Chapter 83: Business Negotiation and the Deli Brand
When Robert saw how decisively Yang Wendong rejected the offer, it only confirmed his own assessment. Still, out of responsibility, there were some things he had to clarify, so he asked, "Not even willing to hear the price, Eric?"
Yang Wendong shook his head and replied, "This is my business. I'm not planning to convert it into cash just like that."
There was another important reason—if it was a one-time deal with a large amount of money involved, and it got picked up by the Hong Kong media, it could easily attract the attention of triad gangs. That, for him, would be a serious problem.
However, if he slowly built up his business through steady development, triads generally wouldn't become too envious.
After all, Chinese-owned factories were the cornerstone of public order and economic stability under the Hong Kong colonial government. The authorities wouldn't allow triads to casually disrupt industrial production. Otherwise, tycoons like Li Ka-shing would never have had the chance to rise in the first place.
Robert smiled, then raised his right hand and spread out five fingers, saying, "My offer is 500,000 US dollars. That's enough for you to live a carefree life in the U.S., Europe, or practically anywhere in the world."
"Five hundred thousand dollars... 3M really does have guts," Yang Wendong said. Although he wasn't planning to sell the patent, the price still made his heart flutter.
Half a million U.S. dollars was nearly 3 million Hong Kong dollars—an astronomical sum in Hong Kong at the time. Even Li Ka-shing, hailed as the "Plastic King," likely made about this amount in net profit in an entire year.
But compared to the long-term revenue from Post-it notes, that figure was child's play. Even if plastic flowers were the current trend with a larger short-term market, their long-term value simply couldn't compare to that of Post-its.
Robert put down his hand and smiled. "It seems Eric and I are on the same page. We both recognize the tremendous commercial value of Post-it notes."
Five hundred thousand dollars wasn't a trivial amount even for a giant like 3M. Before coming to Hong Kong, they had carefully evaluated the commercial potential of Post-it notes internally. In the end, they decided to act decisively—better to buy the patent outright at a high price now than to risk being beaten to it by some other company or entrepreneur.
Yang Wendong nodded and said, "Yes, I certainly understand its value. But to realize that value, a powerful distribution network is essential. That's why I'm hoping we can build a perfect partnership."
"Good, that's exactly what I had in mind," Robert replied. "I hope you'll license us the rights to manufacture and sell the product. In return, you'll receive an upfront payment, plus a royalty on each Post-it sold."
"That won't work." Yang Wendong shook his head immediately. Then he added, "First, I won't authorize anyone else to manufacture it—not you, not anyone. Production of Post-it notes will remain solely with me. What I can do is sell to you at an agreed-upon price."
To make his mark in Hong Kong, especially at a time when the real estate industry hadn't yet become dominant, Yang Wendong needed his factories as a form of protection.
Factories provided employment for large numbers of people, and for the colonial administration, maintaining control and stability meant winning over large factory owners.
The more wealth he accumulated, the larger his factory needed to be. Only then could he maintain balance. If he had a lot of money but no solid foundation, he'd be nothing more than a lamb waiting for slaughter.
It might not necessarily turn into a worst-case scenario—but as long as there was a chance, Yang Wendong would do everything he could to avoid it.
Robert frowned and said, "Eric, I know a bit about Hong Kong's industry. There are no paper mills here, no glue production bases either, and it's far from the U.S. market. Economically speaking, it just doesn't make much sense."
Yang Wendong smiled and replied, "But our labor costs are low. As for shipping, Post-it notes don't take up much space and their shape makes them ideal for transport. As long as we ensure they're waterproof, the shipping cost isn't high at all.
This is something I must insist on. Otherwise, how could I know how many have really been sold at the retail end?"
And this was actually the most important reason. If he outsourced production, who knew how many units the other party actually sold? If they underreported by half, how could he ever verify it?
Seeing Yang Wendong's firm stance, Robert said, "The 3M board is hoping to secure manufacturing rights. But since you've made your position clear, I'll report back to the company when I return to the hotel tonight."
"Alright." Yang Wendong smiled. Then he added, "There's one more point. At present, I can only grant you exclusive distribution rights for the U.S. market."
"Why is that?" Robert asked quickly. "Even though 3M is an American company, we have sales channels all over the world."
"I know," Yang Wendong nodded. "But no product can launch globally all at once. As you saw earlier, our production capacity right now can't even cover one U.S. state.
So we need to take it step by step. Expanding production will take time. We'll satisfy the U.S. market first, then look toward other countries.
Once we have enough production capacity, and the product has proven successful in the U.S., then we can discuss exclusive rights for other regions. How about that?"
With his earlier glue trap product, he had worked with clients from the U.K. and Japan, but never granted them exclusive rights. That was because those clients were just small-scale traders with incomplete distribution channels. Giving them exclusivity would have been a waste of his resources.
But 3M was different. If he wanted them to fully commit to promoting his product, exclusive rights were a must—it was in the best interest of both parties.
Still, there had to be a limit. He wouldn't grant them global rights in one go. The U.S. market, being the largest, was enough for now. The rest could wait.
And besides, his current production capacity truly couldn't handle more.
"Eric, you really are cautious," Robert said, clearly understanding what Yang Wendong was implying. He continued, "Alright, I understand your position. I'll report everything to headquarters tonight.
Since you'll be the one manufacturing the product, will the price remain the same as before?"
"Yes. One dollar for fifty Post-it notes. But we may adjust the price based on future sales performance," Yang Wendong confirmed.
For now, the price would stay the same. But if demand eventually far exceeded supply, he would consider raising the price.
On the other hand, if he increased production capacity enough in the future, he might even consider lowering the price in pursuit of maximizing profit. Ultimately, everything had to follow the market's laws of supply and demand.
Robert thought for a moment. The initial phase of the visit had now concluded, and he said, "Alright, Eric. Let's leave it here for today. Once I receive new authorization tomorrow, we'll continue the negotiations."
"Sounds good," Yang Wendong nodded.
Negotiating with someone who wasn't the final decision-maker was always a bit exhausting, since they couldn't make on-the-spot commitments.
But that was normal in business. The boss usually came in last—or didn't appear at all. Otherwise, they'd be overwhelmed by meetings.
Often, negotiations that dragged on for months weren't due to face-to-face delays, but because both parties were wrestling behind the scenes.
Fortunately, Yang Wendong was his own boss and could make decisions immediately. On top of that, he had great confidence in the commercial potential of Post-it notes, which made it much easier to move things forward.
…
The next day, Robert didn't come to the factory. Instead, Yang Wendong went to the hotel for further discussion. Robert had already seen everything worth seeing at the factory, and the hotel offered a more comfortable environment for talks.
This time, it was Robert who brewed the coffee for Yang Wendong. Smiling, he said, "The coffee in Hong Kong actually tastes pretty good. Before I came, I even brought some instant packs with me—just in case there wasn't any good coffee here."
"Hong Kong is one of the largest trading port cities in the world. As long as you have money, the quality of life here is in no way inferior to that of major cities in the West," Yang Wendong said with a smile.
In this era, the cost of communication and information was incredibly high, and media coverage was expensive too. As a result, many people's understanding of other places might still be stuck decades in the past.
Robert chuckled and said, "Yes, for instance, the buildings and businesses near this hotel give me the impression of being in a Western city.
But the place we went yesterday—near your factory—it felt like America a hundred years ago, straight out of a history book."
Yang Wendong nodded and said, "That's exactly why I'm insisting on handling production myself. That way, I can create a lot of job opportunities here in Hong Kong."
While he did have the strategic goal of solidifying his own position by driving employment, deep down, Yang Wendong genuinely wanted to provide stable jobs for those poor people living in the shanty towns.
Maybe he couldn't do much with his current limited resources, but at the very least, he could provide a decent meal at lunchtime. There were countless families out there—parents and kids alike—working themselves to the bone every day just for the chance to eat a full meal.
He had suffered through that kind of life himself, and now he hoped fewer people would have to go through the same in the future.
Robert said appreciatively, "That's admirable. I have to admit, yesterday I was only thinking about the financial returns. I feel a bit ashamed now."
"You're just doing your job—working to get the best deal for your company. There's nothing wrong with that," Yang Wendong said with a smile.
In this era, "virtue signaling" was already quite common in the West. Many Western countries were promoting the idea of "doing things for the future of humanity" to demonstrate moral superiority, and many of their own citizens were buying into it.
While most people wouldn't genuinely stop being selfish, it had, to some extent, instilled a sense of compassion toward the less fortunate.
"Alright then, let's get down to business," Robert said, switching gears. "Eric, I spoke with our headquarters in the U.S. last night. They agreed to your proposal—however, they want a 20-year exclusive distribution right for the U.S., and they also want priority rights for distribution in Europe."
"We have a saying in Chinese: 'Asking like a lion,' meaning asking for a lot," Yang Wendong said, translating the gist of it for Robert. Then he asked, "Why don't you just ask for even more while you're at it?"
The request for 20 years wasn't actually asking too much—since patent validity only lasts for 20 years. After that, any factory in the world could legally produce Post-it notes, and even the original inventor wouldn't be able to stop them.
As for priority distribution rights in Europe, the logic was the same. Outside of the Soviet Bloc, the combined economies of Europe and North America accounted for nearly 80% of global GDP. The rest of the world wasn't very significant in comparison.
Robert smiled and said, "Everything's negotiable. We're just putting our terms on the table. Of course, if our ask is high, your benefits will be high too."
"If that's the case, then there's really no difference between selling you the patent outright," Yang Wendong said, shaking his head.
"True. Business is business. We're all here to maximize our own interests," Robert said. "But at least we're getting closer to reaching an agreement. Now, let's hear your terms."
Yang Wendong nodded and said, "My request is simple. I can grant you a five-year exclusive distribution right for the U.S. During those five years, Post-it notes in the U.S. can only be sold by you.
As for Europe, Asia, South America, or Africa—they're not part of this negotiation. Like I said yesterday, other markets will be considered only after the U.S. market performs well and my production capacity increases."
Robert frowned and said, "Five years is too short. If we spend a few years building a nationwide distribution network, reaching every potential customer in the U.S., and then you revoke our rights after five years, wouldn't all our efforts be for nothing?"
"You make a good point. We can sign a separate agreement: after the five-year term, you'll have priority rights for the U.S. market. How about that?" Yang Wendong said calmly.
He knew five years was a bit short. Even in the information-rich world of the future, it took at least two to three years to cultivate a mature market for a new product.
In the early stages, it was entirely possible that massive investments into the distribution network wouldn't generate immediate profits. Everyone would just be waiting for the channels to be fully established before they could sit back and earn returns.
If Yang Wendong were just a small-time distributor, he'd probably agree to five years and make what he could. But large distributors didn't care about short-term gains. They had deep resources, but using those resources came with a cost. To promote something at scale, they had to aim for long-term profits.
Robert thought for a moment and said, "We need at least a 10-year license, plus a five-year priority extension. Otherwise, our headquarters won't approve it."
"That's not impossible," Yang Wendong said after a brief pause. "But in return, I need a loan from your side."
In truth, five years or ten didn't matter much to him. As long as the partnership went well, there was no better collaborator than 3M.
"A loan?" Robert asked in surprise.
"Yes," Yang Wendong nodded. "You've seen the condition of my factory. I've got nothing to hide. I know 3M's distribution power can quickly bring in a flood of orders.
But my factory's current capacity is far from sufficient, so I need funding to buy more equipment now. That way, I can meet future U.S. demand—and it benefits both of us."
"That makes sense," Robert said, then asked, "How much money do you need?"
"That depends on how much your first order will be," Yang Wendong responded. "Once you confirm that, I'll make a decision. I assume a company like 3M would do some initial market research before placing a bulk order?"
"Yes, of course. A loan might be possible—but there would have to be some form of collateral," Robert said cautiously. He couldn't approve the loan himself, but he needed to ask these questions first.
"That's fair. But I don't really have anything to use as collateral," Yang Wendong replied honestly.
Robert hesitated for a moment and said, "The Post-it note patent is valuable—it could serve as collateral."
"That's not acceptable. I won't consider using the patent as collateral," Yang Wendong said, shaking his head.
If he pledged the patent and then someone made things difficult down the road, everything could fall apart. In business, these kinds of tricks were common, and if there was even a chance of that happening, Yang Wendong wouldn't take the risk.
Robert frowned and asked, "Then what can you offer as collateral?"
Yang Wendong smiled. "Use the profits from our future U.S. sales partnership as collateral.
The loan amount can be negotiated based on that."
"I don't have the authority to approve that," Robert said, nodding. "I'll speak with headquarters again tonight and give you an answer tomorrow."
"Alright. I believe this will be a win-win situation for both of us," Yang Wendong said with a smile.
Robert agreed. Then something occurred to him, and he asked, "By the way, what's the brand name for these Post-it notes? Your company's Chinese name is a bit awkward in English. It wouldn't work well in the U.S. or in other non-Chinese-speaking countries."
Yang Wendong replied, "I already registered a name—'deli'. D, E, L, I. That's the brand name for Post-it notes going forward."
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