"Wanqing, you're quite bold,"
Fang Xingyuan said with a smile.
"Who are Cao Cao and Liu Bei? How can your second uncle and Uncle Qiu compare to them? This topic is too grand; you should discuss it with your maternal uncle, not with me and Uncle Qiu here."
Fang Wanqing pouted and said,
"My maternal uncle wouldn't want to hear me talk about these things."
"I think, Wanqing, discussing problems is a pretense,"
Qiu Guoyu said.
"The real purpose is probably to use this issue to probe your and my thoughts and views, to offer her some investment inspiration as a way of 'casting a brick to attract jade'."
Fang Wanqing smiled and said,
"Uncle Qiu is indeed sharp. I really do want to hear second uncle and Uncle Qiu's interpretations and opinions on the current macroeconomic situation. I'd like both of you to give me more pointers on key aspects of industry and project investments.
Recently, several investment proposals submitted by our team to the company leadership were all rejected by the Investment Projects Department, which is a bit of a blow to our confidence.
Among them, there was one project I thought had great potential, and I had already assured the boss it would pass.
However, when I submitted the financing plan for this project to the company's Investment Projects Department, it was still rejected by the leaders, and now I don't know what to tell the boss."
"What project?"
Qiu Guoyu asked.
Fang Wanqing said,
"A boss plans to create a vegetable group-buying website and approached our company, hoping we could invest to help him develop the business. I've researched it... currently, the domestic group-buying market in this area is still a blank slate, and everyone has this need.
It's similar to how Taobao changed everyone's shopping habits. I believe that in the future, with the increasingly deep development of mobile internet and the advent of the Internet of Everything,
people's habit of going to offline supermarkets to buy vegetables will also be disrupted by new models. Moreover, the current express delivery network is developing rapidly, pre-positioned warehousing logistics, and fresh and frozen logistics are also rapidly advancing.
Coupled with the rise of food delivery and the increasing prevalence of instant delivery services, all the prerequisite basic conditions for this business development model are already in place. There's no reason why it shouldn't work."
"How much capital is this boss planning to raise?"
Su Yi asked.
Fang Wanqing glanced at Su Yi and replied,
"50 million."
"That's too little. No wonder your company's Investment Projects Department rejected it,"
Su Yi said.
Upon hearing Su Yi's words, Fang Wanqing couldn't help but feel puzzled, asking,
"According to you, if he asked for 500 million, or even 5 billion, it would be easier to secure financing?"
Su Yi nodded slightly and said,
"That's indeed the case."
"How is that possible?"
Fang Wanqing found Su Yi's words completely incomprehensible, thinking he was talking nonsense.
Qiu Guoyu and Fang Xingyuan were also slightly taken aback.
Among them, Fang Xingyuan said with a smile,
"Xiao Su, tell us why you think so."
Su Yi nodded slightly and said,
"Food is the first necessity of the people. As a major category among clothing, food, housing, and transportation, everyone indeed has a need to buy vegetables.
However, the concentration of the fresh produce market is very low, and the shelf life is short, usually only one or two days. Furthermore, as a daily necessity, people are very sensitive to the prices of fresh produce.
This leads to low-profit margins in the fresh produce market. Ms. Fang, you probably know the average net profit margin of major chain supermarkets in our country, don't you?"
Fang Wanqing nodded and replied,
"Generally around 3% to 5%, with very few exceeding 5%."
"Exactly,"
Su Yi continued.
"For daily necessities, prices are extremely sensitive, state control is quite strict, and net profit margins are extremely low. In a situation with extremely low net profit margins, to make money, one must operate at scale.
Only by achieving scale to lower operating costs can one possibly compete against traditional channels, achieve cost-effectiveness, and thus change people's lives and shopping habits.
And an investment of 50 million...
This money, once invested, would at most only allow for the establishment of a pilot area, offering no advantages compared to traditional channels.
By the time the invested money is spent, there's a very high probability that it won't even make a splash. Therefore, your company's rejection of this investment project is correct.
Furthermore, the boss's idea is good, but his vision is insufficient, and he hasn't figured out how this business model can truly work. In short, this boss lacks both courage and capability. Considering the primary investment criterion, which is investing in people, this project also fails to meet investment standards.
If you ask me, with the deep development of the mobile internet, the 'group-buying vegetables' business model will certainly emerge and is highly likely to change people's lifestyles, even eliminating a large number of offline chain supermarkets.
But, again, that's the point. This business model is one that thrives on scale. Only with colossal investment and large platforms possessing a massive user base can a market be carved out through continuous spending, making eventual profitability possible.
Other small and medium-sized enterprises, small and medium-sized players, even if they have the intention, cannot make this model work."
"Hmm, what Xiao Su said... is spot on,"
Qiu Guoyu squinted at Su Yi, his face full of admiration.
"The quality of a business model and its inherent net profit margin determine the difficulty of investment. It's not that low-profit, scale-dependent business models are bad, but at least for these types of business models, the difficulty and risk of investment are quite high, because competitors are everywhere.
Without achieving scale, there's no moat whatsoever. To achieve economies of scale and capture market share, colossal investment is necessary, which further increases investment risk."
"I see!"
Fang Wanqing's long-standing doubts were finally resolved.
She couldn't help but turn her gaze, looking at Su Yi with great surprise.
"But real estate development also has quite low net profit margins,"
Fang Wanqing paused, then added,
"So why do capital and enterprises flock to it?"
Su Yi said,
"Although the net profit margin for real estate development is very low, generally around 3% to 8%, the real estate development industry has a natural advantage: it's very easy to expand in scale and inherently possesses a leverage effect. Even a very low net profit margin can become very substantial when combined with the effect of scaled leverage.
In Modu, an ordinary development project easily involves billions or tens of billions, and an ordinary residential project's sales volume also easily reaches billions or tens of billions.
Even if the net profit margin is only 3%, that's still hundreds of millions in net profit.
Under the same net profit margin, industries or companies that can easily achieve large revenue scales certainly have higher investment priority than those that cannot easily achieve large revenue scales."
"It seems that really is the case,"
Fang Wanqing thought to herself.
Her gaze towards Su Yi gradually turned appreciative.
"Mr. Su, are you also in investment?"
Fang Wanqing proactively asked.
"It seems... you're a colleague of mine."
Before coming to the Qiu family's home as a guest, her second uncle hadn't told her why she was coming for dinner, nor had he mentioned who the Qiu family had invited, let alone brought up Su Yi.
Therefore, she knew absolutely nothing about Su Yi.
She also had no idea that tonight's dinner
was a blind date arranged for her by Qiu Guoyu and Fang Xingyuan after their private discussion and planning.
"I wouldn't exactly call myself a colleague,"
Su Yi said.
"I primarily work in the secondary market. Although I dabble in the primary market, it's mostly small-scale."
"Secondary market?"
Fang Wanqing was slightly surprised.
She had originally thought that someone with such deep insights into the investment market like Su Yi should be an investment talent in the primary market.
She hadn't expected his main focus to be the secondary market.
"Does Mr. Su also have profound insights into the financial trading market?"
Fang Wanqing asked.
"Do you operate in the domestic market or international markets?"
Su Yi said,
"I wouldn't say profound insights, just some experience. Currently, I'm mainly in the domestic market. In the future... I might turn to international markets."
"The A-share market in the second half of this year shouldn't be very easy to navigate,"
Fang Wanqing said.
"Our company's secondary market business department, primarily the fund investment department, was forced to liquidate several equity-biased fund products in the A-share market in just these few months of the second half of the year."
"I think it's alright,"
Su Yi said.
"It's not hard to make a little money."
"Still making money? Then Mr. Su is truly impressive,"
Fang Wanqing complimented, then asked,
"Does Mr. Su work at a brokerage firm?"
Someone who understands both the primary and secondary markets so well,
would make her instinctively think of domestic securities institutions.
Su Yi replied,
"No, I used to be at 'Huaxi Capital', but then I started working for myself."
"'Huaxi Capital'?"
Fang Wanqing said.
"I have a classmate who also works at 'Huaxi Capital'. Her name is Deng Xiyao. Does Mr. Su know her? She should be working in 'Huaxi Capital's' Investment Strategy Research Department now."
Su Yi thought for a moment and indeed had some impression of this person.
After all, the person Fang Wanqing mentioned had worked with him for a period, later moved to a foreign investment bank, and seemed to be doing quite well.
"I know her, but we're not close,"
Su Yi said.
"Which school did Mr. Su graduate from previously?"
Fang Wanqing thought for a moment and asked,
"Harvard Business School? Stanford Graduate School of Business? Oxford, Cambridge, or domestically, Huaqing, Yanda, or Central University of Finance and Economics?"
Su Yi smiled and said,
"Ms. Fang might be overestimating me; I graduated from Modu University of Finance and Economics."
"That's still very good,"
Fang Wanqing said with a smile, not looking down on him because he didn't graduate from a top-tier prestigious university.
"I studied at Zhejiang University for two years, then transferred to Chicago as an exchange student for a period. Oh, right... Mr. Su, what are your thoughts on the current domestic and international economic environment? Are there any industry investment opportunities that you find relatively clear and promising?"
Su Yi said,
"As for the domestic and international economic environment, it can't be called good, but it's not overly pessimistic either. There's a possibility of crises emerging, but within crises, there are also many rare opportunities and investment chances.
As for promising industry investment opportunities, to my knowledge, those with a consensus of expectation are the deep development direction of 'mobile internet' and the development direction of the 'new energy industry'."
"Hmm, I think so too,"
Fang Wanqing nodded.
"Recently, the 'new energy industry' has garnered a lot of attention, but this conceptual theme has been brought up for several years. Many institutions have invested in wave after wave of startups, yet very few have survived, and even fewer have achieved profitability. Mr. Su, do you think this situation... will improve later on? I'm actually quite interested in this industry direction."
Su Yi said,
"It will definitely improve. To my knowledge, the 'lithium battery' technology route and its scaled commercial production route have gradually matured. Related industrial chain companies, as well as enterprises involved in the 'new energy vehicle industrial chain' that the state is vigorously promoting, will certainly usher in a period of prosperity."
"However, Japan's exploration in the 'new energy industry' takes a different technological route than our development of 'lithium batteries',"
Fang Wanqing said.
"Their research focus is mainly on 'hydrogen energy,' and they've proposed the concept of 'hydrogen fuel cells.' Do you think the 'hydrogen fuel cell' route can be successful?"
Su Yi smiled and said,
"Currently, it's likely not very reliable. To truly achieve scaled production and commercial use, it's not enough for experiments to succeed or for the theory to simply work. One also needs to consider factors like material costs, manufacturing costs... If a single battery costs one or two million to produce, then even if the technical route is feasible, it won't be able to be implemented in actual market applications..."
The two discussed from investment perspectives to industry analysis.
Then to macroeconomic development and policy trends.
Finally, they began discussing secondary market trading techniques, talking about stocks, bonds, foreign exchange, futures, derivative financial product trading markets... and other related issues.
They completely failed to notice that Qiu Guoyu and Fang Xingyuan had long put away the chessboard and gone inside.
Nor did they notice the girl feeding the fish beside them muttering and sticking out her tongue before running into the house as well.
They also didn't notice that in the entire garden, only the two of them remained, along with the sunset, its face only half visible.
(End of this chapter)