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Yongye International, AŞ Message Board

  • yo_roe yo_roe Apr 29, 2011 9:50 AM Flag

    $10K per Branded store

    I know both the revs. and store count are growing, but for purposes of order-of-magnitude reasonableness check... What do you think about an average Yongye branded store generating ~$10K in sales/yr?

    $240M/24,000 stores. Is this a reasonable revenue number for a rural ag store in China selling YONG product, supplied by a provinial distributor.

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    • they don't exist.

    • china has 2862 counties, each county has about 20 towns, that is more than 50,000 towns. Each town has about 15K people ( actually more than that). If YONG open one store in each town, then there are more than 50K. Now they only have 24K, it still can be doubled.

    • Kari Juntunen may be from the poorest family, in the poorest town, from the poorest country. Do you think $10K is that big number in China. That is less than my friend's one year bonus, an orderly bank clerk.

      • 1 Reply to pwplay369
      • "Kari Juntunen may be from the poorest family..."

        I think you owe Mr. Kari, a gentleman, an apology for this statement.

        1. Where did he come from is irrelevant to the discussion.

        2. Yes, after Deng Xiaoping (Teng hsiao-ping) decided to let A PORTION OF of population "rich" and your bank clerk friend now does have some bonus, however the majority of the population is still VERY POOR, especially the peasants. This is not too much away from what Mr. Kari depicts and $10K is indeed a BIG number to the majority of Chinese! (Think about this, Chinese GDP is about that of Japan, and China has about 10 times population, and some Chinese are very rich, then you should know how poor some other Chinese!)

        3. Mr. Kari has worked very hard making significant contribution to this board, and you should also express thanks to him.

        4. If I am not wrong, he could be a successful engineer making over $1ooK per year.

    • Not sure we really know how much, but don't we also have to include some product being sold to others (i.e. government)? Also, the figures you were using...were those only the amount made on the PLANT nutrient side? I know the ANIMAL side is nearly non-existent these days, but just checking?

    • Some comments.

      1. It is likely that the current Yongye's branded stores reside in the bigger villages/towns. Just business sense.

      2. Maybe a better way to look at the averages is to try to estimate how large acreage is required to support that 10K USD sales.

      Yongye's website mentions the cost for a farmer being 42 RMB per three applications. One RMB is about 15 US cents, so 42 RMB is about 6.3 USD per (assumed) average farm plot.

      10K USD sales divided by 6.3 USD gives about 1600 average sized farm plots (in China, not in US). Looks like a lot. BUT the average farm size in China is, depending on the farm type, anywhere from 0.04 to 0.6 hectares. 0.6 hectares is more typical size for rice farms - not Yongye's target audience. Let's use average number of 0.3 hectares or about 0.8 US acres (Still on high side for certain provinces, for instance average is 0.1 acres in Guangdong).

      So, we come to conclusion that on the average, the acreage needed to support yearly sales of 10K USD is about 1280 US acres (2 square miles). That, in turn, is less than twice the size of farming land on a certain NJ farm from where I do buy my fresh vegetables.

      While digesting the above, remember that it is only an estimate. For instance: I do suspect that the farm size numbers specific for vegetable farming would give distinctly smaller land area.

      • 1 Reply to kari.juntunen
      • Kari, that was very helpful - in fact I'm impressed by your thought process.

        So, if you're at all familiar with farming and agriculture in China (and I suspect you are...) - does 1280 acres, or 2 sq. miles "seem" like a reasonable coverage area for a larger store? Yongye will not have 100% market share. I do agree that Yongye branded stores are more likely to be located in the larger villages.