Chapter 115: A Loss?

The twenty-fifth day of the twelfth lunar month.
Nanming City.
Headquarters of Huakun Supermarket Group.

Inside the large conference room, small clusters of people were already arriving.

After nearly a year of development, Huakun Supermarket had grown to over a hundred stores, employing more than two thousand full-time staff.

In the year 1990 alone, Huakun Supermarket had conquered the retail markets of six major prefecture-level cities, establishing a near-monopoly.

These six cities were Fengyang, Shalin, Yuheng, Baiwei, Fangcheng, and, as the provincial capital, Nanming City itself.

Frankly speaking, Huakun had already laid the foundation of a first-tier, large-scale retailer.

Looking ahead, as long as they followed the planned expansion strategy, fully seizing the retail market of Angui Province was well within reach.

Lu Kun’s investment of over fifteen million Hong Kong dollars, after dealings with the Angui provincial government, was converted into just over ten million yuan RMB.

There was no escaping the official exchange rate’s stinginess.

Though a blow to prestige, the substance was still profitable.

At least the previous petty demands and under-the-table dealings had been greatly reduced.

Over ten million yuan RMB was no small sum at any time, especially not in China in 1990.

Having conquered several prefecture-level cities’ retail markets in succession, most of this capital had been spent, leaving less than one million yuan in the company’s accounts.

The majority of that expenditure was devoted to expanding the retail market in Nanming City.

To push out the existing small and medium-sized supermarkets and force them to relinquish their hold on the local retail market, Huakun Supermarket had spent lavishly.

The results were remarkable.

After driving many smaller retailers into bankruptcy, Huakun also acquired a number of their stores to supplement its own branches, further solidifying its market share in Nanming.

The conference room buzzed with activity.

Since the meeting had yet to begin, the attendees whispered in small groups, speculating on the agenda.

Year-end bonuses were naturally a topic, but most were more interested in whether the quota for branch promotions in the next quarter would be announced.

Bonuses were not to be handed out carelessly.

Thanks to Huakun’s well-established reward policies, most present were already aware of the approximate amount of their year-end bonus.

“I’m glad to see everyone again. Let me take this opportunity to wish all of you an early Happy New Year, and thank you for your hard work this past year!” Lu Kun bowed slightly, speaking sincerely.

“No, no, it’s you who’s worked the hardest, President Lu.”

“President Lu is the most handsome!”

“...”

Lu Kun: “...”

Fortunately, no one suggested anything absurd like bearing him a child.

Lu Kun raised his hand to quiet the room.

Once silence returned, he calmly continued, “In recent days, I’ve been busy analyzing various data reports and haven’t had the chance to gather everyone together for a proper talk.

“Today, let this be Huakun Supermarket’s first-ever annual meeting.”

“I won’t waste time on small talk. I have a few things to discuss, including—of course—the distribution of year-end bonuses.

“You all know roughly how much your bonuses are, right?”

“Yes!!!”

The crowd answered almost in unison.

“Very well, then our first order of business is to distribute the money!” Lu Kun gestured toward the back door, and staff from the bank entered carrying a large box. They opened it in front of Lu Kun, who turned it so everyone could see.

“Wow...”

Exclamations filled the room.

“This year, our company is handing out a total of 200,000 yuan in year-end bonuses!” Lu Kun announced enthusiastically.

He quickly calculated: there were about 350 people present, so the average bonus was around 570 yuan per person, roughly equivalent to their average monthly wage over the past ten months.

Of course, averages were often misleading.

Among employees of the same rank, the longer someone had been with the company, the larger their year-end bonus.

Managers and assistant managers of newly opened branches were mostly spectators this time, receiving very little, some nearly nothing at all.

That was understandable—stores only open a few days couldn’t reasonably expect a year-end bonus.

Moreover, some lower-level employees were not even eligible to attend the annual meeting.

After all, with the year’s end approaching, the company couldn’t simply shut down and give everyone time off to hold a party—business had to keep running.

“We don’t do anything fancy—bonuses will be paid out in cash. When your name is called, please come up quickly to collect your money. We don’t want to waste the precious time of the bank’s notary,” Lu Kun joked.

The highest bonus went without question to Sun Bowen, who received nearly 10,000 yuan. The smallest went to a store manager in Fangcheng who got just 85 cents.

It wasn’t due to poor performance, but because their branch had just opened two days ago and the sales report was still pending company verification.

...

“All right, most of you have received some bonus—except me. In fact, I’ve nearly lost everything this year,” Lu Kun said self-deprecatingly, prompting a chorus of boos from below.

Once the room settled, he continued.

“We won’t dwell on our accomplishments; you can see the reports yourselves. Last year, Huakun’s total expenditures reached seventeen million yuan, mostly spent on acquiring stores, renovations, marketing, and public relations.”

Everyone was mentally prepared for this.

After all, nearly ten million yuan had been poured into breaking into Nanming’s retail market and crushing the smaller competitors.

Additionally, store prices in prefecture-level cities were far higher than those in county-level towns.

After the murmurs died down, Lu Kun turned to the finance manager and asked, “Can you tell everyone exactly how much we lost last year?”

The finance manager’s face flushed red, nearly bursting into laughter.

Loss? What loss!

The books showed a loss, but how else had Huakun managed to acquire over a hundred stores? It was the classic case of “losing money to gain advantage.”

Such strategic losses born of rapid expansion and territorial conquest would probably make the boss smile even in his sleep.

Laughter erupted from the crowd.

Lu Kun had only been joking, but never expected his employees to be so easily amused.

Counting on his fingers, Lu Kun finally announced that the company’s official loss on the books was just over two million yuan.

Yes, in a single year, a loss of two million yuan had bought a sprawling chain of over one hundred stores with total assets exceeding thirty million yuan. Lu Kun was quietly pleased with that.

The loan application process with the Industrial and Commercial Bank of China’s Angui Branch and the Angui Rural Credit Cooperative was almost complete.

Once the funds arrived, achieving a near-monopoly of the Angui retail market in 1991 would be merely a modest goal for Huakun.