Extraordinary Genius

Of course, Feng Yu did not trust Kameda Masao completely. He gave Fu Guangzheng a call and asked if the Fu family have any connections in Japan to help him find out more about Aiwa and Black Dragon Co.

Aiwa Co. had collaborated with Fu family’s eldest brother in Hong Kong last year. They set up a subsidiary in Hong Kong together to expand their market in China.

Fu Guangzheng made a few calls and found out Aiwa Co. current situation. Before their collaboration with Aiwa, they had researched on the company.

Aiwa was bought over by Sony in 1987 and became part of Sony’s conglomerate. However, Aiwa remained as an independent brand and operated independently from Sony.

Because of the economic crisis, Aiwa’s market share was on a decline, and they suffered losses for consecutive years. Even with the help of Sony, Aiwa was still in debts of a few billion yen, and the market value of the company was not more than 1.2 billion Yen.

This was two years after a restructuring of the management and the company’s turnaround. A few years back, Aiwa was worth only 800 million Yen, and they had over 10 billion in debts!

Sony wanted Aiwa technologies and brand. Together with Aiwa, they could compete with other brands like Panasonic. Sony was trying to vie for the position of industry leader in Japan, and they needed the support of smaller brands to do so. Even if the smaller brands were not doing well now, but at least they did well in the past, and they might have the chance to reach their peak again.

However, Sony was not doing well for the past two years, and Aiwa’s President was still expanding overseas aggressively. The expansion needed a lot of funds.

It was not sure how Aiwa’s President convince Sony and Sony agreed to the expansion. Fu Guangzheng told Feng Yu that Aiwa might have some technologies, brand awareness but it was still in the red. Feng Yu must be prepared to lose his investments if he were to invest in this company.

Others might not think highly of Aiwa but not Feng Yu. In 1993, Aiwa had a turnaround and in 1994, became the leader in the Walkman industry. Their sales for that year was over 160 billion Yen. This showed that Aiwa’s President strategy now was a success.

Of course, this was what Fu Guangzheng had found out. Feng Yu needs to look at what Kameda Masao had gathered before making the decision to negotiate with Sony about the sales of Aiwa’s shares!

As for Black Dragon Co., Fu Guangzheng had never heard of this company before. His uncle had properties in Japan previously and knew some people there. He asked them for help to find out more about this company. They found out that it was what Kameda Masao had said. Black Dragon Co. was not managed well and had rushed to diversify their products, resulting in cashflows issues. The company had applied for bankruptcy.

The factory was seized by the bank, and the company had closed down. The company’s Chairman had also gone missing. Fu Guangzheng could not find anything about Kameda Masao. It could be that he was too low ranked and no one had noticed him before.

Feng Yu asked Fu Guangzheng to contact Aiwa’s shareholders. He expressed interest in Aiwa’s shares and see if they were willing to sell the shares they owned.

But the result was disappointing for Feng Yu. The shareholders had no intentions of selling their shares. They were all Aiwa’s President, Heitaro Nakajima, followers and they believed that Sony would help Aiwa settle the debts.

Feng Yu wanted to ask them where did they get this belief from? Did they forget the massive layoff a few years back? Aiwa had cut their staff by over 60%, from 3000 staffs to 1000 staffs!

Aiwa was once Japan’s top Walkman manufacturer because they had used the BBE system. With this system, the quality of the music was better, and Aiwa became very popular in Japan. But later, because of their aggressive expansion, they suffered losses and starts to sell more of their shares. Now, Aiwa was a subsidiary of Sony and these people still insist on their way.

Feng Yu knew that their persistence would pay off eventually and after two years, Aiwa will return to its former glory. However, in 1995 Aiwa entered into the computer peripheral devices industry and went on a declined again.

Kameda Masao had told Feng Yu a piece of good news. Sony’s Vice President will be in China in another two days to look at China’s market. Kameda Masao also found out that this Vice President was the one that had supported Sony to invest in Aiwa.

But now, Sony did not get any returns from this investment. The pressure was on this Vice President, and the shareholders were unhappy with his decision. Aiwa had been losing money for consecutive years, and Japan’s economy was not doing well. Even Sony’s share prices were dropping.

Sony had tried to sell Aiwa’s shares openly but only their competitors, Panasonic was interested. Sony refused to sell the shares to them and would instead accept the losses.

At least now, Sony and Aiwa could unite and compete against Panasonic, Toshiba, Philips, and control the Walkman market.

Kameda Masao felt that Feng Yu should speak to this Sony’s Vice President. As long as Aiwa Co. maintain the alliance and healthy competition with Sony, Feng Yu could get the shares at market rates. The shares owned by Sony was about 61%, and two other banks held 6% of Aiwa’s shares.

Feng Yu’s eyes sparkled. If he bought the shares from Sony and the banks, he would own 67% of Aiwa, and he would be the major shareholder. He would have full control over Aiwa Co.!

Feng Yu made a calculation. Currently, Aiwa was worth about 1.2 Billion Yen, and if converted to USD, it would be approximately 8.4 million USD. 67% of the shares should cost less than 6 million USD.

It’s only 6 million USD and can get to own a company which would be a leader in the Walkman industry two years later. This company will be bringing in over a 100 million USD in profits. The returns from this investment were too good!

Dollar signs appeared in Feng Yu’s eyes. He must buy the shares from Sony. He must get the company!

……

Fu Guangzheng and his father were sitting together. They were thinking why Feng Yu was finding out about Aiwa. Although the company that collaborated with Aiwa belongs to Fu Guangzheng’s eldest uncle, the Fu family’s businesses were closely knitted together.

Fu Guangzheng and Fu Rongjing do not understand why Feng Yu wanted to take over this Aiwa. Could it be that Feng Yu had received some information from the top? Then they should not be worrying.

Now, Fu Rongjing was thinking if he should intervene and grab the opportunity to earn some profits.

Fu Guangzheng advice his father to discuss with his eldest uncle about buying over Hong Kong’s Aiwa Co. subsidiary. His uncle should not object to their request.

……

“Teacher, I need to apply for a few days leave. I know the exams are near, but I got some urgent matters to attend. I will be back before the exams.”

The next day, Feng Yu and Wu Zhigang boarded the plane for Shanghai.