wouldn't be a competitor to Maxim's or Gingerbread Man; instead, it would become a powerful complement." (End of Chapter)