Big Market Before Big Company

“⁠Edouard then decides to “make a big splash”, contacting the two manufacturers De Dion-Bouton, who make motorized tricycles, and Léon Bollée, who specializes in three-wheeled cars. “My big tubes will completely transform the use of your machines, try them.” He offers to buy their entire production for six months, “to relieve them of any commercial concerns and allow them to focus on quality and production costs.” In reality, for Edouard, the operation is twofold. He encourages the two brands to invest in order to switch to larger production series by temporarily guaranteeing their outlets, and he creates a significant captive market for himself. Priority to manufacturers: this will henceforth be the essential axis of the company’s commercial policy.⁠”

““The Parisian small car company requests the equipment of four hundred cabs. “Three months later, it equips one thousand four hundred and fifty. The battle is won. The tire for horse-drawn carriages becomes mainstream. In 1903, there are six thousand cars on tires in Paris.””

“When an entrepreneur plans to create a large enterprise the first priority is to select a large market. If you were the biggest pencil manufacturer in China, that would be really something. However, if you make cruise ships or corporate jets, no matter how good you are, the market size is limited and so is the size of your company. If you are in the business of selling items people consume every day, like rice or edible oil or toothpaste or toothbrushes, you have chosen a huge market – this market is sufficiently large to achieve large scale and profit. If you choose a small market, it’s very hard to make your company big.”

“Fifth, is the huge population of China. It’s the largest consumer market in the world. And the largest consumer market will produce the world’s largest businesses. China Mobile, the ICBC, Tencent and Alibaba are already global scale businesses. This will spread to other fields of the service sector: e-commerce, the video game industry, the online travel industry, apparel, food and beverages … and, of course, hotels. My rough estimate is that the key players in the future hotel industry in China will have over ten thousand hotels, of which the driving force will be budget hotels. That scale will make it a world leader in future.”