Following He Zhengcheng's advice, Father He kept his Lenovo stock, sold his China Mobile and Hong Kong Telecom shares, and embarked on his entrepreneurial journey in Daxia Country.
"You want to open a wholly-owned chain hotel in the mainland?" He Zhengcheng asked.
"Am I that foolish? Do you think I don't have mainland friends in Hong Kong?" He Wenxuan retorted.
"Oh, what about their character? Are they ambitious and eager to learn? Skills can be cultivated, but we can't do anything about character," He Zhengcheng said.
"That's true!" He Wenxuan agreed.
"Especially those who are not eager to learn, have low educational levels, and are unwilling to learn—we absolutely cannot cooperate with them," He Zhengcheng emphasized.
"Damn you, looking down on your Dad, aren't you!" He Wenxuan raised his hand and slapped him.
"Dad, listen to me. You understand computers and the internet now. Have you ever thought that in a few years, we could use the internet to know which hotels still have how many rooms at what price available? We could also set up a website for customers to inquire and place orders," He Zhengcheng suggested.
"What's the use of that? The cost is too high," He Wenxuan dismissed.
"internet costs will decrease every year, and this cost also depends on the number of chain hotels. Ten hotels certainly aren't suitable, a hundred might be acceptable, but what about reaching one thousand or two thousand nationwide?" He Zhengcheng pressed.
How many hotels does Huazhu Group have? Several thousand, right?
"Several thousand, that's too many!" He Wenxuan exclaimed.
"So, we must constantly learn. Future enterprises will inevitably be dominated by learning-oriented companies. Those that can't keep up with the times are destined to be eliminated," He Zhengcheng stated.
"Good at learning, meaning highly educated talent. I do know such people, but they might not have money. We can't just give them shares for free if we're funding it, can we?" He Wenxuan pondered.
"You haven't asked them about that. What if they have a way to get money? Plus, there's a model that can solve this problem," He Zhengcheng replied.
"What model?" He Wenxuan asked.
"The VIE model, or Variable Interest Entity. Essentially, it refers to the separation of an offshore listed entity from a domestic operating entity. The offshore listed entity establishes a wholly-owned subsidiary in Daxia Country. This wholly-owned subsidiary does not actually conduct primary business but controls the business and finances of the domestic operating entity through agreements, making that operating entity a variable interest entity of the listed entity," He Zhengcheng explained. He was describing the model that later became popular for Daxia Country's internet companies to list overseas. This model not only improved the investment environment for the domestic internet but also stimulated the entrepreneurial passion of high-tech talent in Daxia Country.
"It seems this model hasn't appeared domestically yet!" He Zhengcheng suddenly realized this was an opportunity for Shanhai Capital and their advantage.
"That's so complicated?" He Wenxuan asked.
"If this is complicated, wouldn't operating a company with thousands of hotels be even more complex?" He Zhengcheng countered.
"Sigh, it looks like I'll have to work my Dad to death," He Wenxuan sighed.
"Have you thought of a name yet?" He Zhengcheng asked.
"A name? Haifeng Business Chain Hotel?" He Wenxuan suggested.
"For that name, I think we should remove 'Business.' There's no need to limit our customers to business travelers. What about tourists, people working or studying, or those visiting relatives temporarily? Moreover, this group will grow as Daxia Country's economy develops. We don't need to limit ourselves," He Zhengcheng advised.
"That makes some sense!" He Wenxuan conceded.
"Dad, how about we change the name? What do you think of 'Yuelai Inn'? It sounds classic and grand!" He Zhengcheng said with a mischievous grin.
...The two father and son discussed a lot. Starting a chain hotel wouldn't require much money initially. They still needed time to cultivate talent, summarize experience, and establish standards. By the time they needed more capital, He Zhengcheng might have already earned his first pot of gold from NASDAQ.
He transferred another 500,000-plus US dollars to NASDAQ. Yahoo's stock price had risen significantly, but it still hadn't exceeded 60 US dollars. This was largely because the looming threat of LTCM's bankruptcy hung overhead; even knowing the danger wasn't great, no one dared to be careless. The two purchases were not far apart, totaling 18,000 shares of Yahoo stock.
The remaining money went towards entertaining guests, giving red envelopes to Feng Xinghe, and significantly increased daily social expenses. His previously issued credit cards were often maxed out, and he dared not be without cash.
"I've come across an opportunity this time. What do you all think?" Ji Jiasheng asked.
"What opportunity?"
"During this period, I've learned a lot about Daxia Country's Telecom and internet industries. Besides state-owned enterprises, the most famous company should be Yinghaiwei. Their initial goal seemed to be to become Daxia Country's AOL, but unfortunately, due to the sensitivity of the industry, they didn't succeed. Besides this company, I also found an enterprise with Xinhua News Agency BJ, called China International Network Communication Co., Ltd. (CIC). This company initially wanted to turn Daxia Country's internet into a local area network, where only through them could one access the internet. But Daxia Country opened up the internet, and their efforts failed. However, the leaders of this enterprise registered a CIC Holdings company in Bermuda, ceding management rights to investors and people trusted by investors. Among them, a banker from Hong Kong, Qian Guofeng, a director of HSBC, became the Chairman of the CIC Board of Executive Committee," Ji Jiasheng said in one breath.
"What about it?" Lv Lang asked.
"Qian Guofeng knew we wanted to invest in Daxia Country, so he proactively approached us, wanting us to invest in CIC, and arranged for Ye Keyong, the Vice Chairman of the CIC Board, to maintain long-term contact with us," Ji Jiasheng explained.
"Is this company a state-owned enterprise or a joint venture? What is their main business?" Yu Dehui inquired.
"It should be considered a joint venture! Currently, they primarily provide internet access and content services, but from what I understand, this portion of their income isn't much," Ji Jiasheng replied.
"So, they have new ideas and want to explore new businesses?" He Zhengcheng asked.
"No, their transformation hasn't been successful, so they're looking for investment and opportunities from us," Ji Jiasheng clarified.
"Xinhua News Agency—they have strong news gathering capabilities, so why don't they establish a portal website similar to Yahoo?" He Zhengcheng suggested.
"Establish a portal website?" Ji Jiasheng questioned.
"Exactly. We're going to invest in Daxia Country anyway. If America's portal websites can gain Wall Street's approval, Daxia Country's portal websites won't be bad either," Lv Lang added.
"But we don't understand the technology, and CIC..." Ji Jiasheng began.
"Technical personnel can always be found, but Xinhua News Agency's resources are not so easy to obtain. The biggest bottleneck for portal websites is the news source; technology is not the most important thing."
"So, should we invest in CIC, or cooperate with them to establish a new internet enterprise?" Ji Jiasheng asked.
"Will they choose to cooperate with us? If we can't go public, how do we exit?" Chao Yang wondered.
"The exit problem isn't difficult. We can set up a Variable Interest Entity (VIE) model, which can conveniently circumvent regulation," He Zhengcheng offered.
"VIE model?" Ji Jiasheng asked.
"That's right, the VIE model works like this..." He Zhengcheng began to explain.