Losing Money to Be a Tycoon

Chapter 670: Boss Pei’s Special Business Model

September 29th, Thursday night...

Li Shi had gone to Sloth Apartments in Dawn of Prosperous City early in the morning. He switched on his television and waited for ‘Financial Observation’ to premier on CCTV’s Finance Channel.

The episode had been advertised long ago. It would look deep into Tengda Corporation’s business model, and its title was this:

Tengda Corporation: Always believe that something strange is about to happen.

Just reading those words would be enough to pique anyone’s interest!

There were many people like Li Shi who were waiting for the episode to premier.

That was because everyone was curious as to how the episode would analyze Tengda Corporation’s business model.

Financial Observation was a professional financial segment, which contained a chatting-and-discussing-style of reporting the news. Members of the finance media, professionals, and businessmen were often invited as guests on the show to chat about economics and make it more relatable and commercial. The program was both easy to understand and highly professional.

Of course, many so-called ‘famous economists’ frequently appeared on television and were often praised by the media. However, none of them knew what they were talking about, and most lacked the ‘conscience’ that academics should have.

Still, because of the platform that Financial Observation was on, no such problem existed. Thus, it was quite popular among viewers.

Li Shi had seen a few episodes before and benefited a lot from their analyses of business models.

This time, however, the Financial Observation segment was going to cover Tengda Corporation, which had rapidly expanded in two years. What kind of sparks would that generate?

Just thinking about it excited him!

Soon, the program officially began.

...

“An in-depth observation of economics for the benefit of the greater public. Good day, everyone. I am the host, Wang Zheping.

“Tengda Network Technology Co., Ltd is a company that was established in Jingzhou in 2009. In just two short years, its business had expanded into the technology, video games, internet cafe, food and beverages, online literature, logistics, fitness, and rental apartments industries.

“Compared to the companies that featured on our Financial Observation segment before, it’s not as large-scale. It has not risen to the top in most regions around the country. From the looks of its situation, the company seems mix-natured and non-elite.

“Many people have criticized Tengda Corporation’s business model, saying that it’s ‘biting off more than it can chew’ and ‘being fickle-minded’.

“On the surface, that may appear to be the case. Every time Tengda achieves a breakthrough in one field, it would waste no time in entering the next. In fact, it tends to give one a sense of being ‘too impatient’.

“However, as Tengda Corporation continues to expand, perhaps we should start thinking about whether it’s really ‘biting off more than it can chew’ or not, as people say? Has Boss Pei, a man who has built an entire business empire in just two short years, really been making low-class mistakes in terms of business strategy, or does he have other considerations?

“For today’s Financial Observation segment, we have invited Professor Bai Qimiao, an expert in economics, to conduct an in-depth analysis on Tengda Corporation’s seemingly unreasonable business model and the deeper intentions within!”

Before the program officially started, a short video was played. It featured most of the achievements that Tengda Corporation had achieved so far.

That included excellent games that had received multiple praises from the official games platform, Fish-Catching Take-Out that had actively responded to garbage sorting efforts, the old industrial zone that had been turned into the star project that was Thriller Hostel, the Tengda Life App that had contributed significantly to convenience in Jingzhou, and so on.

After that, the host began to discuss the topic of the day with Professor Bai Qimiao.

Professor Bai Qimiao had a head full of gray hair and wrinkles on his face. He spoke slowly and made the audience feel comfortable.

“Tengda Corporation is a very interesting business. I have conducted some simple research into the company as well.

“Earlier, many netizens said that Tengda’s business model seemed mix-natured and non-elite. Why? That was because one look at Tengda’s history would reveal that it started out producing games. Halfway through, it established internet cafes. Once those took off, it established a restaurant, gyms, rented apartments, and so on.

“Obviously, this is very different from how ordinary businesses conduct their affairs.

“Ordinary companies pursue deep cultivation in certain fields. Take those who have established internet cafes for example. If their internet cafes are successful, they would move on to open more branches in other cities. After that, they would look for investors who would pour money into their business and allow them to expand rapidly. Once they have chain stores across the country, they would try hard to dominate the market.

“Yet, Tengda does the exact opposite. Once it achieves some results in a certain field, it casts it aside and enters another. Its original business would be left to survive on its own and develop slowly without further fund-raising or investment efforts.

“Thus, until now, most of Tengda’s businesses—apart from its games, movies, cell phone, and the like—are still concentrated within Jingzhou City and Handong Province at the most.

“While many young companies choose to focus on super first-tier cities in particular, Tengda steers clear of them.

“Many people think that Tengda’s strategy is stupid. Why? Take their internet cafes for example. If they channel all their funds into opening more internet cafes across the country, Fish-Catching Internet Cafe would have a greater market share, and it might earn tens of times of its income. When the time comes for it to be listed, how much more could the company make?

“Yet, recently, fewer and fewer people have been echoing this thought. Why? That’s because most people have come to realize the merits of Tengda’s business model.

“We have noticed that Tengda’s various physical industries work together to support and help one another. No decision to enter a new field would be made hastily. Obviously, each decision is deliberate and well thought-through.

“What disadvantages are there to such a business model? Slow results.

“The company is depending on its own funds and only expanding when it has spare cash. Of course, this would take much longer to yield results than the conventional business model. Many companies would have raised several rounds of funds in a year or two, thus increasing their market share by sixty to seventy percent or even more. On the other hand, while Tengda’s physical industries are quite significant in size, they have not fully moved out of Handong Province.

“Its rate of expansion in a certain field cannot be compared to conventional models.

“However, what are the merits of such a business model? A solid foundation!

“You would find that the businesses are interconnected and interdependent. That forms an extremely stable and closed loop.

“Each time a new business is launched, customers of the other businesses would be channeled over. That would easily resolve the problems that most start-ups face. Once customers get used to that new business, they would become more loyal. Even if competitors start price wars, they might not be able to win customers over!

“Of course, between the two business models, neither is better than the other. Both could succeed, but it’s obvious that Tengda Corporation’s model is more stable and reliable. Once it’s formed, it would be unshakable.

“That’s why I think that Tengda Corporation has different ambitions.

“Many companies now think about burning money to create data and attract more investments. Then, they would seek to be bought over by larger companies for their founders to achieve financial freedom.

“Is that kind of behavior right? I won’t comment, but it’s certainly too short-sighted. Such business models would definitely not become commercial giants.

“On the other hand, Tengda’s business model is especially stable because it takes things one step at a time! Its end goal is to become a super-large enterprise with an extreme ability to fend against risks. Its future competitors would be multinational behemoths like Shenhua Corporation and Pineapple.

“Boss Pei’s goal is obviously not to sell the company off so that he can achieve financial freedom. His real goal is to fight the big guns.

“Such far-sightedness and patience are lacking in most entrepreneurs and are exactly what I want to encourage and promote.”

The host, Wang Zheping, nodded. “Professor Bai, do you think other companies can learn from or replicate Tengda’s business model?”

Bai Qimiao shook his head. “It’ll be very difficult.

“Tengda Corporation is able to adopt such a model because its founder, Boss Pei, is far-sighted and good at planning. At the same time, the group has Tengda Games to provide endless funding and support the group’s wide range.

“Other companies that want to adopt such a model could end up rupturing the entire company’s capital chain once a single project fails. The risk is too high!

“Then again, that goes to show how valuable Tengda Corporation is. We should really cherish private enterprises like that.”

The host, Wang Zheping, nodded again. “Professor Bai, Tengda’s slogan is the title of this episode. What do you think about it?”

Professor Bai Qimiao smiled subtly. “That’s a very interesting slogan that perfectly describes Tengda Corporation.

“To me, there are two ways to understand this sentence:

“First, it is directed to all users, telling them to believe that Tengda is a surprising enterprise that can create miracles.

“Customers must always believe that Tengda will surprise them.

“That’s because Boss Pei’s plan is so complex. At first glance, most of his businesses don’t seem related. That’s why it would make people feel ‘strange’.

“However, once the secret is revealed, people would feel that it was unexpected but reasonable.

“Second, it’s directed to employees to cultivate a positive attitude and acknowledgment of risk among them.

“A foreign economist once proposed the ‘black swan theory’. It’s complicated, so I won’t go too deep into it.

“That slogan perfectly fits the theory.

“Always believe that strange things are about to happen. That’s an emphasis on the co-existence of opportunity and risk. We have to be ever ready to grasp opportunities and to meet risks.

“Sometimes, the things you don’t know are more meaningful than the things you do.

“I think it’s that high awareness of risk that causes Boss Pei to attach great importance to avoiding it. That’s what drove him to create the embryonic form of a special business empire like Tengda Corporation.”

The host, Wang Zheping, nodded for the last time. “Alright. Thank you for giving us such an in-depth analysis of Tengda Corporation’s business model, Professor Bai. Professor Bai, what kind of guidance do you think this episode of Financial Observation would provide for other businessmen out there?”

After some thought, Bai Qimiao said, “It’s quite impossible to imitate Tengda’s business model, but other businesses can try to work together with Tengda more.

“I think that, given Boss Pei’s awareness of risk and Tengda’s defense against risk, Tengda Corporation would make an excellent working partner!

“Working together with a businessman like that would be much better than working together with those who can only think about burning money and selling their companies!”

...

At that point, the people on the 11th and 12th stories of the Sloth Apartments in Dawn of Prosperous City fell silent.

While Pei Qian’s mind was filled with question marks, Li Shi’s was filled with exclamation marks.

Li Shi was only now realizing a very serious problem.

Soon, many companies would be rushing to work with Tengda. The benefits that would have belonged to him would soon be snatched away by them!

On the other hand, Pei Qian was also realizing a very serious problem.

He had originally thought about setting an empty pot over the fire. However, Boss Li had inexplicably arrived with a portion of ingredients, forced them into Pei Qian’s mouth, and willingly drunk the soup.

Now, more and more people were going to bring their own ingredients and drink their share of soup!

Pei Qian could almost picture himself miserably choking on all the meat.

The only good news was that settlement would take place tomorrow. No matter how much meat he ate, he would only suffer the consequences in the next cycle.

On the night before settlement, Pei Qian had mixed feelings.

There was a hint of sadness as well.

Was it that hard to incur losses in secret?