Inspired by the work of Colonel Truman with Office Space and Gorillatore with Fashion Mogul I’ve decided to contribute my experience with the scenario China Opening Up.
China Opening Up
In the 1990s, China continues its economic reform with great strides, attracting tens of billions of dollars of foreign investments each year.
You must set up factories to take advantage of the low labor cost, and at the same time establish a retail presence and start cultivating brand awareness of your products,
While the wage rate and local demands for high-end products are still low, they are increasing rapidly.
If you can successfully secure a foothold in the market, you will be in a position to reap the benefits when the consumer market in China grows to a substantial size in the near future.
The five cities, their populations and real wage rate.
Beijing 4,356,182 52
Shanghai 4,509,746 47
Guangzhou 2,806,251 42
Chengdu 2,345,756 33
New York City 4,504,368 89
Upstream Business (Subgoal)
In order to receive permission to invest in the natural resources business, your company’s net worth must be at least $150 million and have an annual revenue of $200 million.
Subgoal Target Current
Net Worth of Your Corporation $150 million $50.00 million
Annual Revenue of Your Corporation $200 million $0 million
Seize the Opportunities (Main Goal)
Seize the opportunities that emerge during China’s opening-up and grow your company to become a dominating force in the market.
Goal Deadline January 1, 2040
No. of years passed 0.001 / 50.00
Main Goal Target Current
Net Worth of Your Corporation $250 million $50.00 million
Annual Revenue of Your Corporation $300 million $0 million
Market Dominance of the Retailing Sector
Market Dominance of the Manufacturing Sector
China Opening Up
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robertshfl
- Posts: 12
- Joined: Fri Mar 15, 2019 4:30 pm
Re: China Opening Up
December 31, 1990
Playing Time: 1 hour 16 minutes
The first thing we did was to borrow the maximum amount of money from the bank, $50 million. We purchased 1.05% of our own stock to give us a 51.05% ownership.
Our business expertise was in the Household Products area with a rating of 80.
We switched our brand strategy to Range Brand.
We set up two supermarkets in New York City, traffic rating of 72 and 60 and a demand bonus of 13 for both. We stocked both of them with Snacks from the seaports. Ice Cream, Frozen Yogurt, Cereal Bar, and Chewing Gum. We set up an advertising budget of $250,000 monthly in each store. In hindsight it doesn’t appear this benefited us much at all as our brand rating for snacks didn’t see a significant increase over time. I’m assuming this may be due to the fact that the items stocked were imported and not produced by our company. Any insight into this observation is appreciated.
The reason we set up these two supermarkets were to generate a profit from the very start. This proved to be successful as the stores generated a combined revenue of $55,359,126 and combined profits of $24,871,618 in the very first year.
We decided to base our operations in the city of Chengdu which had the lowest real wage rate of 33. Our headquarters was set up with an office for the CEO, COO, and CTO. We set the CEO salary at a measly $9,900. We hired Cathy Jakoi as our CTO. Ms. Jakoi had a business expertise of 20 in Manufacturing, 60 in Research and Development, and 100 in Household Products. She commanded a salary of $8,415,000.
In February we set up two R&D Centers. The first had 4 units researching tissues for one year, tech gain 30 >> 67, and 5 units researching detergent for one year, tech gain 30 >> 74. The second had 4 units researching washing powder, tech gain 30 >> 67, and 5 units researching toilet cleaner, tech gain 30 >> 74. Due to Ms. Jakoi’s expertise of 60 in research and developments, all units were level 4 units and we allowed her to set her own training budget which was minimal. Our two R&D Centers had a combined first year expense of $6,410,284.
Our first factory was set up in Chengdu producing detergent. Due to a lack of Citric Acid on the open market we had to set up a purchasing unit for lemons and two manufacturing units to produce citric acid. We had another purchasing unit for chemical minerals and another for plastic. Two additional manufacturing units were set up for the detergent as well as two sales units. This factory had a first year revenue of $2,285,182 and a profit of $377,220.
We have an internal sales only default. We set up a supermarket in Chengdu with a traffic rating of 72 but no demand bonus. A purchasing and sales unit for detergent was set up as well as one advertising unit. We set our advertising budget at $250,000 and by the end of the year our brand rating had increased from 0 to 20. This location had first year revenue of $2,981,401 and a loss of $2,585,858.
In the stock market we closed out the year with no public shareholders, the remaining 48.95% of stock was purchased by various individuals and companies. Our stock price on December 31, 1990 was $15.03, total shares were 5,000,000 and our market cap was $75,150,060. Earnings per share were $1.45, equity per share was $13.47, P/E ratio was 10.39 and P/B ratio was 1.12.
On December 31, 1990 we had $39,741,154 in cash and annual profit of $9,099,788. For our goals we had a net worth of $67.36 million and annual revenue of $60.63 million. We did not have market dominance in the retail or manufacturing sector.
Playing Time: 1 hour 16 minutes
The first thing we did was to borrow the maximum amount of money from the bank, $50 million. We purchased 1.05% of our own stock to give us a 51.05% ownership.
Our business expertise was in the Household Products area with a rating of 80.
We switched our brand strategy to Range Brand.
We set up two supermarkets in New York City, traffic rating of 72 and 60 and a demand bonus of 13 for both. We stocked both of them with Snacks from the seaports. Ice Cream, Frozen Yogurt, Cereal Bar, and Chewing Gum. We set up an advertising budget of $250,000 monthly in each store. In hindsight it doesn’t appear this benefited us much at all as our brand rating for snacks didn’t see a significant increase over time. I’m assuming this may be due to the fact that the items stocked were imported and not produced by our company. Any insight into this observation is appreciated.
The reason we set up these two supermarkets were to generate a profit from the very start. This proved to be successful as the stores generated a combined revenue of $55,359,126 and combined profits of $24,871,618 in the very first year.
We decided to base our operations in the city of Chengdu which had the lowest real wage rate of 33. Our headquarters was set up with an office for the CEO, COO, and CTO. We set the CEO salary at a measly $9,900. We hired Cathy Jakoi as our CTO. Ms. Jakoi had a business expertise of 20 in Manufacturing, 60 in Research and Development, and 100 in Household Products. She commanded a salary of $8,415,000.
In February we set up two R&D Centers. The first had 4 units researching tissues for one year, tech gain 30 >> 67, and 5 units researching detergent for one year, tech gain 30 >> 74. The second had 4 units researching washing powder, tech gain 30 >> 67, and 5 units researching toilet cleaner, tech gain 30 >> 74. Due to Ms. Jakoi’s expertise of 60 in research and developments, all units were level 4 units and we allowed her to set her own training budget which was minimal. Our two R&D Centers had a combined first year expense of $6,410,284.
Our first factory was set up in Chengdu producing detergent. Due to a lack of Citric Acid on the open market we had to set up a purchasing unit for lemons and two manufacturing units to produce citric acid. We had another purchasing unit for chemical minerals and another for plastic. Two additional manufacturing units were set up for the detergent as well as two sales units. This factory had a first year revenue of $2,285,182 and a profit of $377,220.
We have an internal sales only default. We set up a supermarket in Chengdu with a traffic rating of 72 but no demand bonus. A purchasing and sales unit for detergent was set up as well as one advertising unit. We set our advertising budget at $250,000 and by the end of the year our brand rating had increased from 0 to 20. This location had first year revenue of $2,981,401 and a loss of $2,585,858.
In the stock market we closed out the year with no public shareholders, the remaining 48.95% of stock was purchased by various individuals and companies. Our stock price on December 31, 1990 was $15.03, total shares were 5,000,000 and our market cap was $75,150,060. Earnings per share were $1.45, equity per share was $13.47, P/E ratio was 10.39 and P/B ratio was 1.12.
On December 31, 1990 we had $39,741,154 in cash and annual profit of $9,099,788. For our goals we had a net worth of $67.36 million and annual revenue of $60.63 million. We did not have market dominance in the retail or manufacturing sector.
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nosedigger
- Posts: 12
- Joined: Sat Sep 24, 2016 12:42 pm
Re: China Opening Up
You are right on this, you can't advertise other company's products, that's why there is private labeling unit. So the chain should be Purchasing->Private Labeling->Sales. If you do this in the store, you can either have 3xPU+SU and 1xPU+PL+SUrobertshfl wrote: ↑Thu Apr 18, 2019 1:05 am ...We set up an advertising budget of $250,000 monthly in each store. In hindsight it doesn’t appear this benefited us much at all as our brand rating for snacks didn’t see a significant increase over time. I’m assuming this may be due to the fact that the items stocked were imported and not produced by our company. Any insight into this observation is appreciated....
OR 3xPU+PL+SU. This is ok if you are selling product in one store, but if you want to sell labelled product in several stores, then the better solution is to use warehouse and setup Input->Labeling->(maybe inventory)->Output. Just be mindful with this, since labeling unit is kind of processing unit, so it can be a bottleneck if you are trying to move larger quantities of product.
In my experience, labeling should be used only if you want to start building brand from the day one for the product range, because eventually you will be producing those products yourself. If that is not case you are competing with all the other companies who are also trying to sell the same product from the same dock -> you will pump money into marketing, but higher price will not offset the advertising budget since the volume of sales can't grow and in the end you will lose money.
There is only one case where I use labeling, and that is in the digital age, to "help" my rival sell the Operating System disks. Usually only one company makes OS, and if you started developing your own you are two and a half year behind it from the start. The market is HUGE and the computer doesn't open too many stores, but produces OS in the large factories, so I relabel them, pump up the advertising, and make a really nice profit of their technology and production
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robertshfl
- Posts: 12
- Joined: Fri Mar 15, 2019 4:30 pm
Re: China Opening Up
Thank you for the feedback Nosedigger.
December 31, 1991
Total Playing Time: 2 hours 54 minutes
We continued to perform R&D on our four household products. Research was set in one year increments. We also swapped the number of research units for each product. This year in the one R&D center we had 5 units researching tissues and 4 units researching detergent. The other center had 5 units researching washing powder and 4 units researching toilet cleaner. This allowed all four products to show the same tech gain which was 99. We continued this method of research so that every two years the products had an equal amount of tech.
An additional R&D Center was set up towards the end of the year to research paper and citric acid, two products needed for the manufacturing of our household products.
As soon as the R&D was completed we set up two additional factories to manufacture our remaining household goods of tissue, washing powder, and toilet cleaner. We decided to combine the manufacturing of tissue and washing powder in one factory due to the fact that paper was required by each item. This was a large factory where timber was imported. One manufacturing unit was set up to produce tissues. Another manufacturing unit was set up to produce paper which in turn was used along with chemical minerals in the production of washing powder where we had two manufacturing units set up. One sales unit for each product was set up.
A medium factory was built for the production of toilet cleaner. Two purchasing units for plastic, one for chemical minerals, three manufacturing units and three sales units completed the layout.
Our supermarket in Chengdu was stocked with all four items. We kept the advertising budget at $250,000. Also maintained the overall rating of each item 3-5 higher than the city overall. An additional four supermarkets were set up, Beijing customer traffic index 57, Shanghai CTI 54, Guangzhou CTI 60, and New York CTI 72 and demand bonus 21. Same advertising budget for all of them and same strategy with the overall rating.
The two original supermarkets in New York still have the same snack products for sale. In the future if an item is no longer available from the port we will replace it with an item were manufacturing. Performance at both these supermarkets is outstanding. Combined lifetime revenue of $135,331,075 and lifetime profit of $64,637,617.
We did set up an additional factory for the production of detergent due to the high demand from our supermarkets. This factory was set up in Beijing, and sold the detergent to the supermarkets in Beijing and Guangzhou. The detergent factory in Chengdu distributed to the other three cities. This was an attempt to try to improve the supply and demand from a factory in one city to retail stores in other cities. Not sure if it was a beneficial move or not. The cost of manufacturing was a penny cheaper in Beijing, $0.13 compared to $0.14. The cost of land in Beijing was more expensive than in Chengdu.
Early in the year we borrowed an additional $50 million to keep up with our expansion. Due to inflation our total loan was $96,095,726, a savings of almost $4 million. Interest rate was 9.00% which set our monthly interest payment an affordable $720,717.
A quick summary of the financials for this year. 7 retail stores had total revenue of $123,958,533 and total profit of $37,745,052. 4 factories with revenue of $28,021,465 and profit of $17,085,146. 3 R&D Centers with total expenses of $8,194,933.
On December 31, 1991 we had $33,487,983 in cash and annual profit of $38,233,446. For our goals we had a net worth of $116.14 million, annual revenue of $151.98 million and market dominance of the manufacturing sector.
Our stock price on December 31, 1991 was $73.59, total shares were 5,000,000 and our market cap was $367,943,251. Earnings per share were $7.01, equity per share was $23.23, P/E ratio was 10.50, P/B ratio was 3.17, and dividend yield was 0.05%.
December 31, 1991
Total Playing Time: 2 hours 54 minutes
We continued to perform R&D on our four household products. Research was set in one year increments. We also swapped the number of research units for each product. This year in the one R&D center we had 5 units researching tissues and 4 units researching detergent. The other center had 5 units researching washing powder and 4 units researching toilet cleaner. This allowed all four products to show the same tech gain which was 99. We continued this method of research so that every two years the products had an equal amount of tech.
An additional R&D Center was set up towards the end of the year to research paper and citric acid, two products needed for the manufacturing of our household products.
As soon as the R&D was completed we set up two additional factories to manufacture our remaining household goods of tissue, washing powder, and toilet cleaner. We decided to combine the manufacturing of tissue and washing powder in one factory due to the fact that paper was required by each item. This was a large factory where timber was imported. One manufacturing unit was set up to produce tissues. Another manufacturing unit was set up to produce paper which in turn was used along with chemical minerals in the production of washing powder where we had two manufacturing units set up. One sales unit for each product was set up.
A medium factory was built for the production of toilet cleaner. Two purchasing units for plastic, one for chemical minerals, three manufacturing units and three sales units completed the layout.
Our supermarket in Chengdu was stocked with all four items. We kept the advertising budget at $250,000. Also maintained the overall rating of each item 3-5 higher than the city overall. An additional four supermarkets were set up, Beijing customer traffic index 57, Shanghai CTI 54, Guangzhou CTI 60, and New York CTI 72 and demand bonus 21. Same advertising budget for all of them and same strategy with the overall rating.
The two original supermarkets in New York still have the same snack products for sale. In the future if an item is no longer available from the port we will replace it with an item were manufacturing. Performance at both these supermarkets is outstanding. Combined lifetime revenue of $135,331,075 and lifetime profit of $64,637,617.
We did set up an additional factory for the production of detergent due to the high demand from our supermarkets. This factory was set up in Beijing, and sold the detergent to the supermarkets in Beijing and Guangzhou. The detergent factory in Chengdu distributed to the other three cities. This was an attempt to try to improve the supply and demand from a factory in one city to retail stores in other cities. Not sure if it was a beneficial move or not. The cost of manufacturing was a penny cheaper in Beijing, $0.13 compared to $0.14. The cost of land in Beijing was more expensive than in Chengdu.
Early in the year we borrowed an additional $50 million to keep up with our expansion. Due to inflation our total loan was $96,095,726, a savings of almost $4 million. Interest rate was 9.00% which set our monthly interest payment an affordable $720,717.
A quick summary of the financials for this year. 7 retail stores had total revenue of $123,958,533 and total profit of $37,745,052. 4 factories with revenue of $28,021,465 and profit of $17,085,146. 3 R&D Centers with total expenses of $8,194,933.
On December 31, 1991 we had $33,487,983 in cash and annual profit of $38,233,446. For our goals we had a net worth of $116.14 million, annual revenue of $151.98 million and market dominance of the manufacturing sector.
Our stock price on December 31, 1991 was $73.59, total shares were 5,000,000 and our market cap was $367,943,251. Earnings per share were $7.01, equity per share was $23.23, P/E ratio was 10.50, P/B ratio was 3.17, and dividend yield was 0.05%.
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colonel_truman
- Community Contributor
- Posts: 207
- Joined: Wed Mar 21, 2018 2:58 pm
Re: China Opening Up
Hello, and glad to know I can inspire others!
It s always welcome to see how other people play and see if one can learn stuff from it.
By the way, you haven´t provided any screenshots!
I remember playing that scenario back in January this year.
Basically all scenarios can be solved in 2-3 years by:
Set up HQ and hire the best COO in retail. Take max loan. Use 90%-95% of your cash to build discount megastores (in this scenario all in NY) and let the COO run them. He will do a great job! After the 1st-2nd month you will have a positive balance.
With the cash flowing in, start buying the public retailer´s stock: find the ones that open the most stores and are retail focused, their price will soon skyrocket.
Keep borrowing (10% interest is fine), opening new stores and buying the leading retailers in the public marketplace.
I didnt want to spoil the party, but I always find the seaports are the real party breakers.
Keep going!
It s always welcome to see how other people play and see if one can learn stuff from it.
By the way, you haven´t provided any screenshots!
I remember playing that scenario back in January this year.
Basically all scenarios can be solved in 2-3 years by:
Set up HQ and hire the best COO in retail. Take max loan. Use 90%-95% of your cash to build discount megastores (in this scenario all in NY) and let the COO run them. He will do a great job! After the 1st-2nd month you will have a positive balance.
With the cash flowing in, start buying the public retailer´s stock: find the ones that open the most stores and are retail focused, their price will soon skyrocket.
Keep borrowing (10% interest is fine), opening new stores and buying the leading retailers in the public marketplace.
I didnt want to spoil the party, but I always find the seaports are the real party breakers.
Keep going!
Things aren´t getting worse; our information is getting better!
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robertshfl
- Posts: 12
- Joined: Fri Mar 15, 2019 4:30 pm
Re: China Opening Up
Thank you for the positive feedback Colonel.
What's the best way to do the screenshots? I do have OneNote, would this be the best option or is there a better way?
After I updated to the newest version I lost all my previous save files. However my analysis has been completed for a while. 31 pages, lots of text, no screenshots,
I don't know if there is enough interest for me to post the entire thing or not. I also did this work for the scenario: Corporate Leadership, that one is 47 pages long, again all text, no screenshots, and no save files available. If I didn't do a post here on the forums maybe I could upload it somewhere and provide a link for anyone who wants to download it.
In most of the scenarios I've played so far I borrow the maximum amount right from day 1 and continue to borrow, usually for the first two to three years, in order to fund my growth and expansion. If I'm generating a profit I'm not really concerned with the amount of interest I'm paying.
I also set up headquarters and hire the best COO available with strong retail and marketing expertise. I don't set up discount megastores. Depending on my expertise, i.e. lets say my expertise is furniture, I'll build factories to produce the products and open specific retail stores, furniture stores, as my retail outlets. I usually don't open discount megastores or department stores until my brand is well established.
I completed this scenario in the beginning of the 16th year. Total playing time was a little over 28 hours. Looking back it seems the goal of market dominance in the manufacturing sector was the biggest hurdle to accomplish. From 1990 to 1995 we maintained dominance in manufacturing, than lost it and didn't gain it back until the end of the scenario.
I have noticed a lot of similarities in the various scenarios like you've mentioned. Where performing certain actions in whatever scenario seems to produce the same if not similar results. I've also noticed a lot of the same behavior from the AI's.
I have a question. I own all 3 of the DLC's. Are you able to utilize the Digital Age DLC in any of the scenarios whether they be the Basic Scenarios, the Subsidiary Scenarios, or the City Economic Scenarios. I have all the DLC's set to "on" yet I haven't been able to do anything with the Digital Age DLC content in any of the scenarios.
What's the best way to do the screenshots? I do have OneNote, would this be the best option or is there a better way?
After I updated to the newest version I lost all my previous save files. However my analysis has been completed for a while. 31 pages, lots of text, no screenshots,
I don't know if there is enough interest for me to post the entire thing or not. I also did this work for the scenario: Corporate Leadership, that one is 47 pages long, again all text, no screenshots, and no save files available. If I didn't do a post here on the forums maybe I could upload it somewhere and provide a link for anyone who wants to download it.In most of the scenarios I've played so far I borrow the maximum amount right from day 1 and continue to borrow, usually for the first two to three years, in order to fund my growth and expansion. If I'm generating a profit I'm not really concerned with the amount of interest I'm paying.
I also set up headquarters and hire the best COO available with strong retail and marketing expertise. I don't set up discount megastores. Depending on my expertise, i.e. lets say my expertise is furniture, I'll build factories to produce the products and open specific retail stores, furniture stores, as my retail outlets. I usually don't open discount megastores or department stores until my brand is well established.
I completed this scenario in the beginning of the 16th year. Total playing time was a little over 28 hours. Looking back it seems the goal of market dominance in the manufacturing sector was the biggest hurdle to accomplish. From 1990 to 1995 we maintained dominance in manufacturing, than lost it and didn't gain it back until the end of the scenario.
I have noticed a lot of similarities in the various scenarios like you've mentioned. Where performing certain actions in whatever scenario seems to produce the same if not similar results. I've also noticed a lot of the same behavior from the AI's.
I have a question. I own all 3 of the DLC's. Are you able to utilize the Digital Age DLC in any of the scenarios whether they be the Basic Scenarios, the Subsidiary Scenarios, or the City Economic Scenarios. I have all the DLC's set to "on" yet I haven't been able to do anything with the Digital Age DLC content in any of the scenarios.
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VRBones
- Posts: 13
- Joined: Thu Aug 10, 2017 9:55 am
Re: China Opening Up
I'd agree that a screenshot every now and then can help frame the story, but I wouldn't let that stop you. If you have it all done, post away! Help others, helps you, helps new people to the forums.31 pages, lots of text, no screenshots,
Snipping tool on Windows. PrintScreen button will also put a screenshot into the paste buffer to paste into any bitmap program (EG: MS Paint)What's the best way to do the screenshots?
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robertshfl
- Posts: 12
- Joined: Fri Mar 15, 2019 4:30 pm
Re: China Opening Up
Thank you VRBones for the positive feedback. I will go ahead and post my work for this scenario. I've been working on The Master of Capital scenario with the subsidiary DLC. I've been using 2013 Microsoft OneNote for screenshots. I just posted in the forums in the tech support section and I learned how to include screenshots in the forums with that post.
December 31, 1992
Total Playing Time: 3 hours 54 minutes
This year is significant due to our company successfully completing the Upstream Business Subgoal on May 24, 1992. On April 15, 1992 we set up two additional factories in Beijing, a large factory producing tissue and washing powder and a medium factory producing toilet cleaner. Our three R&D Centers continued to research the 4 household goods, paper and citric acid.
A new detergent factory was opened in New York, our first factory in this city. This was set up to try and help with the supply and demand issue, detergent from this factory was sent to two supermarkets in New York. The other two detergent factories, one in Chengdu, the other in Beijing had their sales units sending detergents to the other four supermarkets in the other four cities.
The supply of ice cream in our two original supermarkets in New York came to an end. We replaced them with detergent in one store and washing powder in the other store.
We didn’t borrow any additional funds from the bank and our total loan decreased to $93,411,340. The interest rate increased a half percent to 9.50% which set our monthly interest payment to $739,506.
At the end of the year we had 7 retail stores, revenue $214,301,138 and profit of $60,052,001. 7 factories, revenue $83,864,304 and profit of $58,812,733. 3 R&D Centers with total expenses of $11,409,857.
On December 31, 1992 we had $89,624,284 in cash, an annual profit of $98,645,320, a net worth of $227.48 million, annual revenue of $298.17 million, and market dominance of the manufacturing sector. It would seem we were just a few steps away from completing the main goal. After all we had less than $3 million of net worth, $2 million of annual revenue, and a quick market dominance of the retail sector left to accomplish. We couldn’t have been more wrong with that analysis. We didn’t complete this scenario until 2006.
Our stock price on December 31, 1992 was $214.94, total shares of 5,000,000 and a market cap of $1,074M. Earnings per share were $18.38, equity per share was $45.50, P/E ratio was 11.69, P/B ratio was 4.72, and dividend yield was 0.07%.
It should also be noted that with the completion of the sub goal we had the opportunity to open our own natural resources facilities. We chose not to because the availability and price of resources we needed in our factories were readily available either at the seaports or from our competitors.
December 31, 1993
Total Playing Time: 5 hours 37 minutes
This year our CEO maintained his meager salary of $9,900. Ms. Jakoi’s salary increased to $10.3 million and we didn’t add any other members to our executive team.
By the end of the year we still maintained our dominance of the manufacturing sector with a market share of 17 percent. In the retail sector we were fourth with a 9 percent market share, the leader had a 17 percent share.
We were only producing the household products of detergent with a 53% market share, tissues with a 100% share, toilet cleaner with a 60% share, and washing powder with a 54% share. Our two original supermarkets in New York only had two sales units from the seaports, these two items being chewing gum and yogurt.
Knowing we needed to continue growing our manufacturing and retailing operations, we studied what our next area of growth would be. After careful consideration we decided on the tobacco products area.
We built two more R&D Centers, one to research cigarettes and the other to research cigars. Current tech was 23, research set for one year and a target tech of 54. The research began in the month of March that way when our tobacco was harvested the following March our tech level would be 54 instead of 23.
A large tobacco farm was built in Chengdu. This farm had 6 crop units, one inventory unit, and two sales units. Spoiler alert! As much cigarettes and cigars we sold over the course of this scenario, we only needed this one farm for all our tobacco needs.
This year two more supermarkets were set up, one in Shanghai and the other in Chengdu.
Here is a quick look at our advertising and brand rating by the end of this year. In Chengdu we decreased our advertising budget to $100,490. Our Range Brand Rating in Chengdu was 42. New York we had two advertising units with a budget of $100,490 each and a third advertising unit with a budget of $250,000. Our Range Brand Rating in New York was also 42.
Beijing had two advertising units with a budget of $250,000 each and a Range Brand Rating of 10. Shanghai also had two advertising units with a budget of $250,000 and a Range Brand Rating of 25. Rounding out the analysis is one advertising unit in Guangzho, budget of $250,000, rating of 35.
Here is a quick look at our technology. Up to this point all technology was from performing our own research. We didn’t begin to acquire tech from other companies until the next year. Keep in mind research on these 6 items continued. Tech for citric acid and paper was 59, detergent and toilet cleaner was 106 and tissues and washing powder was 111.
On the financial side we paid our loans off completely, $93,136,985. The total amount of interest paid over the life of the loan was $21,920,914. We never took out another loan nor did we issue any additional shares of our corporation.
The end of this year we had 9 retail stores, revenue $272,000,661 and profit $82,785,979. Number of factories were 7, revenue $123,051,424 and profit $90,321,375. Our 5 R&D Centers had an expense of $17,457,806 and our newly set up farm had no revenue and a loss of $741,068.
On December 31, 1993 we had $97,977,614 in cash, an annual profit of $145 million, a net worth of $379.83 million, and annual revenue of $395 million. As mentioned earlier we still maintained our dominance in the manufacturing sector.
Our stock price on December 31, 1993 was $322.36 and our market cap was $1,611 million. Earnings per share were $28.40, equity per share was $75.97, P/E Ratio of 11.35, P/B Ratio of 4.24, and a dividend yield of 0.12%.
December 31, 1994
Total Playing Time: 8 hours 11 minutes
This was a busy year with the set-up of 4 factories, 3 convenience stores, the hiring of a Chief Operating Officer (COO) and our first acquisition of technology from a competitor.
As soon as our research was completed in March we set up a large factory in Chengdu for the production of cigarettes and cigars. Two purchasing units for timber with one manufacturing unit for paper. Two purchasing units for tobacco, a manufacturing unit for cigarettes and one for cigars with each of them having their own sales unit. As we do with all our factories, an initial training budget was set slightly above the 50% mark.
Three convenience stores were set up in the cities of New York, Beijing, and Chengdu. One purchasing unit and one sales unit was set up for the cigarettes and cigars. Advertising budget was set at $500,000 per convenience store. By the end of the year our Range Brand Rating was 13 in New York and Beijing and 24 in Chengdu.
One issue we struggled with, at least before we enlisted the help of a qualified COO, was the proper ratio of factories to retail units. This was most noticeable with detergents. At the end of 1993 we had 3 medium factories only producing detergent with two sales units in each factory. We had 8 retail outlets in the 5 different cities that had one purchase and sales unit for detergent per store. That’s 3 factories to 8 retail stores, seems a little lopsided to me.
Our first action taken to address this issue was instead of having each factory manufacture its own citric acid we opened up one factory to produce citric acid and the detergent factories purchased the citric acid from this one main facility. The citric acid factory was set up in Chengdu on June 28, 1994.
We retrofitted our 3 detergent factories, removing the purchase units for lemons and the manufacturing units for citric acid. Our new layout consisted of the top 3 units, from left to right, set up as purchase unit citric acid, purchase unit chemical minerals, and purchase unit citric acid. The second row was 3 manufacturing units and our bottom row was sales unit, purchase unit plastic, and sales unit.
This year we gave our CEO/Chairman a well-deserved raise to an annual salary of $16.1 million. Our CTO’s salary increased to $11.7 million. On September 1, 1994 we hired Rebecca S. Spake as our Chief Operating Officer (COO). Rebecca came to us with a Beverage Business Expertise of 50, Retailing Expertise of 80 and a Marketing Expertise of 80. We agreed to a starting salary of $15.2 million.
We placed her in charge of all retail stores with the ability to set the training budget and advertising budget. We kept the pricing policy and freight concern balanced. She was instructed to never sell products below cost. We adjusted our low supply tolerance down to about 25%. Our thought behind this would be that she would be more aggressive in keeping our stores efficiently stocked.
We didn’t task her with the decision of looking for better products to sell in the retail stores, however in 1995, we did set her up with a couple of stores with open purchase units and let her decide the products to sell in those stores. The results were quite interesting and we’ll discuss it in next year’s papers.
The popularity of our household goods amongst the five cities justified us opening two more factories in Chengdu on September 1st. Both of these were large factories, one producing toilet cleaner and the other producing tissues.
After hiring Ms. Spake as our COO with her expertise in the beverage industry we entertained the idea of making beverage our next area for expansion. Instead of engaging in our own research we decided to acquire the technology from one of our competitors.
On December 12, 1994 we acquired the technology for bottled milk from Treasure Pit for $2,668,000. Tech level increased from 21 to 57. STRATEGY TIP. Before placing an offer on technology lower the offer price significantly. If the competitor is willing to sell you the tech they will counteroffer your amount. It may be less or more than their original asking price, if it’s less you’ll save a little money. The worst that will happen is they’ll tell you they don’t want to sell their tech to a competitor.
The end of this year we had 12 retail stores, revenue $357,243,899 and profit $70,129,770. Number of factories were 11, revenue $156.269.124 and profit $111,703,624. Our 5 R&D Centers had an expense of $18,946,064 and our tobacco farm had $2,048,013 in revenue and a loss of $1,099,016.
On December 31, 1994 we had $165,754,116 in cash, an annual profit of $142 million, a net worth of $540.16 million, and annual revenue of $515.56 million and we still maintained our dominance in the manufacturing sector.
Our stock price on December 31, 1994 was $378.57 and our market cap was $1,892 million. Earnings per share were $30.76, equity per share was $108.03, P/E Ratio of 12.31, P/B Ratio of 3.50, and a dividend yield of 0.31%.
December 31, 1992
Total Playing Time: 3 hours 54 minutes
This year is significant due to our company successfully completing the Upstream Business Subgoal on May 24, 1992. On April 15, 1992 we set up two additional factories in Beijing, a large factory producing tissue and washing powder and a medium factory producing toilet cleaner. Our three R&D Centers continued to research the 4 household goods, paper and citric acid.
A new detergent factory was opened in New York, our first factory in this city. This was set up to try and help with the supply and demand issue, detergent from this factory was sent to two supermarkets in New York. The other two detergent factories, one in Chengdu, the other in Beijing had their sales units sending detergents to the other four supermarkets in the other four cities.
The supply of ice cream in our two original supermarkets in New York came to an end. We replaced them with detergent in one store and washing powder in the other store.
We didn’t borrow any additional funds from the bank and our total loan decreased to $93,411,340. The interest rate increased a half percent to 9.50% which set our monthly interest payment to $739,506.
At the end of the year we had 7 retail stores, revenue $214,301,138 and profit of $60,052,001. 7 factories, revenue $83,864,304 and profit of $58,812,733. 3 R&D Centers with total expenses of $11,409,857.
On December 31, 1992 we had $89,624,284 in cash, an annual profit of $98,645,320, a net worth of $227.48 million, annual revenue of $298.17 million, and market dominance of the manufacturing sector. It would seem we were just a few steps away from completing the main goal. After all we had less than $3 million of net worth, $2 million of annual revenue, and a quick market dominance of the retail sector left to accomplish. We couldn’t have been more wrong with that analysis. We didn’t complete this scenario until 2006.
Our stock price on December 31, 1992 was $214.94, total shares of 5,000,000 and a market cap of $1,074M. Earnings per share were $18.38, equity per share was $45.50, P/E ratio was 11.69, P/B ratio was 4.72, and dividend yield was 0.07%.
It should also be noted that with the completion of the sub goal we had the opportunity to open our own natural resources facilities. We chose not to because the availability and price of resources we needed in our factories were readily available either at the seaports or from our competitors.
December 31, 1993
Total Playing Time: 5 hours 37 minutes
This year our CEO maintained his meager salary of $9,900. Ms. Jakoi’s salary increased to $10.3 million and we didn’t add any other members to our executive team.
By the end of the year we still maintained our dominance of the manufacturing sector with a market share of 17 percent. In the retail sector we were fourth with a 9 percent market share, the leader had a 17 percent share.
We were only producing the household products of detergent with a 53% market share, tissues with a 100% share, toilet cleaner with a 60% share, and washing powder with a 54% share. Our two original supermarkets in New York only had two sales units from the seaports, these two items being chewing gum and yogurt.
Knowing we needed to continue growing our manufacturing and retailing operations, we studied what our next area of growth would be. After careful consideration we decided on the tobacco products area.
We built two more R&D Centers, one to research cigarettes and the other to research cigars. Current tech was 23, research set for one year and a target tech of 54. The research began in the month of March that way when our tobacco was harvested the following March our tech level would be 54 instead of 23.
A large tobacco farm was built in Chengdu. This farm had 6 crop units, one inventory unit, and two sales units. Spoiler alert! As much cigarettes and cigars we sold over the course of this scenario, we only needed this one farm for all our tobacco needs.
This year two more supermarkets were set up, one in Shanghai and the other in Chengdu.
Here is a quick look at our advertising and brand rating by the end of this year. In Chengdu we decreased our advertising budget to $100,490. Our Range Brand Rating in Chengdu was 42. New York we had two advertising units with a budget of $100,490 each and a third advertising unit with a budget of $250,000. Our Range Brand Rating in New York was also 42.
Beijing had two advertising units with a budget of $250,000 each and a Range Brand Rating of 10. Shanghai also had two advertising units with a budget of $250,000 and a Range Brand Rating of 25. Rounding out the analysis is one advertising unit in Guangzho, budget of $250,000, rating of 35.
Here is a quick look at our technology. Up to this point all technology was from performing our own research. We didn’t begin to acquire tech from other companies until the next year. Keep in mind research on these 6 items continued. Tech for citric acid and paper was 59, detergent and toilet cleaner was 106 and tissues and washing powder was 111.
On the financial side we paid our loans off completely, $93,136,985. The total amount of interest paid over the life of the loan was $21,920,914. We never took out another loan nor did we issue any additional shares of our corporation.
The end of this year we had 9 retail stores, revenue $272,000,661 and profit $82,785,979. Number of factories were 7, revenue $123,051,424 and profit $90,321,375. Our 5 R&D Centers had an expense of $17,457,806 and our newly set up farm had no revenue and a loss of $741,068.
On December 31, 1993 we had $97,977,614 in cash, an annual profit of $145 million, a net worth of $379.83 million, and annual revenue of $395 million. As mentioned earlier we still maintained our dominance in the manufacturing sector.
Our stock price on December 31, 1993 was $322.36 and our market cap was $1,611 million. Earnings per share were $28.40, equity per share was $75.97, P/E Ratio of 11.35, P/B Ratio of 4.24, and a dividend yield of 0.12%.
December 31, 1994
Total Playing Time: 8 hours 11 minutes
This was a busy year with the set-up of 4 factories, 3 convenience stores, the hiring of a Chief Operating Officer (COO) and our first acquisition of technology from a competitor.
As soon as our research was completed in March we set up a large factory in Chengdu for the production of cigarettes and cigars. Two purchasing units for timber with one manufacturing unit for paper. Two purchasing units for tobacco, a manufacturing unit for cigarettes and one for cigars with each of them having their own sales unit. As we do with all our factories, an initial training budget was set slightly above the 50% mark.
Three convenience stores were set up in the cities of New York, Beijing, and Chengdu. One purchasing unit and one sales unit was set up for the cigarettes and cigars. Advertising budget was set at $500,000 per convenience store. By the end of the year our Range Brand Rating was 13 in New York and Beijing and 24 in Chengdu.
One issue we struggled with, at least before we enlisted the help of a qualified COO, was the proper ratio of factories to retail units. This was most noticeable with detergents. At the end of 1993 we had 3 medium factories only producing detergent with two sales units in each factory. We had 8 retail outlets in the 5 different cities that had one purchase and sales unit for detergent per store. That’s 3 factories to 8 retail stores, seems a little lopsided to me.
Our first action taken to address this issue was instead of having each factory manufacture its own citric acid we opened up one factory to produce citric acid and the detergent factories purchased the citric acid from this one main facility. The citric acid factory was set up in Chengdu on June 28, 1994.
We retrofitted our 3 detergent factories, removing the purchase units for lemons and the manufacturing units for citric acid. Our new layout consisted of the top 3 units, from left to right, set up as purchase unit citric acid, purchase unit chemical minerals, and purchase unit citric acid. The second row was 3 manufacturing units and our bottom row was sales unit, purchase unit plastic, and sales unit.
This year we gave our CEO/Chairman a well-deserved raise to an annual salary of $16.1 million. Our CTO’s salary increased to $11.7 million. On September 1, 1994 we hired Rebecca S. Spake as our Chief Operating Officer (COO). Rebecca came to us with a Beverage Business Expertise of 50, Retailing Expertise of 80 and a Marketing Expertise of 80. We agreed to a starting salary of $15.2 million.
We placed her in charge of all retail stores with the ability to set the training budget and advertising budget. We kept the pricing policy and freight concern balanced. She was instructed to never sell products below cost. We adjusted our low supply tolerance down to about 25%. Our thought behind this would be that she would be more aggressive in keeping our stores efficiently stocked.
We didn’t task her with the decision of looking for better products to sell in the retail stores, however in 1995, we did set her up with a couple of stores with open purchase units and let her decide the products to sell in those stores. The results were quite interesting and we’ll discuss it in next year’s papers.
The popularity of our household goods amongst the five cities justified us opening two more factories in Chengdu on September 1st. Both of these were large factories, one producing toilet cleaner and the other producing tissues.
After hiring Ms. Spake as our COO with her expertise in the beverage industry we entertained the idea of making beverage our next area for expansion. Instead of engaging in our own research we decided to acquire the technology from one of our competitors.
On December 12, 1994 we acquired the technology for bottled milk from Treasure Pit for $2,668,000. Tech level increased from 21 to 57. STRATEGY TIP. Before placing an offer on technology lower the offer price significantly. If the competitor is willing to sell you the tech they will counteroffer your amount. It may be less or more than their original asking price, if it’s less you’ll save a little money. The worst that will happen is they’ll tell you they don’t want to sell their tech to a competitor.
The end of this year we had 12 retail stores, revenue $357,243,899 and profit $70,129,770. Number of factories were 11, revenue $156.269.124 and profit $111,703,624. Our 5 R&D Centers had an expense of $18,946,064 and our tobacco farm had $2,048,013 in revenue and a loss of $1,099,016.
On December 31, 1994 we had $165,754,116 in cash, an annual profit of $142 million, a net worth of $540.16 million, and annual revenue of $515.56 million and we still maintained our dominance in the manufacturing sector.
Our stock price on December 31, 1994 was $378.57 and our market cap was $1,892 million. Earnings per share were $30.76, equity per share was $108.03, P/E Ratio of 12.31, P/B Ratio of 3.50, and a dividend yield of 0.31%.
-
robertshfl
- Posts: 12
- Joined: Fri Mar 15, 2019 4:30 pm
Re: China Opening Up
December 31, 1995
Total Playing Time: 9 hours 56 minutes
This was another busy year, especially in the first half. From February 3rd through July 3rd we set up 3 factories, 2 convenience stores, and 5 supermarkets.
At the end of 1994 we had one factory producing cigarettes and cigars which supplied three convenience stores. As mentioned earlier, each convenience store had one purchase and sale unit for cigarettes and one purchase and sale unit for cigars. All 3 stores had an advertising unit set up.
With our COO’s level of expertise and previous training we instituted in the convenience stores our purchase and sale units were level 6 and our advertising units were level 5. All 3 stores had low supply and high demand.
In the beginning of 1995 we decided to experiment by setting up an inventory unit in each store. Due to the existing layout we were only able to set up an inventory unit for cigarettes unless we wanted to set up an additional purchase unit for cigars and link that to an inventory unit for cigars.
February 3, 1995 we opened a large factory for cigars and cigarettes in Guangzhou. Four days later we opened a convenience store in Guangzhou, and on the 25th of February we opened a convenience store in Shanghai. These two stores were set up identical to the other 3 stores with an inventory unit for the cigarettes. We linked the purchasing units in these two stores to the new factory and then turned over control of the two stores to our COO.
An interesting observation. The inventory units of our two new convenience stores each had 300,000 packs of cigarettes but still had a shortage of supply about half the bar of the demand side. Our level 5 sales unit was at 96% utilization. Our remaining convenience stores, which were supplied by the original tobacco factory had a total of 75,000 packs in their inventory.
The other two factories set up this year were in Chengdu on May 3rd. The first was a large factory producing washing powder and the second was a medium factory producing paper. Paper is a component in our production of cigarettes, cigars, and washing powder. For the time being we only used the paper factory to supply paper to the new washing powder factory.
On May 3rd we also set up a supermarket in Shanghai. This is where we changed up our game plan a little bit. Since we were stocking these supermarkets with our own household goods that were already established brands currently being advertised, we set up these two supermarkets with 3 purchasing units, 3 inventory units and 3 sales units.
On June 1st we opened a supermarket in Beijing and one in Guangzhou. This is the point where we let our COO decide what household products to stock the stores with. We did this by setting up the purchasing, inventory, and sales units but not linking any products to them. The supermarket in Beijing she linked one purchasing unit with tissues and the other two with toilet cleaner. The supermarket in Guangzhou she linked all 3 purchasing units to tissues.
On July 3rd we performed the same actions with a new supermarket in New York City and Shanghai. For both supermarkets our COO linked one purchasing unit to toilet cleaners and two purchasing units to tissues.
We decided to do our own linking of products in our stores instead of allowing our COO to take care of it. In a few years we’ll analyze the performance of these two stores in comparison to other supermarkets.
We began purchasing land this year. We noticed our competitors locking up prime real estate with high traffic ratings. Even though we weren’t ready to set up new retail outlets we understood we needed to lock up the land so it would be available when we needed it. In the city of Shanghai we purchased $35.2 million in land. In the city of Guangzhou we purchased $14.6 million in land. We continued purchasing parcels of land in all 5 cities occasionally over the years. Not going to go into any further detail of these purchases, just know it was done.
The end of this year we had 17 retail stores, revenue $499,098,154 and profit $146,556,289. Number of factories were 14, revenue $219,997,259 and profit $144,528,094. Our 5 R&D Centers had an expense of $18,960,000. Our tobacco farm finally turned a profit this year. Revenue was $3,963,240 and a profit of $642,524.
On December 31, 1995 we had $197,723,737 in cash, an annual profit of $228 million, a net worth of $787.93 million, and annual revenue of $723 million. We no longer maintained our dominance in the manufacturing sector.
Our stock price on December 31, 1995 was $520.43 and our market cap was $2,602 million. Earnings per share were $41.88, equity per share was $157.59, P/E Ratio of 12.43, P/B Ratio of 3.30, and a dividend yield of 0.22%.
December 31, 1996
Total Playing Time: 11 hours 24 minutes
This was the year where we started investing some of our cash into the stock market. I won’t go into great detail on this endeavor. Stock was purchased by our company, not our CEO. We didn’t acquire a substantial amount of stock, no mergers and acquisitions. We invested our money and realized a nice ROI. For 1996 we invested $57.7 million in one company for a 14.11% stake in ownership and realized a 27% gain by the end of the year.
Businesswise this was a quiet year. We switched some things around in our R&D Centers. Our tech levels for all of our household products were an impressive 146, the top tech for all four products. By the early part of the next year, 1997, our tech for cigarettes was at 100 and 102 for cigars. We continued researching paper and citric acid, both achieving a tech level of 99.
If you remember our earlier discussion, we had thought about breaking into the beverage market as our next endeavor. Examining the market we discovered all four beverage products either in heavy production by many of our competitors or readily available at the various seaports.
We decided to shift our focus to the drug market. The only drug on the market at that time was cold pills. Understanding the importance of production technology in the manufacturing of drug products, either 83% or 88%, depending on the product, we decided to invest heavily in R&D before going into production. We dedicated one R&D Center for each of the three drug products and set the time for research at two years. With our CTO in place we’d realize a tech gain from 18 >> 89.
In August and October we opened 3 convenience stores, one in New York City, Shanghai, and Guangzhou. We set up a purchasing, inventory, sales unit for cigarettes and the same for cigars. That left us 3 open units per store for expansion in the future. No advertising units were set up in these stores as the advertising was handled in the stores opened previously.
In November we opened a third tobacco factory. This was set up differently than the original two. Instead of purchasing timber and manufacturing paper in the factory, we set up a purchasing unit for paper which was supplied by our own paper factory. Two other purchasing units were set up for tobacco and then one manufacturing unit and one sales unit each for cigarettes and cigars. With our COO in charge of all retail locations we didn’t personally link the sales units to any particular retail store, she’d decide where to purchase the tobacco products from.
Our citric acid factory had been set up for 2 years and our paper factory for 1 year. The lifetime operating profits for both were a small loss of less than $2 million. These items were set to internal sales only.
The end of this year we had 22 retail stores, revenue $556,667,418 and profit $232,183,926. Number of factories were 15, revenue $214,269,592 and profit $135,422,510. Our 5 R&D Centers had an expense of $19,016,428. Our tobacco farm continued generating a small profit of $706,197 based on revenue of $4,180,541.
On December 31, 1996 we had $351,060,293 in cash, an annual profit of $301 million, a net worth of $1.1 billion, and annual revenue of $775 million.
Our stock price on December 31, 1996 was $647.55 and our market cap was $3,237 million. Earnings per share were $59.52, equity per share was $220.18, P/E Ratio decreased to 10, P/B Ratio decreased to 2.94, and a dividend yield increased to 0.28%.
December 31, 1997
Total Playing Time: 12 hours 34 minutes
On the second day of January we opened our 9th convenience store, this time in the city of Guangzhou. We stocked this store with cola, wine, and bottled milk. This was done more out of curiosity to see how the store would perform since our COO had a business expertise of beverages. No advertising unit was set up since the brand rating of these products were in the 90’s from the company that owned them. By the end of the year this store realized an operating profit of $2.7 million.
At the end of January one of our competitors asked to purchase our technology of citric acid. We accepted their offer of $4.5 million and their tech increased from 17 to 76.
Even though the completion of our research of the drug products was still a year off we decided to introduce two of our three drugs to the marketplace. In the beginning of February we built two factories in Chengdu. The first factory was for headache pills. We used the template provided and had one purchasing unit for plastic, another purchasing unit for chemical minerals. These two units were linked to three manufacturing units and the three manufacturing units were linked to four sales units. Our training budget was set at $44,000 monthly.
The second factory was for cough syrup. Cough syrup requires 3 inputs; chemical minerals, corn syrup, and plastic. A purchasing unit was set up for each one linked to three manufacturing units which were linked to two sales units. We allowed both factories to produce products for a half a month before opening our first drug store.
The first drug store was opened in the middle of February in New York City and had one purchasing and sales unit for headache pills and another purchasing and sales unit for cough syrup and one advertising unit. Our COO linked the advertising unit and set the budget at the maximum amount of $500,000.
Note here that we didn’t open a factory for cold pills. Cold pills were already in the marketplace and we wanted our range brand rating for drug products to reach a competitive level before we brought our cold pills to market and we wanted the tech level to be high enough so our quality level was higher than our competitors.
We spaced out the opening of our drug stores in each city so the factories had time to develop a decent amount of stock. We wanted our factory to produce the products to a level where each store could be properly stocked as we opened them, instead of starting out with a shortage in each of our drug stores.
Chengdu’s drug store was opened on April 16th. Beijing on May 3rd, Shanghai on May 10th and Guangzhou on May 17th. These 5 drug stores didn’t turn a profit by the end of the year, in fact the combined operating profit was a loss of $16.7 million. The two factories gave a small combined profit of $2.6 million by the end of the year.
Our executive team’s salaries by this time had reached $30 million for the CEO, $25 million for the COO and $18.6 million for the CTO.
This year our company purchased stock of another competitor. We purchased 558,950 shares at $212.24 per share for a 5% ownership stake, total purchase price being $118.5 million. This purchase was made on June 8th and by the end of the year our ownership increased to 5.09% and we realized a 26% gain.
The end of this year we had 28 retail stores, revenue $634,607,176 and profit $234,233,580. Number of factories were 17, revenue $246,226,775 and profit $150,717,760. Our 5 R&D Centers had an expense of $18,960,000. Revenue at our tobacco farm decreased to $3,476,659 and we had a small loss of $143,883.
On December 31, 1997 we had $432,300,870 in cash, an annual profit of $302 million, a net worth of $1.4 billion, and annual revenue of $888.8 million.
Our stock price on December 31, 1997 was $781.43 and our market cap was $3,907 million. Earnings per share were $60.40, equity per share was $286.57, P/E Ratio bounced back to 12.94, P/B Ratio decreased slightly to 2.73, and dividend yield increased to 0.31%.
Total Playing Time: 9 hours 56 minutes
This was another busy year, especially in the first half. From February 3rd through July 3rd we set up 3 factories, 2 convenience stores, and 5 supermarkets.
At the end of 1994 we had one factory producing cigarettes and cigars which supplied three convenience stores. As mentioned earlier, each convenience store had one purchase and sale unit for cigarettes and one purchase and sale unit for cigars. All 3 stores had an advertising unit set up.
With our COO’s level of expertise and previous training we instituted in the convenience stores our purchase and sale units were level 6 and our advertising units were level 5. All 3 stores had low supply and high demand.
In the beginning of 1995 we decided to experiment by setting up an inventory unit in each store. Due to the existing layout we were only able to set up an inventory unit for cigarettes unless we wanted to set up an additional purchase unit for cigars and link that to an inventory unit for cigars.
February 3, 1995 we opened a large factory for cigars and cigarettes in Guangzhou. Four days later we opened a convenience store in Guangzhou, and on the 25th of February we opened a convenience store in Shanghai. These two stores were set up identical to the other 3 stores with an inventory unit for the cigarettes. We linked the purchasing units in these two stores to the new factory and then turned over control of the two stores to our COO.
An interesting observation. The inventory units of our two new convenience stores each had 300,000 packs of cigarettes but still had a shortage of supply about half the bar of the demand side. Our level 5 sales unit was at 96% utilization. Our remaining convenience stores, which were supplied by the original tobacco factory had a total of 75,000 packs in their inventory.
The other two factories set up this year were in Chengdu on May 3rd. The first was a large factory producing washing powder and the second was a medium factory producing paper. Paper is a component in our production of cigarettes, cigars, and washing powder. For the time being we only used the paper factory to supply paper to the new washing powder factory.
On May 3rd we also set up a supermarket in Shanghai. This is where we changed up our game plan a little bit. Since we were stocking these supermarkets with our own household goods that were already established brands currently being advertised, we set up these two supermarkets with 3 purchasing units, 3 inventory units and 3 sales units.
On June 1st we opened a supermarket in Beijing and one in Guangzhou. This is the point where we let our COO decide what household products to stock the stores with. We did this by setting up the purchasing, inventory, and sales units but not linking any products to them. The supermarket in Beijing she linked one purchasing unit with tissues and the other two with toilet cleaner. The supermarket in Guangzhou she linked all 3 purchasing units to tissues.
On July 3rd we performed the same actions with a new supermarket in New York City and Shanghai. For both supermarkets our COO linked one purchasing unit to toilet cleaners and two purchasing units to tissues.
We decided to do our own linking of products in our stores instead of allowing our COO to take care of it. In a few years we’ll analyze the performance of these two stores in comparison to other supermarkets.
We began purchasing land this year. We noticed our competitors locking up prime real estate with high traffic ratings. Even though we weren’t ready to set up new retail outlets we understood we needed to lock up the land so it would be available when we needed it. In the city of Shanghai we purchased $35.2 million in land. In the city of Guangzhou we purchased $14.6 million in land. We continued purchasing parcels of land in all 5 cities occasionally over the years. Not going to go into any further detail of these purchases, just know it was done.
The end of this year we had 17 retail stores, revenue $499,098,154 and profit $146,556,289. Number of factories were 14, revenue $219,997,259 and profit $144,528,094. Our 5 R&D Centers had an expense of $18,960,000. Our tobacco farm finally turned a profit this year. Revenue was $3,963,240 and a profit of $642,524.
On December 31, 1995 we had $197,723,737 in cash, an annual profit of $228 million, a net worth of $787.93 million, and annual revenue of $723 million. We no longer maintained our dominance in the manufacturing sector.
Our stock price on December 31, 1995 was $520.43 and our market cap was $2,602 million. Earnings per share were $41.88, equity per share was $157.59, P/E Ratio of 12.43, P/B Ratio of 3.30, and a dividend yield of 0.22%.
December 31, 1996
Total Playing Time: 11 hours 24 minutes
This was the year where we started investing some of our cash into the stock market. I won’t go into great detail on this endeavor. Stock was purchased by our company, not our CEO. We didn’t acquire a substantial amount of stock, no mergers and acquisitions. We invested our money and realized a nice ROI. For 1996 we invested $57.7 million in one company for a 14.11% stake in ownership and realized a 27% gain by the end of the year.
Businesswise this was a quiet year. We switched some things around in our R&D Centers. Our tech levels for all of our household products were an impressive 146, the top tech for all four products. By the early part of the next year, 1997, our tech for cigarettes was at 100 and 102 for cigars. We continued researching paper and citric acid, both achieving a tech level of 99.
If you remember our earlier discussion, we had thought about breaking into the beverage market as our next endeavor. Examining the market we discovered all four beverage products either in heavy production by many of our competitors or readily available at the various seaports.
We decided to shift our focus to the drug market. The only drug on the market at that time was cold pills. Understanding the importance of production technology in the manufacturing of drug products, either 83% or 88%, depending on the product, we decided to invest heavily in R&D before going into production. We dedicated one R&D Center for each of the three drug products and set the time for research at two years. With our CTO in place we’d realize a tech gain from 18 >> 89.
In August and October we opened 3 convenience stores, one in New York City, Shanghai, and Guangzhou. We set up a purchasing, inventory, sales unit for cigarettes and the same for cigars. That left us 3 open units per store for expansion in the future. No advertising units were set up in these stores as the advertising was handled in the stores opened previously.
In November we opened a third tobacco factory. This was set up differently than the original two. Instead of purchasing timber and manufacturing paper in the factory, we set up a purchasing unit for paper which was supplied by our own paper factory. Two other purchasing units were set up for tobacco and then one manufacturing unit and one sales unit each for cigarettes and cigars. With our COO in charge of all retail locations we didn’t personally link the sales units to any particular retail store, she’d decide where to purchase the tobacco products from.
Our citric acid factory had been set up for 2 years and our paper factory for 1 year. The lifetime operating profits for both were a small loss of less than $2 million. These items were set to internal sales only.
The end of this year we had 22 retail stores, revenue $556,667,418 and profit $232,183,926. Number of factories were 15, revenue $214,269,592 and profit $135,422,510. Our 5 R&D Centers had an expense of $19,016,428. Our tobacco farm continued generating a small profit of $706,197 based on revenue of $4,180,541.
On December 31, 1996 we had $351,060,293 in cash, an annual profit of $301 million, a net worth of $1.1 billion, and annual revenue of $775 million.
Our stock price on December 31, 1996 was $647.55 and our market cap was $3,237 million. Earnings per share were $59.52, equity per share was $220.18, P/E Ratio decreased to 10, P/B Ratio decreased to 2.94, and a dividend yield increased to 0.28%.
December 31, 1997
Total Playing Time: 12 hours 34 minutes
On the second day of January we opened our 9th convenience store, this time in the city of Guangzhou. We stocked this store with cola, wine, and bottled milk. This was done more out of curiosity to see how the store would perform since our COO had a business expertise of beverages. No advertising unit was set up since the brand rating of these products were in the 90’s from the company that owned them. By the end of the year this store realized an operating profit of $2.7 million.
At the end of January one of our competitors asked to purchase our technology of citric acid. We accepted their offer of $4.5 million and their tech increased from 17 to 76.
Even though the completion of our research of the drug products was still a year off we decided to introduce two of our three drugs to the marketplace. In the beginning of February we built two factories in Chengdu. The first factory was for headache pills. We used the template provided and had one purchasing unit for plastic, another purchasing unit for chemical minerals. These two units were linked to three manufacturing units and the three manufacturing units were linked to four sales units. Our training budget was set at $44,000 monthly.
The second factory was for cough syrup. Cough syrup requires 3 inputs; chemical minerals, corn syrup, and plastic. A purchasing unit was set up for each one linked to three manufacturing units which were linked to two sales units. We allowed both factories to produce products for a half a month before opening our first drug store.
The first drug store was opened in the middle of February in New York City and had one purchasing and sales unit for headache pills and another purchasing and sales unit for cough syrup and one advertising unit. Our COO linked the advertising unit and set the budget at the maximum amount of $500,000.
Note here that we didn’t open a factory for cold pills. Cold pills were already in the marketplace and we wanted our range brand rating for drug products to reach a competitive level before we brought our cold pills to market and we wanted the tech level to be high enough so our quality level was higher than our competitors.
We spaced out the opening of our drug stores in each city so the factories had time to develop a decent amount of stock. We wanted our factory to produce the products to a level where each store could be properly stocked as we opened them, instead of starting out with a shortage in each of our drug stores.
Chengdu’s drug store was opened on April 16th. Beijing on May 3rd, Shanghai on May 10th and Guangzhou on May 17th. These 5 drug stores didn’t turn a profit by the end of the year, in fact the combined operating profit was a loss of $16.7 million. The two factories gave a small combined profit of $2.6 million by the end of the year.
Our executive team’s salaries by this time had reached $30 million for the CEO, $25 million for the COO and $18.6 million for the CTO.
This year our company purchased stock of another competitor. We purchased 558,950 shares at $212.24 per share for a 5% ownership stake, total purchase price being $118.5 million. This purchase was made on June 8th and by the end of the year our ownership increased to 5.09% and we realized a 26% gain.
The end of this year we had 28 retail stores, revenue $634,607,176 and profit $234,233,580. Number of factories were 17, revenue $246,226,775 and profit $150,717,760. Our 5 R&D Centers had an expense of $18,960,000. Revenue at our tobacco farm decreased to $3,476,659 and we had a small loss of $143,883.
On December 31, 1997 we had $432,300,870 in cash, an annual profit of $302 million, a net worth of $1.4 billion, and annual revenue of $888.8 million.
Our stock price on December 31, 1997 was $781.43 and our market cap was $3,907 million. Earnings per share were $60.40, equity per share was $286.57, P/E Ratio bounced back to 12.94, P/B Ratio decreased slightly to 2.73, and dividend yield increased to 0.31%.
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robertshfl
- Posts: 12
- Joined: Fri Mar 15, 2019 4:30 pm
Re: China Opening Up
December 31, 1998
Total Playing Time: 13 hours 39 minutes
Our two years of research on our drug products came to a conclusion in the beginning of February. We continued research of these products for another year where we’d realize a tech gain from 87 to 107. Cigarettes and cigars were still being researched in the one center with a tech gain from 97 to 110 for cigarettes and 96 to 107 for cigars. Our final center we set about researching corn syrup for 2 years with a tech gain from 16 to 88.
In other research news, we had a company approach us in December to acquire the technology of cough syrup from us. We agreed to a price of $6.6 million and their tech increased from 16 to 87.
Our first cold pill factory was set up on February 7th in the city of Chengdu. Two purchasing units, 3 manufacturing units and 4 sales units. Our 4 drugstores were stocked with cold pills from this factory.
In May we started building discount megastores. With our range brand well established in all 5 cities we wanted to capitalize on the ability of these megastores to purchase and sell vast quantities of products compared to our smaller, specialty stores.
The first two megastores were set up in New York City, the first with a traffic rating of 69 and the other a traffic rating of 72. The first store was stocked with cigarettes, cigars, tissues and toilet cleaner. We didn’t set up an advertising unit in either of the megastores. By the end of the year this first megastore had $42.1 million in operating revenue, $24.6 million in operating expenses, giving us an operating profit of $17.5 million.
The second megastore was stocked with cold pills, cough syrup, headache pills, and washing powder. This megastore had $34.2 million in operating revenue, $21.4 million in operating expenses, and an operating profit of $12.8 million.
The next month we did the same thing in Shanghai. Both megastores had a traffic rating of 54. The first one was stocked with cigarettes, headache pills, cough syrup, and toilet cleaner. The second megastore was stocked with cigars, cold pills, tissues, and washing powder.
Shanghai’s first megastore had $15.3 million in operating revenue, $11.7 million in operating expenses, and operating profit of $3.67 million. The second megastore had $23.3 million in operating revenue, $16.2 million in operating expenses, and operating profit of $7.1 million.
In July we did some more investing in the stock market, three different companies from our first two. First company 1,258,450 shares at $10.70 per share, second company 1,686,050 shares at $53.24 per share and the third company 594,200 shares at $49.18 per share.
September we opened two large factories in Chengdu, one producing headache pills, the other, cough syrup. This would help our COO maintain a more balanced supply and demand of these products in our retail stores. All factories we opened for the manufacture of consumer goods were large factories. Medium factories were used for production of sub products like paper, citric acid, etc. etc.
The end of this year we had 32 retail stores, revenue $802,673,102 and profit $265,514,733. Number of factories were 20, revenue $348,713,889 and profit $213,951,424. Our 5 R&D Centers had an expense of $18,960,000. Revenue at our tobacco farm increased to $5,842,792 with a small profit of $286,434.
On December 31, 1998 we had $480.3 million in cash, an annual profit of $388 million, a net worth of $2 billion, and annual revenue of $1.16 billion.
Our stock price on December 31, 1998 was $1,021 and our market cap was $5.1 billion. Earnings per share were $81.86, equity per share was $400.33, P/E Ratio slightly decreased to 12.48, P/B Ratio decreased slightly to 2.55. Dividend yield for the year decreased to 0.24%.
December 31, 1999
Total Playing Time: 15 hours 2 minutes
This was a very active year with the opening of new stores, new factories, and new R&D centers, the acquisition of new technology and continued investing in the stock market. On the 3rd of January we opened our first two discount megastores in Beijing, the first with a traffic rate of 57 and the second with a traffic rate of 60.
The first store was stocked with tissues, washing powder, cigarettes, and cough syrup and the second store was stocked with headache pills, detergent, cold pills, and cigars.
In February we invested an additional $146.2 million in the stock market.
March saw us open our first discount megastore in Chengdu with a traffic rating of 48. It proved to be difficult to find higher traffic patterns in Chengdu, especially with the requirement of larger parcels of land. We stocked the store with washing powder, headache pills, cold pills, and cigarettes.
At this point we’re in the second quarter of our ninth year in business and we’ve only completed 50% of our main goals, the fifty percent being our net worth and annual revenue. With an 8% market share we were ranked fourth in retailing. In manufacturing we were ranked sixth with a 7% market share. The leaders had a 10% and 12% share respectively.
We were the leader in market share for the product classes of drugs, household products, and tobacco products. We were ranked first in all the products in these classes except for detergent, but even there we were only short by 3%.
We checked the products tab to see where we could expand next in order to help reach our goal of dominance in the retail and manufacturing sector. The first thing we noticed was in nine years not one of our competitors dealt in desktop computers, handheld game consoles, or video game consoles. It looked like handheld game consoles had the potential of $48 million in annual revenue and desktop computers had the potential of $29 million. There was no data on the potential for video game consoles.
We had zero tech level on both the handheld and video game consoles. What we found unusual was one of our competitors had a tech level of 30 for video game consoles and 45 for the handheld game consoles. For some reason though they were not manufacturing or selling these two items. They accepted our offer of $12.7 million for tech on the video game console and $14.2 million for the tech on the handheld game console.
We immediately opened two new R&D Centers in Chengdu to continue our research on these two products. We set research for one year, handheld would show a tech gain of 45 >> 72 and video would show a tech gain of 30 >> 60.
On May 1st we opened two large factories in Chengdu and began production. We spaced out the opening of our new toy stores better than we did with our drug stores. May 7th our first toy store opened in New York City. June 15th for Shanghai, July 2nd for Beijing, August 1st for Chengdu, and August 15th for Guangzhou.
On December 31st handheld game consoles showed an annual revenue from production and retail of $22.5 million and an annual gross profit of $13.1 million Video game consoles had annual revenue of $21.1 million and annual gross profit of $10.4 million. Not bad for only being in production for 8 months.
The end of this year we had 40 retail stores, revenue $1.1 billion and profit $440,660,069. Number of factories were 22, revenue $474,739,958 and profit $333,632,194. Our 7 R&D Centers had an expense of $24,128,464. Revenue at our tobacco farm increased to $6,257,381 and our profit leaped to an incredible $2.3 million.
On December 31, 1999 we had $727.5 million in cash, an annual profit of $620.6 million, a net worth of $2.76 billion, and annual revenue of $1.59 billion.
Our stock price on December 31, 1999 was $1,546 and our market cap was $7.7 billion. Earnings per share were $115.03, equity per share was $552.36, P/E Ratio increased to 13.44, P/B Ratio increased to 2.80. Dividend yield for the year decreased to 0.20%.
December 31, 2000
Total Playing Time: 16 hours 45 minutes
Overall a quiet year for our company. One thing I wanted to point out was that in these scenarios, disruptive technology is active, your tech level on all products decreases each year by 10%. We sort of forgot about this when it came to our household products. In 1996 all our household products were at a tech level of 146. Towards the end of this year they were down to 98. We remodeled one of our R&D Centers to research washing powder, toiler cleaner, and detergent with 3 units each for one year. Tech gain was 98 >> 116.
To update you on the rest of our technology we still had one R&D Center for each of our drug products researching a year at a time with most recent tech gain being from 107 >> 124. Cigarettes and cigars split the available space on another R&D center, recent tech gain 103 >> 114 and 100 >> 112 respectively.
Handheld game consoles and video game consoles were in the middle of a one year research at the end of this year. Tech gain 68 >> 91 for handheld and 57 >> 82 for video. We’ve come to the conclusion that continuous research and development is a necessary evil with these scenarios if disruptive technology is active.
Our toy store in Beijing was quite popular with our sales revenue averaging $1.3 million a month. However we were losing about $1 million every other month. Reason being with only one toy store open our COO had to budget the maximum amount of $500,000 monthly on advertising. In April we decided to open another toy store to help shoulder the burden.
We laid out this store a little differently, hoping to improve efficiency and increase our profits. Instead of the typical one purchase unit, one sales unit for each product we went with the one purchase unit, inventory unit and sales unit model. We placed one of these on the top row and the other on the bottom row. On the far right unit of the middle row is where we set up an advertising unit and linked the two sales units.
We had no plans of manufacturing or selling the other two toys in the toy product class so future available units wasn’t an issue. With our COO in charge of our advertising budget we were a little surprised to see she set the budget to a max at each location.
Continuing to use Beijing as the example here, our brand range rating for the toy product class was at 57 after 18 months. Allowing our COO to spend what she felt necessary in advertising was a smart decision.
In July, as soon as our first year of research was completed for the consoles we opened two more factories in Chengdu. In July we opened a discount megastore in Beijing, another in Shanghai in September and lastly one in Chengdu in October. Handheld and video game consoles were sold in each of these stores and then depending on what was needed, we sold two other products in each of the stores. No advertising units were set up in any of these three stores.
We closed out the year with some additional investments in the stock market to the tune of $487 million. By the end of the year our company’s stock portfolio had a value of $1.48 billion from an initial investment of $533 million, a gain of 56.49%.
The end of this year we had 45 retail stores, revenue $1.28 billion and profit $538 million. Number of factories were 24, revenue $535 million and profit $378 million. Our 7 R&D Centers had an expense of $26.6 million. Revenue at our tobacco farm was $6.47 million and profit was the same as the previous year at $2.3 million.
On December 31, 2,000 we had $763.8 million in cash, an annual profit of $777 million, a net worth of $3.68 billion, and annual revenue of $1.82 billion.
Our stock price on December 31, 2000 was $1,964 and our market cap was $9.8 billion. Earnings per share were $156.49, equity per share was $737.37, P/E Ratio dipped down to 12.55, P/B Ratio slipped to 2.66. Dividend yield for the year increased to 0.26%.
For the first time we did gain market dominance of the retailing sector with a 10% market share though we were ranked 6th in the manufacturing sector with a 7% share. The leader had a 12% market share.
Total Playing Time: 13 hours 39 minutes
Our two years of research on our drug products came to a conclusion in the beginning of February. We continued research of these products for another year where we’d realize a tech gain from 87 to 107. Cigarettes and cigars were still being researched in the one center with a tech gain from 97 to 110 for cigarettes and 96 to 107 for cigars. Our final center we set about researching corn syrup for 2 years with a tech gain from 16 to 88.
In other research news, we had a company approach us in December to acquire the technology of cough syrup from us. We agreed to a price of $6.6 million and their tech increased from 16 to 87.
Our first cold pill factory was set up on February 7th in the city of Chengdu. Two purchasing units, 3 manufacturing units and 4 sales units. Our 4 drugstores were stocked with cold pills from this factory.
In May we started building discount megastores. With our range brand well established in all 5 cities we wanted to capitalize on the ability of these megastores to purchase and sell vast quantities of products compared to our smaller, specialty stores.
The first two megastores were set up in New York City, the first with a traffic rating of 69 and the other a traffic rating of 72. The first store was stocked with cigarettes, cigars, tissues and toilet cleaner. We didn’t set up an advertising unit in either of the megastores. By the end of the year this first megastore had $42.1 million in operating revenue, $24.6 million in operating expenses, giving us an operating profit of $17.5 million.
The second megastore was stocked with cold pills, cough syrup, headache pills, and washing powder. This megastore had $34.2 million in operating revenue, $21.4 million in operating expenses, and an operating profit of $12.8 million.
The next month we did the same thing in Shanghai. Both megastores had a traffic rating of 54. The first one was stocked with cigarettes, headache pills, cough syrup, and toilet cleaner. The second megastore was stocked with cigars, cold pills, tissues, and washing powder.
Shanghai’s first megastore had $15.3 million in operating revenue, $11.7 million in operating expenses, and operating profit of $3.67 million. The second megastore had $23.3 million in operating revenue, $16.2 million in operating expenses, and operating profit of $7.1 million.
In July we did some more investing in the stock market, three different companies from our first two. First company 1,258,450 shares at $10.70 per share, second company 1,686,050 shares at $53.24 per share and the third company 594,200 shares at $49.18 per share.
September we opened two large factories in Chengdu, one producing headache pills, the other, cough syrup. This would help our COO maintain a more balanced supply and demand of these products in our retail stores. All factories we opened for the manufacture of consumer goods were large factories. Medium factories were used for production of sub products like paper, citric acid, etc. etc.
The end of this year we had 32 retail stores, revenue $802,673,102 and profit $265,514,733. Number of factories were 20, revenue $348,713,889 and profit $213,951,424. Our 5 R&D Centers had an expense of $18,960,000. Revenue at our tobacco farm increased to $5,842,792 with a small profit of $286,434.
On December 31, 1998 we had $480.3 million in cash, an annual profit of $388 million, a net worth of $2 billion, and annual revenue of $1.16 billion.
Our stock price on December 31, 1998 was $1,021 and our market cap was $5.1 billion. Earnings per share were $81.86, equity per share was $400.33, P/E Ratio slightly decreased to 12.48, P/B Ratio decreased slightly to 2.55. Dividend yield for the year decreased to 0.24%.
December 31, 1999
Total Playing Time: 15 hours 2 minutes
This was a very active year with the opening of new stores, new factories, and new R&D centers, the acquisition of new technology and continued investing in the stock market. On the 3rd of January we opened our first two discount megastores in Beijing, the first with a traffic rate of 57 and the second with a traffic rate of 60.
The first store was stocked with tissues, washing powder, cigarettes, and cough syrup and the second store was stocked with headache pills, detergent, cold pills, and cigars.
In February we invested an additional $146.2 million in the stock market.
March saw us open our first discount megastore in Chengdu with a traffic rating of 48. It proved to be difficult to find higher traffic patterns in Chengdu, especially with the requirement of larger parcels of land. We stocked the store with washing powder, headache pills, cold pills, and cigarettes.
At this point we’re in the second quarter of our ninth year in business and we’ve only completed 50% of our main goals, the fifty percent being our net worth and annual revenue. With an 8% market share we were ranked fourth in retailing. In manufacturing we were ranked sixth with a 7% market share. The leaders had a 10% and 12% share respectively.
We were the leader in market share for the product classes of drugs, household products, and tobacco products. We were ranked first in all the products in these classes except for detergent, but even there we were only short by 3%.
We checked the products tab to see where we could expand next in order to help reach our goal of dominance in the retail and manufacturing sector. The first thing we noticed was in nine years not one of our competitors dealt in desktop computers, handheld game consoles, or video game consoles. It looked like handheld game consoles had the potential of $48 million in annual revenue and desktop computers had the potential of $29 million. There was no data on the potential for video game consoles.
We had zero tech level on both the handheld and video game consoles. What we found unusual was one of our competitors had a tech level of 30 for video game consoles and 45 for the handheld game consoles. For some reason though they were not manufacturing or selling these two items. They accepted our offer of $12.7 million for tech on the video game console and $14.2 million for the tech on the handheld game console.
We immediately opened two new R&D Centers in Chengdu to continue our research on these two products. We set research for one year, handheld would show a tech gain of 45 >> 72 and video would show a tech gain of 30 >> 60.
On May 1st we opened two large factories in Chengdu and began production. We spaced out the opening of our new toy stores better than we did with our drug stores. May 7th our first toy store opened in New York City. June 15th for Shanghai, July 2nd for Beijing, August 1st for Chengdu, and August 15th for Guangzhou.
On December 31st handheld game consoles showed an annual revenue from production and retail of $22.5 million and an annual gross profit of $13.1 million Video game consoles had annual revenue of $21.1 million and annual gross profit of $10.4 million. Not bad for only being in production for 8 months.
The end of this year we had 40 retail stores, revenue $1.1 billion and profit $440,660,069. Number of factories were 22, revenue $474,739,958 and profit $333,632,194. Our 7 R&D Centers had an expense of $24,128,464. Revenue at our tobacco farm increased to $6,257,381 and our profit leaped to an incredible $2.3 million.
On December 31, 1999 we had $727.5 million in cash, an annual profit of $620.6 million, a net worth of $2.76 billion, and annual revenue of $1.59 billion.
Our stock price on December 31, 1999 was $1,546 and our market cap was $7.7 billion. Earnings per share were $115.03, equity per share was $552.36, P/E Ratio increased to 13.44, P/B Ratio increased to 2.80. Dividend yield for the year decreased to 0.20%.
December 31, 2000
Total Playing Time: 16 hours 45 minutes
Overall a quiet year for our company. One thing I wanted to point out was that in these scenarios, disruptive technology is active, your tech level on all products decreases each year by 10%. We sort of forgot about this when it came to our household products. In 1996 all our household products were at a tech level of 146. Towards the end of this year they were down to 98. We remodeled one of our R&D Centers to research washing powder, toiler cleaner, and detergent with 3 units each for one year. Tech gain was 98 >> 116.
To update you on the rest of our technology we still had one R&D Center for each of our drug products researching a year at a time with most recent tech gain being from 107 >> 124. Cigarettes and cigars split the available space on another R&D center, recent tech gain 103 >> 114 and 100 >> 112 respectively.
Handheld game consoles and video game consoles were in the middle of a one year research at the end of this year. Tech gain 68 >> 91 for handheld and 57 >> 82 for video. We’ve come to the conclusion that continuous research and development is a necessary evil with these scenarios if disruptive technology is active.
Our toy store in Beijing was quite popular with our sales revenue averaging $1.3 million a month. However we were losing about $1 million every other month. Reason being with only one toy store open our COO had to budget the maximum amount of $500,000 monthly on advertising. In April we decided to open another toy store to help shoulder the burden.
We laid out this store a little differently, hoping to improve efficiency and increase our profits. Instead of the typical one purchase unit, one sales unit for each product we went with the one purchase unit, inventory unit and sales unit model. We placed one of these on the top row and the other on the bottom row. On the far right unit of the middle row is where we set up an advertising unit and linked the two sales units.
We had no plans of manufacturing or selling the other two toys in the toy product class so future available units wasn’t an issue. With our COO in charge of our advertising budget we were a little surprised to see she set the budget to a max at each location.
Continuing to use Beijing as the example here, our brand range rating for the toy product class was at 57 after 18 months. Allowing our COO to spend what she felt necessary in advertising was a smart decision.
In July, as soon as our first year of research was completed for the consoles we opened two more factories in Chengdu. In July we opened a discount megastore in Beijing, another in Shanghai in September and lastly one in Chengdu in October. Handheld and video game consoles were sold in each of these stores and then depending on what was needed, we sold two other products in each of the stores. No advertising units were set up in any of these three stores.
We closed out the year with some additional investments in the stock market to the tune of $487 million. By the end of the year our company’s stock portfolio had a value of $1.48 billion from an initial investment of $533 million, a gain of 56.49%.
The end of this year we had 45 retail stores, revenue $1.28 billion and profit $538 million. Number of factories were 24, revenue $535 million and profit $378 million. Our 7 R&D Centers had an expense of $26.6 million. Revenue at our tobacco farm was $6.47 million and profit was the same as the previous year at $2.3 million.
On December 31, 2,000 we had $763.8 million in cash, an annual profit of $777 million, a net worth of $3.68 billion, and annual revenue of $1.82 billion.
Our stock price on December 31, 2000 was $1,964 and our market cap was $9.8 billion. Earnings per share were $156.49, equity per share was $737.37, P/E Ratio dipped down to 12.55, P/B Ratio slipped to 2.66. Dividend yield for the year increased to 0.26%.
For the first time we did gain market dominance of the retailing sector with a 10% market share though we were ranked 6th in the manufacturing sector with a 7% share. The leader had a 12% market share.