Offer To The CEO

Friday, continued…

"Apologise CEO Hou, I approached CEO Yao yesterday with a proposal for your new joint venture, and rather than beating around I wanted to bring the proposal to you as soon as possible." Responded King.

That was a surprise for the Hou Enterprises and XF International staff in the meeting that had no real idea about why the joint venture had been started. Hou Yi was intrigued. Yes, land development was the core of the business for King and the others, not the entertainment division and despite all issues the seven of them were highly competent when it came to business decisions. Hou Yi decided that he would at least listen to the proposal.

"CEO Ru, I am intrigued. What do you have in mind?"

King nodded towards Lion and Snake, before saying "Directors Gan and Mo, are better placed to explain to you our proposal."

As Lion started to speak, Snake started to hand out folders. "The proposal here is commercial-in-confidence. We had, around eight years ago purchased a large parcel of land outside what is commonly called Studio City. Over the intervening years we have added to that initial purchase. The original land was designated farming land and since we started the purchasing of the land, we have been happy to hold it until the right opportunity presents itself."

"Since then, there has been significant growth in film and television lot developments in Studio City, to the point that much of the land surrounding it has been developed for the film and television industry. The earlier developments have either been abandoned, and we have where possible purchased them, or they have been turned into other businesses."

"As CEO Yao, CEO Hou and Vice-CEO Ji all know, and understand the reasoning behind it, one thing our business has always been conscious of is ensuring that our developments are environmentally sound. While that has always added to their costs in the long term the costs involved have been returned to us with significantly higher profits."

"For example a recent apartment development in the capital, which being considered by all to be a speculative development followed this key principal, and apartments in similar developments in the same area sold for half the price we received for ours given our adherence to this simply policy."

"In the last few years we have been constantly looking for opportunities for the right development in Studio City for the land, and we understand CEO Hou that Hou Enterprises owns some land that adjoins the land we have there. Having seen the destruction caused in the past four years by LU Corporation's developments, we have finally decided that we need to have this land responsibly developed."

"As you can see, and we hope you do not mind that we have included the land Hou Enterprises has in this development, constructed a proposal that would encompass not only the redeveloping or part of Hou Enterprises existing film and television studio space, but the repurposing of other areas as well as developing the current land that both Hou Enterprises and ourselves have in the area."

"The plan, with this proposal is to develop across the sites a total of 50 small and large sound stages, four small and four large television studio spaces, ten different size music recording studios, five separate different outdoor environment filming spaces, and all the various ancillary services. While the plans for the development are currently general, our view is that it can be done in stages, so not to interfere with current uses of the land that Hou Enterprises has, and the income it derives."

"What we are proposing is that we take over the long-term development and management of the land, providing an income stream to Hou Enterprises from the use of the land it contributes to the development, as well as, and this will be confirmed in writing, that the joint venture that both companies have announced receive discounted usage fees for all sound stages."

"We also know given the approaches that large and small companies have made to us about the land, that they have become frustrated that Lu Corporation controls most of the film, television and recording spaces in Studio City and over-exploit it. Some have commented about the poor environmental standards and maintenance, as we know in the last twelve or so months there has been a slow retreat from the use of spaces in Studio City."

"We view, with some appropriate development plans that great outcomes for ourselves, Hou Enterprises and XF International could be achieved with the development. Of course, we are quite prepared to spend additional time and money to come up with better development plans, but this has only been put together in the last couple of weeks."

Hou Yi by the end was stunned. He never thought King would agree to such a development, given his previous attitude. Yes, Hou Enterprises has studio space for Film, Television and recording, and it was over-booked in the last twelve months impacting the maintenance on facilities that they were able to do.

It sounded attractive as a business prospect, but despite the fact that there seemed to be something changed in King, he was still wary of doing business with him, given he knew their past with illegal activities (although that had not been a real issue for at least ten to twelve years according to Yao Tan).

"Gentleman, while I have my own opinions, and I suspect CEO Yao also has his opinions, I would like to hear the opinion of the others here," responded Hou Yi.