Chapter 8: Kunpeng & Huawei Merger (Part 6)

Chapter 8: The Kunpeng-Huawei Merger Case (6)

At the startup competition, sitting on the judging panel alongside Zhou Chang, Jing Hong suddenly recalled the first time he had ever met Zhou Chang.

It was under similar circumstances.

Jing Hong had never really mingled with the "second-generation heirs" in the industry circle. First, because the Fanhai Group had always been a giant in the internet world, not even in the same league as other companies—even without any socializing, others would still treat him with a mix of respect and wariness. Second, because most tech company CEOs came from engineering backgrounds and didn't care much for the flashy nightlife, and their children, influenced by their families, tended to keep a low profile as well. Third, because Jing Hong himself didn't enjoy smoking, drinking, racing cars, or chasing women—he found that kind of base-level pleasure utterly boring.

He only liked winning.

From the best elementary school in Beijing, to the best high school in all of China—an experimental class that recruited students nationwide—and then to the best university in the world.

But after winning so much, it had started to feel a little numb.

He met Zhou Chang at a nationwide college business competition.

Jing Hong's major was computer science, but after graduating, he pursued a joint degree in MBA and CS from Stanford—many universities offered such combined programs. Top-tier MBA programs typically required at least two years of work experience, so Jing Hong applied for both the joint program and a standalone CS degree, figuring he'd do the MBA if he got in, and pass on it if he didn't.

But because Jing Hong's father was Jing Haiping, and Jing Hong himself was the heir to the IT giant Fanhai Group, and since the business schools of world-renowned universities placed the utmost importance on networking—the fact that the heir of Fanhai Group was a GSB alum was undoubtedly crucial for the alumni network. At the same time, Jing Hong's academic record, internship experience, awards, and recommendation letters were all top-notch, more than enough to prove his excellence. He was admitted. Three years later, Jing Hong turned his CS master's into a PhD—but that's a story for later.

In any case, because he was simultaneously pursuing an MBA, Jing Hong participated in that nationwide college business competition.

Thanks to his strong performance in class, Jing Hong was also the team leader, even though he wasn't a native English speaker.

In the semifinals, Jing Hong's Stanford team faced off against their school's "arch-rival"—another top university in the Bay Area, UC Berkeley.

Berkeley's business school was also among the top few in the country, though it lagged behind Stanford and Harvard, which topped the rankings. UC Berkeley's strongest departments were physics, chemistry, computer science, electrical engineering, sociology, history, among others.

When the opposing school took the stage, Jing Hong was surprised to discover that the opposing team's leader was also Chinese! The other person had East Asian features, and Jing Hong, having spent several years in America, could instantly tell whether a face belonged to an ABC, a Japanese person, a Korean, or one of his own countrymen.

The opposing leader was clearly a fellow Chinese. And he was tall and imposing, with clear, bright eyes like deep pools.

That competition focused on execution, and the semifinal task was to "Sell Cupcakes."

Each team was given several hours of selling time, and the final comparison was based on profit.

The competition offered two options for the teams to choose from: one was premium cupcakes, sold in high-end malls, with the organizing committee providing higher-quality bakers and ingredients. The final selling price could be set at $4, with a cost of $2—in other words, a more premium product. The second was budget cupcakes, sold in low-end malls, with the committee providing ordinary bakers and standard tools. The final selling price could only be set at $2, with a cost of $1.

Because the "premium cupcakes" required longer prep time, the participating teams only had two hours of selling time in the high-end mall; while the "budget cupcakes" had relatively shorter prep time, giving the teams a full four hours of selling time in the low-end mall.

It was a fair setup. The "premium cupcakes" yielded a profit of $2 per unit, while the "budget cupcakes" yielded $1 per unit. Therefore, the committee gave the "budget cupcakes" twice the selling time.

The committee was meticulous. Based on past experience, the foot traffic at both malls was nearly identical—one on a fashionable avenue, the other in a low-income community—and both the "premium cupcakes" for high-end mall shoppers and the "budget cupcakes" for low-end mall shoppers perfectly matched their respective customers' typical spending habits.

At the start of the competition, both teams had to choose which option they wanted. If both chose the same option, it meant they were competing for the same baker, and they would enter a bidding war—the side willing to pay the baker a higher wage would end up winning, while the other side would take the backup option.

In the first team meeting, Jing Hong's teammates started talking all at once: "The premium one seems better, right? Premium cupcakes can have more variety and be more attractive, while the budget ones... they're just everyday styles, nothing appealing." "Right, and..." "Also..."

Someone else said, "But 'discounts' themselves are attractive to budget customers."

The first person replied, "Discounts—everyone wants those, right?"

Jing Hong listened for a while, then spoke up: "The premium option is clearly better. Besides what we just said, another factor is that premium cupcakes only need to be sold for two hours, while budget cupcakes need four hours. Two hours is manageable, but standing and selling for four hours is nearly impossible—the team choosing that option must rotate shifts. In other words, because rest breaks are necessary, at any given moment, that team will have fewer people on the floor than the opposing side, which is a challenge to execution." Even soldiers only stood guard for two hours at a time.

Several people nodded in realization, impressed by Jing Hong's attention to detail: "Right," "That's true," "Forgot about that."

The team had six people total. If each person rested ten minutes every hour, that meant at any given moment, the team would only have five people on the floor, while the other side had six.

But just a few seconds later, Jing Hong said, "However, we're choosing the budget option."

Everyone on Jing Hong's team: "...Huh???" They thought: What kind of twist is this?

Jing Hong continued: "Because the premium option is clearly better, I think Berkeley will also choose it. We can use that to our advantage—in the first round, we select the 'premium option' to force Berkeley into a bidding war, forcing them to raise the baker's pay, and then... in the second round, we simply hold our price and let Berkeley bid against themselves. That way, from the start, Berkeley pays more costs, while we just focus on execution—Berkeley's team enters the competition carrying a burden."

It clicked for several teammates: "I see!"

"Right," Jing Hong added, "Everyone should put on an act then—act like we're dead set on the premium option, as if we're ready to bid sky-high, making Berkeley go all in and bid as high as they can. In short, the strategy is to drive up the price."

Everyone laughed: "Got it."

Jing Hong never expected that in the second round, both teams would hold their prices!

Their strategies had collided!

And in the third round, they still held firm! Neither side was willing to bid a single cent.

Because the strategies had collided, the competition committee resolved it with a lottery to allocate the sales locations, and in the end, UC Berkeley got the premium option, Jing Hong's team got the budget option, and nobody had bid anything.

Another rule of this competition was that each customer could buy a maximum of five cupcakes per transaction.

In the second team meeting, Jing Hong's teammates again offered various suggestions: "Since each person can buy up to five cupcakes, we could offer discounts—like 5% off for one, 10% for two, 15% for three, 20% for four, 25% for five—to encourage them to buy more." "We could also..."

"No," Jing Hong flat-out rejected all these promotional strategies. He said, "These strategies are all great, but the competition has a fixed time limit. Don't forget, we have fewer people on our side, and we're under a lot of pressure to execute. Also, we're targeting budget customers—getting them to buy more than their usual quantity all at once is very difficult."

"Then...?"

Jing Hong looked at the different cupcake designs on the table and said, "Here's what we'll do—Christmas is coming up. We'll only sell a box of five Christmas-themed cupcakes, and we won't allow customers to choose quantities or styles, otherwise it'll be too chaotic. We need to save time and sell quickly." With that, Jing Hong pulled out a piece of paper. "The designs for a box of five... I've already sketched them here—they're all fairly simple, and our current baker can definitely make them, but they'll look very attractive. The first is a Christmas tree—spiral green frosting dusted with white sprinkles. The second is a blue cupcake with a snowflake decoration on top. The third is a Santa hat—spiral red frosting with white frosting balls around the base to mimic pom-poms. The fourth is... like this—so selling them as a 'set of five' seems perfectly natural. Under a Christmas theme, they're a complete set that can't be split apart, and even budget customers won't feel that buying five at once is too much. And I think, even in a low-income community, customers have a special attitude toward 'Christmas'—after all, Christmas comes only once a year, and they won't be stingy, because they want to give their families a warm Christmas. So when they see the cupcakes, they might be tempted."

Jing Hong also added: "The discount will be 10%. Research shows that discounts exceeding 10% increase consumer distrust and are actually less effective than 10%. This is food—we don't want it to look like it's about to expire."

The other contestants were once again impressed by him.

Additionally, Jing Hong hadn't forgotten about the "internet." He directly negotiated with the mall manager, persuading him to include Jing Hong's cupcake promotion in the mall's customer newsletter and app that day, blasting it out to tens of thousands of registered customers.

Jing Hong reasoned that customers in the low-income community mostly lived nearby and might be interested in the "Christmas set" discount, while customers on the fashionable avenue were scattered across the city and wouldn't be.

Before the sale, Jing Hong was extremely thorough.

He thought of everything: "Mike, go to the bank and get change—as much as possible, some people might pay in cash." "Misha, you set up the POS system and other payment methods." "Kate, you handle the promotional posters and signage, introducing our event throughout the mall." "Yao, you handle the product display." "Chelsea, you handle the tables, chairs, and product stacking." "Finally, I'll make the coupons to hand out at the entrance."

Jing Hong didn't micromanage or interfere with each subgroup's leader—he only checked the results after each group completed their tasks.

Even so, at five o'clock in the evening, there was still some chaos on site.

That's just how events go—there are always unexpected situations.

But Jing Hong remained very calm, telling everyone to hold steady and focus on their own tasks. Some handled guidance and explanations, some handled fetching items, some handled cash and change, some handed out coupons at the entrance, some promoted the cupcakes to the queue at the elevator...

At one point, a Black member of their team got into an argument with Jing Hong.

The Black man was two meters tall with a shaved head. He looked down at Jing Hong, his voice booming, speaking rapid English: "NO!!! We should..."

Jing Hong was exhausted by then too, but he didn't back down an inch or lose his authority. He raised his voice even louder, his vocal cords nearly hoarse as he shouted: "Your issue isn't important! Understand? Not important! Now go do what you're supposed to do!!!"

In the end, the Black man listened to Jing Hong.

And Jing Hong's rotation strategy was a complete success—rest breaks, shift changes, all perfectly organized.

Jing Hong remembered that the final result of that competition was extremely dramatic.

They won, and UC Berkeley got eliminated for the very reason that they received a counterfeit $20 bill.

This wasn't a test of management—it was a test of money management.

When the organizing committee announced the results, his teammates cheered, high-fived, and were overjoyed.

Another Chinese member in Jing Hong's group, a full-time MBA named Yao who had previously worked in consulting, quietly leaned in close to Jing Hong and whispered, cupping his hand over his mouth, "I heard that Zhou Chang is Zhou Buqun's son."

Jing Hong was, of course, extremely surprised: "...What? Are you sure?"

"Pretty sure." Jing Hong had never revealed his identity at school, and the other person didn't know Jing Hong's background either, so he continued, "He used to run in those rich-kid circles, but then he stopped going and suddenly settled down. A big shot on my WeChat feed knew him before, and just a couple of days ago, he even commented on my post with the event photos. I nearly jumped out of my skin!"

Jing Hong: "............"

A few seconds later, he blurted out his main thought: "Zhou Buqun is that ugly—how did he produce a son who looks like this? Must be a genetic mutation, holy shit."

Yao: "Hahahahahaha!!! Jing Hong, you're secretly hilarious!"

Back then, Jing Hong was 22 and didn't have to keep it together all the time yet.

That time, Stanford beat Harvard to take the championship, and countless companies came knocking, but Jing Hong was a computer science major and was also planning to pursue a PhD.

The semifinals were the first time Jing Hong ever felt "threatened." Up until then, he'd never had a clue what "threat" even meant.

And from then on, the name "Zhou Chang" would stick to him like glue.

Jing Hong didn't actually like that feeling, but on second thought, without Zhou Chang, the business world would be pretty dull. Without competition, he would lose his drive.

Honestly, the period when Zhou Chang bared his fangs after taking over Qinghui was the most driven Jing Hong had ever been in his life.

In short, Jing Hong and Zhou Chang—at the time, they met by chance and were caught off guard; later, they each took over Fanhai and Qinghui among the Big Four, like two flowers blooming on different branches, each going its own way.

Author's note:

I bought a book called *Your MBA Game Plan*—only 2% of students at top MBA programs have no work experience, but Honghong will definitely be fine!