Rebirth in Hong Kong: From Dessert Shop to Industrial Empire

Chapter 91 Leveraging Opportunities to Rise Higher (Seeking monthly votes and recommendations to continue reading)
Ichiro Tanaka's proposal was clearly laid out on the table: a basic licensing fee of $20 + a commission of 0.01 cents per bottle + a 3% commission on channels in the Japanese market.

A 3% channel commission is neither high nor low in the FMCG industry. Considering that Jinba has a gross profit margin of over 60%, this commission rate is within an acceptable range.

It could even be said that Suntory's massive distribution system was something that Chen's company could not build on its own in the short or even medium term. Paying 3% "toll" was quite worthwhile, and Chen Bingwen had no objection to this.

As for the $20 base licensing fee, it is in line with Suntory's market share.

Chen Bingwen strongly disagreed with Tanaka Ichiro's "priority access support" and the 3% channel commission.

Tanaka Ichiro's so-called "priority access support" is more like an empty promise, with the strength, scope and specific content of the support being vague and unclear, and the initiative is entirely in Suntory's hands.

What Chen Bingwen demanded was genuine channel access qualification!
After a brief silence, Chen Bingwen spoke first, "Mr. Tanaka, I have felt Suntory's sincerity."

However, this plan is probably still quite far from the strategic synergy we envision.

I completely agree with what you just mentioned about "people-oriented and striving for excellence".

The value of bottle cap patents lies precisely in their ability to significantly improve the consumer's opening experience, reduce usage risks, and enhance brand affinity.

Isn't this the best embodiment of Suntory's "people-oriented" philosophy?

Tanaka Ichiro nodded slightly: "What Chen said is absolutely right."

That's why we attach so much importance to this patent.

“Then,” Chen Bingwen changed the subject and questioned, “the value of a patent should be reflected in the actual benefits it creates.”

A commission of 0.01 cents per bottle?

Mr. Tanaka, do you think this number matches the improved user experience and brand value it brings to every bottle of Suntory's glass-bottled beverage?

He paused for a moment, then continued, "The Southeast Asian market, especially the Japanese domestic market, is the key area for Chen's future development."

We are willing to cooperate with local giants like Suntory to share the market dividends.

But the foundation of cooperation is fairness and mutual benefit.

Chen Bingwen's gaze swept over Tanaka Ichiro's slightly tense face: "We can accept the basic licensing fee of $20."

This reflects Suntory's initial recognition of the value of the patent.

However, the commission must be increased to 0.025 cents per bottle.

This price is closer to the actual value increment that the patent brings to Suntory.

As for channel commissions in the Japanese market…

Chen Bingwen paused for a moment, looked into Tanaka Ichiro's eyes, and said, "We can accept a 3% percentage."

However, this is contingent on Suntory assuming responsibility for the distribution, warehousing, and initial promotion of Chenji products once they enter its designated channels.

What we need is not just a "priority assistance" offer, but tangible channel implementation and sales support!
The specific list of distribution channels, product placement standards, and promotional resource allocation must be clearly stated in the agreement!

0.025 cents per bottle!
That's more than double the 0.01 cents Tanaka Ichiro proposed!
Tanaka Ichiro's brows furrowed instantly, and he instinctively wanted to retort, "Mr. Chen, 0.025 cents... this..."

“Mr. Tanaka,” Chen Bingwen interrupted him, speaking calmly, “please do the math carefully.”

Based on Suntory's annual sales volume of bottled beverages in Southeast Asia and Japan, the additional costs incurred by this commission rate are negligible compared to the increased repurchase rates, brand premium, and potential market share growth resulting from improved user experience.

As for channel implementation, this is a win-win situation.

Suntory's strong distribution network is a shortcut for Chen Ji products to quickly enter the Japanese market.

Chen Ji's products, especially our upcoming "Jinba" energy drink, with their unique taste and efficacy, can also bring new customer traffic and sales growth to Suntory's channels.

We pay a 3% commission in exchange for Suntory's established channel services and localized operational capabilities, which is fair.

Tanaka Ichiro remained silent.

At 0.025 cents per bottle, it seems like double the price, but as Chen Bingwen said, when spread over a huge sales volume, it is indeed not high.

The key point is that this price is within the bottom line authorized by the headquarters and is still acceptable.

What truly made him hesitate was Chen Bingwen's demand for "responsibility for channel implementation."

Distribution, warehousing, and initial promotion. This means that Suntory needs to invest real resources and bear certain risks.

Although the 3% commission can cover costs, management costs and potential risks still exist.

However, Chen Bingwen's "Jinba" energy drink and the "win-win" prospects he described were extremely tempting.

The Japanese market for functional beverages is still largely untapped, with enormous potential.

If "Jinba" is truly as effective as he claims, it might open up a new world for them with the help of Suntory's channels.

More importantly, the patented diamond-shaped anti-slip bottle cap is crucial to enhancing Suntory's competitiveness in the international market.

Obtaining this patent means taking a step ahead in user experience!
“Mr. Chen,” Tanaka Ichiro took a deep breath, finally making up his mind, “we can accept a commission of 0.025 cents per bottle, plus a 3% commission on distribution channels in the Japanese market. Regarding responsibility for channel implementation…”

He paused, seemingly considering his words: "Suntory can promise to provide standardized distribution and warehousing services for Chen Ji's designated products in the core channels specified in the agreement, including large supermarkets and convenience store chains in key cities such as Tokyo, Osaka, and Nagoya, and ensure that the products are displayed in prominent positions. At the same time, we will provide basic product information displays in the stores as initial promotional support."

He added, "However, in-depth marketing activities such as specific promotional campaign planning and large-scale advertising are not within the scope of basic responsibility and need to be negotiated separately, with additional costs."

A smile appeared on Chen Bingwen's lips.

Tanaka Ichiro's concessions have achieved his expected goals.

Product distribution, warehousing, basic product display, and information presentation are exactly what he needs most at this stage.

“Good!” Chen Bingwen stood up, smiled, and extended his hand. “Mr. Tanaka, it’s a pleasure to do business with you!”

The specific details of the agreement will be discussed between Mr. Fang and your team.

We hope to finalize the signing as soon as possible.

Tanaka Ichiro breathed a sigh of relief and gripped Chen Bingwen's hand tightly: "It's a pleasure to cooperate with you, Mr. Chen! Suntory looks forward to creating a brilliant future together with Chen's!"

Send away Ichiro Tanaka.

Chen Bingwen breathed a long sigh of relief.

In just two hours, after two intense negotiations, a global non-exclusive license agreement of $50 was reached with Nestlé, and a deep cooperation agreement of $20 basic license + 0.025 cents/bottle commission + 3% commission for Japanese channels was finalized with Suntory.

The two transactions not only brought in nearly HK$350 million in immediate cash inflow, but more importantly, they opened up sales channels for "Jinba" energy drinks to the Japanese market!
"Mr. Chen, this is incredible!" Ling Peiyi exclaimed, holding the draft preliminary agreement. "Nestlé, $50."

Suntory has a base fee of $20, plus subsequent commissions and fees.

We've truly become equals with these giants!

Fang Wenshan also exclaimed, "Chen Sheng's precise assessment of the patent's value and his mastery of the negotiation rhythm are simply superb. I admire him!"

Chen Bingwen smiled and said, "This is just the beginning. The cooperation between Nestlé and Suntory is the icing on the cake."

The real battle is on the side of Coca-Cola and Pepsi.

After saying that, he looked at Ling Peiyi and instructed her: "Immediately contact the media you are familiar with and release the news that Nestlé and Suntory have signed a contract!"
Be quick! Be alert!

"Understood!" Ling Peiyi perked up. "I'll get right on it!"

Chen Bingwen released the negotiation results for two reasons: firstly, to continue putting pressure on the two major cola companies and create a sense of urgency.

While Coca-Cola's Thompson and PepsiCo's Ross were still in Hong Kong, releasing news that Nestlé and Suntory had already obtained patent licenses could create the illusion that patents and the market wait for no one, forcing them to speed up their decision-making.

Secondly, by leveraging Nestlé's $50 and Suntory's $20 in additional commissions, they set a benchmark for the global market!

It was reported in black and white in writing, publicly.

This is tantamount to announcing to the world: Chen Ji's diamond-shaped anti-slip bottle cap patent is worth this much!
This is the open market price that Chenji set for the bottle cap patent!
In the future, whoever comes to negotiate, whether it's Coca-Cola, Pepsi, or other beverage and food companies, sorry, please take a look at the conditions offered by the two giants mentioned above first.

Below this standard?

They themselves were too embarrassed to speak up!
Most importantly, announcing the successful negotiation can enhance Chenji's industry standing and negotiating power.

When media outlets in Hong Kong and around the world are reporting on giants like Nestlé and Suntory vying to cooperate with Chan Kee, Chan Kee is no longer a small regional factory that needs to look up to these giants, but a strategic partner with core value, capable of engaging in equal dialogue with them, and even being sought after by them!
This leap in brand image and industry standing is an advertising opportunity that no amount of money can buy!
By leveraging the momentum of the giants, Chenji has turned the halo of the giants into a stepping stone for itself!
This approach serves to deter potential competitors and boost the confidence of Chenji's franchisees, distributors, and suppliers, providing a more solid foundation for future cooperation.

It can be said that it accomplishes multiple things with one stone.

The following morning, the Sing Tao Daily's front page headline and content ignited Hong Kong Island!
Shocking! Nestlé and Suntory invest heavily to acquire Chen Ji bottle cap patent!

Subtitle: "$50 + $20 + exorbitant commission!"

A patent for a dessert shop in Sham Shui Po has ignited a global battle among giants!

$50! $20 base fee! Exorbitant commission!

These cold, hard numbers have been given a powerful commercial significance.

These are no longer simply transaction amounts, but rather the value endorsement that international giants have given to Chenji's diamond-shaped anti-slip bottle cap patent with real money.

This is no longer a one-sided price demanded by Chen Bingwen, but a price set in the open market after rigorous evaluation and fierce negotiation by international giants!

"This is insane! Absolutely insane!" In a high-end tea restaurant in Central, a well-dressed middle-aged man put down his newspaper and shook his head repeatedly. "A bottle cap design, selling for 50 US dollars?"
Is Nestlé just throwing money away?

"What do you know!" a young white-collar worker next to him retorted. "Didn't you read the report?"

This patent solves the world-class pain point of difficulty in opening glass bottle beverages!

The brand value and market share growth brought about by improved user experience cannot be measured by 50.
Giants like Nestlé and Suntory are shrewd! Their willingness to pay this much means the value far exceeds that amount!

"Chen's has really taken off!" exclaimed a customer at another table. "From Sham Shui Po to being fought over by global giants, it's only been a few months?"

It's simply mythical!

(End of this chapter)