Huayu: Hard fight against Zhang Weiping at the beginning

Chapter 583 Group Buying and Capital Operations

"Boss, do you know Groupon? It's a new business model I discovered in the US..."

When it came to her field of expertise, Chen Xiaowei began to speak at length.

Zhang Chen listened quietly without interrupting.

He certainly knew what group buying was, but he still wanted to hear Chen Xiaowei's understanding.

"Currently, the target customers of the Internet are mainly of two types: large enterprises and medium-sized enterprises."

The core revenue source for the most common portal websites of internet companies is advertising, and only large and medium-sized enterprises can afford to spend money on advertising.

The same principle applies to search engines. Baidu has created search rankings, where you can pay to get ranked and spend tens of thousands of yuan to buy keywords for advertising. Only large and medium-sized enterprises can afford these.

What about small businesses, or even micro-enterprises?

What about local small and medium-sized enterprises (SMEs) that lack the financial resources to advertise on portal websites and search engines but urgently need promotion, such as those in the catering, entertainment, and hotel industries?

The internet is missing in this part.

Group buying fills this gap perfectly, leveraging economies of scale to obtain lower prices.

Actually, Maoyan's subsidies during the Lunar New Year season were essentially group buying, but I think it's a waste for us to only offer movie tickets. This model, once developed, can be replicated for any fast-moving consumer goods.

"Then what are you going to do?"

"We'll start with food and beverage. Clothing is the most frequently purchased item in our daily lives. We negotiate partnerships with businesses to guarantee a certain number of orders and get lower prices."

In the early stages, subsidies will definitely be the main focus. Our Maoyan 29.9 movie ticket subsidy is a platform subsidy, but I think other group buying deals can do both at the same time.

We get discounts from merchants, such as half price. Consumers use the Maoyan code to dine at restaurants and get the discount. Merchants use the Maoyan code to settle accounts with Maoyan, and Maoyan pays the subsidy to the merchants. In this way, the actual price is more than half price.

Essentially, group buying helps merchants promote their businesses. The advertising costs saved are partly passed on to consumers, partly become the merchants' profits, and the rest is the website's own profit.

There's just one problem: the cost of such subsidies will be calculated in the tens of millions.

Chen Xiaowei knew all too well how much money subsidies could burn. The 29.9 yuan movie ticket subsidy had already burned through millions of yuan, and that was just for watching movies, which was nowhere near as frequent as eating out.

"That's the investors' business. Your job is to scale up as quickly as possible."

"You agreed?"

"Of course, there aren't any similar products in China yet. We're the first to try this."

"Yes, I think now is the best time to do group buying."

"So how much do you think needs to be invested in the early stages?"

"Hmm, at least 6000 million."

Chen Xiaowei hesitated for a moment before quoting a price that wasn't too outrageous; she had already tried to keep the figure as low as possible.

Zhang Chen laughed, "That's too conservative, at least 100 million."

"...One hundred million?"

"One hundred million is enough to burn through for almost a year. You need to take over the Beijing and Shanghai markets as quickly as possible..."

I estimate that 100 million might not be enough to last a year!

There's not much of a barrier to entry when it comes to group buying. To put it bluntly, it's just a business model that anyone can learn if they want to.

At its peak in the previous life, there were 5000 group-buying websites of all sizes on the market...

Later, through natural selection, only a little over a hundred companies remained, and these companies all had capital behind them.

Then came the famous Hundred Regiments Offensive.

Back then, it was a paradise for customers, with all sorts of great deals and discounts available.

Back then, you could often hear about meals being sold at a 90% discount, which was unimaginable.

How was the White Team war fought? Subsidies, all kinds of subsidies~
BAT (Baidu, Alibaba, Tencent) have all entered the fray...

Damn it, Zhang Chen felt like he couldn't handle it. Considering his own size, he probably wouldn't even last until the Hundred Regiments Offensive.

No, I need to find my own capital.
First, bring in Sina. We need 100 million in the early stages, right? We'll put in 70 million ourselves and let Sina put in 30 million. Once that's all gone, we'll bring in Shen Nanpeng. Anyway, it'll end up on NASDAQ.

Internet products are really too expensive. Zhang Chen had previously considered whether to create something like Didi or Douyin, but now it seems he was oversimplifying things.

"No, I'll call Cao Guowei right now!"

Shortly after, Cao Guowei's surprised voice came from the other end of the phone: "What? You're going to do group buying?"

No, aren't you a movie actor?
Why are you switching between Weibo and group buying? What are you trying to do?

"Just tell me if you're joining or not."

Despite being from the same hometown as Li Yanhong, Zhang Chen preferred to work with Cao Guowei because the two already had a cooperative relationship based on Weibo.

"Of course I'll join!"

With the success of Weibo as a precedent, Cao Guowei is now 100% certain that Zhang Chen is an excellent product manager.

His suggestions for improving Weibo have all proven to be correct in practice.

Among them, @ is praised by countless people as a perfect tool for arguing.

Weibo's trending topics have become Weibo's sole tool for making money.

"Alright, I'll invest 70 million, you invest 30 million, and we'll split the shares 70/30."

"Wait a minute, what are you trying to do? You come up with a hundred million right away?"

Cao Guowei was a little annoyed by his extravagant spending. One hundred million yuan, are you trying to create another Sina?

"Even 100 million might not be enough to burn through. Group buying businesses need a lot of subsidies to attract users in the early stages. I think this 100 million will only last for nine months at most..."

"And what about nine months later?"

"For Series B funding, look to Sequoia Capital or IDG!"

"Let's talk in detail when we meet."

Such a large project cannot be finalized over a few words on the phone.

You should at least have a project proposal, right?
"It's agreed, let's talk tomorrow night~"

Zhang Chen's phone rang again immediately after he hung up, but this time it was Lao Li.

Old Li from Haixin Film & Television.

"Uncle Li~"

Zhang Chen and Lao Li haven't been in touch for a long time. Ever since Zhang Chen started collaborating with Hollywood, Lao Li has become less competitive. Haixin Films is too small and can't provide any substantial help to film projects, making it difficult for Lao Li to participate in investment.

However, he can invest in other projects of Star Entertainment.

"Director Zhang, I'm here to ask for your help."

"Hmm? Uncle Li is in trouble?"

"It's not me, it's my friends. To be honest, since the beginning of this year, the threshold of my office has been practically worn down by people walking all over it..."

After Lao Li briefly explained the situation, Zhang Chen finally understood what had happened.

Shanxi began restructuring its coal enterprises in 09.

The scale of this coal enterprise restructuring has exceeded everyone's expectations.

After the restructuring, the number of mining entities was reduced from more than 2200 to 130.

The coal mine owners, bought out and clutching huge sums of compensation, left the industry and suddenly didn't know what to do. Then someone thought of Haixin Film & Television. There are no secrets in this industry!
Many people know that coal mine owners have partnered with Haixin Film & Television to invest in Jiahe Cinemas.

They knew before, but perhaps they didn't care.

But now that I've suddenly lost my livelihood and only have a lot of money, I want to find something to do.

Coal mine owners, waving their cash, rushed into all sorts of industries: real estate, microfinance, film, internet, hotels, supermarkets, wineries...

Basically, as long as there's a profession that's rumored to be profitable, there will be people doing it.

The film industry is naturally among them.

Hisense Group isn't in the coal business, they're in the steel business, but that doesn't matter, it's all mining, they're all part of the same company.
Since the Lunar New Year, Old Li has had a group of people coming to learn from him every few days.

"Old Li, is making movies fun?"

"I heard you're in the cinema chain business. How does that work?"

Is investing in movies profitable?

How many female celebrities have you slept with?

Everyone chimed in with their opinions, and Old Li picked out the ones he could answer:
"Running a cinema chain is basically running cinemas. We franchise with Golden Harvest Cinemas, and we expect to break even in about two years."

"Investing in movies is out of the question, Wang Laoliu. You may have some money, but you lack connections and can't find good projects."

Then he turned to a coal mine owner named Zhao Shitou and said, "Sleeping with celebrities? I'll sleep with you my foot!"

You can't be too polite when talking to these people; we're all just ordinary folks.

"Give us some advice. We all have compensation money, but we don't know what to do with it. We heard you're doing very well in Beijing, so we wanted to ask you for some guidance."

Unable to resist the urging of the crowd, Lao Li finally decided to call Zhang Chen in front of everyone.

After understanding the situation, Zhang Chen said on the other end of the phone, "If you're asking me, my opinion is still to invest in cinemas."

In the past two years, the government has provided substantial support to cinema chains. Almost every province and city has issued relevant documents explicitly stating that "governments at all levels will provide strong support for cinema construction projects in terms of site selection, project approval, land acquisition, investment, and licensing." Furthermore, it encourages mergers and acquisitions among cinema chain companies to promote large-scale and intensive development.

Those of you who run cinema chains should be able to feel it.

I told you before that it would take two and a half years to break even and the third year to make a profit. Is that true?
Have those of you who were among the first to invest in cinemas already broken even?

As for investing in movies, it depends on your perspective.

If it's just about promoting a mistress or sleeping with an actor, without considering the financial gain, then there's no problem.

If you're looking to make money, then you need to be careful. You're all outsiders, the prime targets for easy prey; too many people want to fleece you.
I can guarantee with my hand on my heart that you will never get good projects; the projects that will come after you are all extremely high-risk.

If you really want to try, I suggest investing in several films, but don't invest too much in each one, maybe a hundred thousand or two to test the waters. And no matter what happens, absolutely do not add more. If you do that, in about a year, you'll know how deep the water is here..."

Zhang Chen spoke from the bottom of his heart. Of course, he hoped that all these people would join Golden Harvest Cinemas, then Golden Harvest Cinemas could probably become number one in the country overnight.

Moreover, it's a win-win situation; operating a cinema chain is now a sure-fire way to make money.

But he also knew it was impossible.

Coal mine owners won't come to terms with reality until they suffer heavy losses.

After thanking him, Old Li hung up the phone. Chen Xiaowei, who was standing next to him, finally got a chance to speak: "Director Zhang, why don't you persuade these people to invest in Maoyan.com?"

Coal mine owners have the most money in their hands right now, and Maoyan.com is also short of money.

Perfectly complementary~
Chen Xiaowei has a well-thought-out plan.

Zhang Chen shook his head: "None of the coal bosses are simple people, and many of them have dirty backgrounds. Maoyan.com is going public in the future, so we absolutely cannot get involved with these people."

"Yes~"

Chen Xiaowei also understood this principle, but felt it was a pity.

Speaking of coal mine owners, there were indeed many in the early days who invested in movies just to promote their idols.

They don't consider profits.

In such cases, imitating Jing Tian's model is actually the most effective approach.

Bring your own investment to the production team~
When it comes to bringing investment to a production, our first impression is Jing Tian, ​​but in fact, there is another person in the industry who is no less than Jing Tian – Lin Peng.

She played the female lead in both "Little Big Soldier" and "The Viral Factor," working alongside big stars such as Jackie Chan, Wang Leehom, and Nicholas Tse.

Rumors circulated that Lin Peng joined the production with a huge investment from Qiankun Xingguang.

She seems to be the daughter of some coal mine owner, hence her arrogance.
See, if it's just for the thrill, coal mine owners can really control everything, even getting involved in Cheng Long's projects.

Of course, if you want to make money, that's a different story.

In Zhang Chen's memory, next year, 2010, will be the peak year for coal mine owners to enter the film and television industry.

The number of feature films registered in the first half of the year alone exceeded the total number registered in the entire previous year.

That year's box office more than doubled compared to the same period of the previous year.

……

The next day, Zhang Chen met with Cao Guowei at the same private club where they had discussed Weibo before, and even the people present were the same: Zhang Chen, Chen Xiaowei, Cao Guowei, and Shen Nanpeng.

"Director Zhang, I heard you've come up with a new idea, so I've come uninvited!"

Shen Nanpeng said with a grin, as if he hadn't come uninvited last time.

"It's alright. I didn't intend to avoid Mr. Shen anyway. Maoyan.com will go public sooner or later. But let me clarify something: this idea was proposed by Ms. Chen. She should explain it later..."

Chen Xiaowei has been hosting Weibo for some time now, and she is no stranger to most people.

Chen Xiaowei knew that Zhang Chen was giving her a chance to shine, so she opened the PPT and spoke fluently.

Maoyan.com?
Group buy?

subsidy?

One hundred million?
With Chen Xiaowei's explanation, everyone quickly understood the business logic behind it.

Each person has their own judgment.

To be honest, although Shen Nanpeng once mentioned investing in Star Entertainment in his personal capacity, it was more about getting closer to Zhang Chen.

Shen Nanpeng doesn't have a high opinion of the film market itself.

Too small~
A movie was painstakingly produced for a year, only to gross 2 million yuan at the box office.

It sounds like a lot, but in the end, the profit was only 4000 million.
This is assuming the project is profitable.

Many film projects lose money.

With low profits and a high degree of risk, Shen Nanpeng believes this is not a good business.

Unlike later generations~
While later films often grossed billions, "Man Jiang Hong" surprisingly earned a staggering 17 billion yuan!
This is real fatty meat, the kind of fatty meat that everyone craves.

Moreover, with a larger plate, there are more creative ways to play.

Xu Guangtou directed "Lost in Hong Kong," which grossed 16 billion yuan, but Xu Guangtou earned 18 billion yuan.

How does it work?
Xu Guangtou sold "Lost in Hong Kong" to a listed company, Huanxi Media, for 1.5 million yuan.

Huanxi Media is actually Xu Guangtou's company, and he owns 19% of Huanxi Media's shares.

After its release, due to the success of its predecessor "Lost in Thailand", "Lost in Hong Kong" became a box office hit, which boosted the market value of Huanxi Media by more than 925%, and Xu Guangtou made a fortune of 18 billion yuan from the stock price.

This is capital operation~
(End of this chapter)