Chapter 561 Huge Losses (Additional Structure)

July 13th, the beginning of the first ten days of summer.

The scorching sun poured down unhindered onto the glass curtain wall of the science and technology building, and the sweltering heat heralded the arrival of the hottest time of the year.

Inside the conference room on the top floor of the Tengda headquarters building, only a dozen or so people were seated around the dark walnut circular conference table.

Aside from Chairman Song Ci, CEO Zhang Yong, and COO Wang Jing, all the attendees were core executives of Tengda Technology.

Chief Financial Officer, Chief Risk Officer, Chief Data Officer... even the lowest level is the T17 level Executive President.

At the head of the table, Song Ci's deep gaze slowly swept over the group of executives. His voice was slightly hoarse from a morning of intense discussion.

"Does anyone have any objections to the group's restructuring?"

A brief silence.

Those who are sitting here have already fully stated their positions in the previous debates. Their silence at this moment signifies the achievement of consensus and the final confirmation of power.

"Good!" Song Ci tapped her pen on the desktop file, making a crisp sound like a judge's gavel. "The new organizational structure for the group is settled!"

After a morning of intense work, Tenda Technology has undergone a new round of restructuring. At the group headquarters level, three major committees have been established, supplemented by core functional departments, to oversee ten major business groups (strategic subsidiaries).

This move aims to eliminate redundancy, clarify responsibilities, and make the vast technology empire more flexible and efficient in the ever-changing digital battlefield.

Zhang Yong chimed in at the opportune moment: "After the board of directors approves the reorganization plan and Chairman Song signs it to take effect, please have General Manager Wang take the lead in overseeing it."

Coordinate with legal and administrative departments to amend the company's articles of association. All departments must complete the organizational restructuring and personnel readjustment within one month.

Wang Jing nodded solemnly: "Okay, Chairman Song, General Manager Zhang."

With a major event concerning the company's future direction settled, Song Ci's brows relaxed, she let out a long sigh, and her tone was light:

"I will formally appoint the heads of each department and business group at the semi-annual meeting."

Wang Jing immediately asked, "Chairman Song, when is the conference scheduled?"

Song Ci turned her gaze to CFO Chen An: "Has the first half-year financial report been released yet?"

"Chairman Song, the data from each business line is still being finalized and verified, and it will take two days to issue the final report."

After a moment's thought, Song Ci instructed, "The meeting will be postponed until the end of this month. We'll have something to compare it with when Google and Amazon release their financial reports."

Everyone has had a long morning of meetings, and we've all worked hard. If there are no other agenda items, let's adjourn.

Today, Tenda Technology is an international internet giant, having long since left many domestic internet companies behind.

In Song Ci's view, only Google and Amazon across the ocean are worthy of attention as competitors.

"Chairman Song, please wait a moment, there's something else I need to report to you," Chen An said quickly.

"Speaking."

“It’s Gaode Maps.” Chen An recalled the financial report data he had reviewed, carefully choosing his words. “In the first half of the year, Gaode Maps’ net loss reached 300 million yuan.”

At this rate, the annual loss will exceed $100 million. According to the restructuring plan, it will be merged into the newly established local life services company.

I worry that the new company will be unable to withstand such continuous and enormous losses.

300 million? "In six months?"

As soon as Chen An finished speaking, a murmur of discussion broke out in the meeting room.

Although everyone present knew that the map business was a money pit, they did not expect the situation to be so dire.

Upon hearing this, Song Ci fell into deep thought.

He understood the CFO's unspoken message: the newly agreed-upon restructuring plan would package Gaode Maps, ride-hailing, and food delivery services together and inject them into Tengda Local Life Services Company.

However, in the next few years, ride-hailing and food delivery are inherently cash-burning businesses that will require financing to maintain development and will be unable to cope with their own problems.

With the added burden of a huge loss-making digital map, the new company simply cannot continue operating.

As the chairman pondered, Wang Jing frowned slightly and asked, "What are the main difficulties facing Gaode Maps at present?"

I recall that the losses narrowed somewhat in the fourth quarter of last year, so why is the situation even worse this year?

Upon being specifically named and questioned, Bai Xiaojin, CEO of the local life services company and president of Gaode Maps, immediately became extremely vigilant:

"Distinguished leaders, digital maps are not static products that can be produced once and for all; they are a 'living' infrastructure that requires continuous and substantial financial investment."

The brief improvement in Q4 last year was due to the slowdown of some data collection projects.

But competition is intensifying, and slowing down means falling behind. This year we have to restart and increase investment.

Chen An picked up the thread: "When I reviewed the financial statements, I found that, in addition to the costs of professionally collecting vehicle fleets, satellite imagery and aerial photography, and manual drawing of these data collection and mapping data, there were also other expenses."

Besides the costs of purchasing copyrights from official surveying and mapping agencies, the costs of data processing and technology research and development are increasing extremely rapidly. Which specific projects are consuming these funds?

All eyes were once again on Bai Xiaojin. He felt immense pressure and explained his points clearly and meticulously:

"There are three major challenges: First, real-time traffic conditions and intelligent navigation."

Providing users with the optimal route across millions of roads nationwide and constantly changing traffic requires a top-notch algorithm team and powerful computing capabilities.

The investment required to analyze and process massive amounts of traffic data 24/7 is astronomical.

Second, high-precision maps. Lane lines, road signs, slope curvature...

The cost of collecting, producing, and dynamically maintaining this massive amount of information is more than ten times that of ordinary navigation maps.

Third, there are the costs of platform maintenance and updates.

Currently, Amap has accumulated 360 million users and holds a 46.6% market share on mobile devices, firmly ranking first in the industry.

A large user base means extremely high concurrent access pressure, requiring us to maintain an extremely large server cluster and bandwidth resources.

More importantly, map data needs to be updated on a daily or even hourly basis.

Points of Interest (POIs), road conditions... This is a never-ending project; once it stops, the product's value rapidly diminishes.

Zhang Yong pushed up his black-rimmed glasses and said in a deep voice, "Gaode Maps is the cornerstone, ecological, and strategic component of Tengda Technology."

It can empower all of the group's businesses. All of Tenda's businesses that need to connect with the real world must rely on Gaode.

Therefore, the group will definitely continue to provide unwavering support.

The CEO's resolute statement reassured Bai Xiaojin.

However, Zhang Yong immediately changed his tone, which became serious:

"Although Tenda is a large and powerful company, it has started to lose $100 million, but it cannot continue to lose money indefinitely and without any bottom line. We must find a way to reduce costs and increase efficiency."

He looked sharply at Bai Xiaojin, and then swept his gaze over everyone present. "In the second half of the year, the group's cloud computing division will launch Storm Engine to support the unlimited computing power plan."

With the completion of the Jiuzhang Supercomputing Center next year, all of Gaode Maps' servers and data processing operations will be migrated to Tenda Cloud.

Leveraging the powerful elastic computing and distributed storage capabilities of the Baofeng engine, it replaces Gaode's expensive data centers.

Upon hearing this, Chen An immediately did some mental calculations and nodded in agreement: "This is an excellent move!"

Gaode can immediately reduce its hard costs in IT infrastructure by 30% to 50%.

This is the fastest and most effective cost reduction measure.

Wu Yi, the newly appointed CEO of the Social Networking Business Group, had a flash of inspiration and interjected with his suggestion:

"We can create an entry point on the 'Discover' page of WeChat, or utilize the public account system to develop a 'public traffic report' function."

Hundreds of millions of WeChat users can easily report information such as traffic jams, accidents, road construction, and temporary road closures. The data is then synchronized to Gaode Maps in real time after being verified by algorithms.

Taking the route of data crowdsourcing and public mapping can, to some extent, reduce the cost burden of professional data collection.

The atmosphere in the meeting room immediately became lively.

The senior executives offered suggestions on how Gaode Maps could reduce costs and increase efficiency, drawing on their own business expertise, creating what resembled an "expert consultation" for Gaode.

After the discussion subsided, Zhang Yong turned to ask, "Chairman Song, what do you think of these proposals? Do you have any instructions?"

Song Ci had snapped out of her reverie and slowly began to speak: "Mr. Zhang has already explained the importance of Gaode Maps very thoroughly, so I won't go into details."

He paused for a moment, then dropped a bombshell: “Starting in August, all Tenda apps will set Gaode Maps as the default and only option for sharing location information.”

At the same time, Gaode Maps will be given top-tier entry points on three major traffic platforms: WeChat, Weibo, and Toutiao.

A chill ran through everyone. It was tacitly agreed upon and the only way! A monopoly on the entry point for traffic injection!

This means that Tenda will dedicate its entire ecosystem to building a moat that competitors will find difficult to overcome for Gaode.

The chairman is aiming to solidify AutoNavi's absolute dominance in the industry.

The sound of Song Ci echoed in the conference room. "As a result, I estimate that the daily active users and monthly active users of Gaode APP are expected to grow by more than 20% within a year."

Only after firmly establishing its market leadership and building a solid user base can it confidently discuss monetization.

Having set the strategic tone, Song Ci further stated: "Integrate high-frequency services such as ride-hailing and food delivery into Gaode Maps, making it a portal for local life services."

This includes all location-based services such as restaurant and hotel reservations and ticket purchases, which I mentioned in the last meeting. This is also the original intention behind my strong advocacy for the establishment of a local life services company.

After listening to everyone's discussion, I have some new ideas. Mr. Bai, please write them down.

Bai Xiaojin immediately picked up a pen and awaited the chairman's instructions.

Song Ci said calmly, "For C-end users, Gaode could create an 'icons and themes' store."

Launch co-branded icons and customized theme skins.

Users can choose to change the car logo on the map, the overall color scheme of the map, the shape of the navigation pointer, and even the sound effects of the turn prompts.

For example, collaborating with popular anime and movie IPs.

Upon hearing this, everyone's eyes lit up. Creating skins and selling virtual goods—that was Tengda's forte.

The gaming business has long been proven to be an extremely profitable business model, with almost zero cost and extremely high profits!

Song Ci continued to offer advice: "IP collaborations and brand collaborations are both worth trying boldly."

For example, Snoopy's Starry Sky Adventure, Marvel Heroes Assemble, and the Palace Museum's traditional Chinese style theme will definitely attract different users.

We could also create a celebrity voice navigation pack and offer a fan support package. A single voice line or skin could be priced at 3 to 5 yuan, while a series package could sell for 30 yuan.

Wang Jing sighed inwardly, realizing that the chairman was indeed a cut above the rest when it came to understanding user psychology and profit models.

Once this skin system is implemented, it's practically pure profit, essentially opening up a completely new revenue stream for Gaode.

"Brilliant! Chairman Song, you truly have foresight!" Bai Xiaojin praised the chairman's idea highly, and his own thinking was also broadened, allowing him to apply the concept to other situations.

"We can also develop a premium navigation car version cooperation program for B-end customers!"

He was visibly excited as he explained, "When users search for or navigate to car dealerships or brand 4S stores..."

The corresponding POIs on the map can be directly displayed as the brand's logo, increasing brand exposure.

During navigation, the arrow representing the user's real-time location can transform into a sophisticated 3D realistic model of the brand's car!

Let users experience the feeling of 'driving in the cloud'!

Upon hearing this, Zhang Yong nodded and smiled, saying, "Your idea is very business-savvy."

For automakers, this is both precise brand marketing and an innovative user experience.

Gaode Maps could first charge a basic map data service fee, and then charge a fee for 3D model customization and platform licensing. A two-pronged approach.

Song Ci chuckled softly and used more sentimental language to describe it:

"Many people think navigation is a cold tool, but starting today, you can have your favorite Snoopy drive his doghouse and guide you on the map;

You can also choose your dream Mercedes-Benz G-Class to roam freely in the digital world.

Tools, too, can have warmth and personality.

The atmosphere in the meeting room suddenly became cheerful, and everyone was inspired, contributing their ideas and filling in the gaps.

As the discussion subsided, Song Ci lightly tapped the table, signaling everyone to be quiet.

"President Bai, with the group's comprehensive resource allocation and strategic support for Gaode Maps, its future cannot and will never be one of perpetual losses."

Now, I'll give you a clear five-year development path!

Bai Xiaojin's expression was solemn: "Please give your orders, and I will do my utmost to fulfill them!"

Song Ci's insightful observations, word by word, outlined a blueprint for Gaode's future:

"Next year, we will complete the full migration to Tenda Cloud and leverage Baofeng Engine to reduce costs and increase efficiency. Our goals are: revenue of 1.8 billion yuan and losses reduced to less than 500 million yuan."

In 2015, the focus was on platform commercialization, increasing commission sharing and advertising revenue. The goal was to reach 4 billion RMB in revenue and approach break-even.

In 2016, the company focused on its To G (government) business, signing major contracts for smart transportation systems in at least three large cities. Revenue reached 5.5 billion yuan, turning a profit with a net profit of 300 million yuan.

In 2017, we focused on the B2B market, becoming the preferred partner for automakers in the field of high-precision maps. Our goals: 7 billion RMB in revenue and 1 billion RMB in net profit.

In 2018, Gaode Maps announced that it would cover major roads in China, with revenue targets exceeding 10 billion yuan and net profit reaching 2 billion yuan.

This string of challenging numbers struck Bai Xiaojin's heart like a heavy hammer.

Despite having just discussed many positive and innovative ideas, the company is currently facing an annual loss of $100 million with an unclear future.

He felt immense pressure as he set out to turn a profit within three and a half years and achieve a net profit of 2 billion yuan in five years.

The road ahead is far from smooth. This five-year plan is both a roadmap and a Damocles' sword hanging over his head.

He took a deep breath and firmly stated, "Understood, Chairman Song! Bai Xiaojin and all colleagues at the Local Life Services Company will do our utmost to fulfill the five-year agreement!"

(The following content is free of charge and is not for padding word count.)

Tenda Technology Group Organizational Structure Plan (Draft)

I. The Group's Brain: Committees and Core Functional Departments

At the group level, three major committees and core functional departments have been established as the central hub for strategic decision-making, resource allocation, and risk management. All responsible persons report directly to the group's chairman/CEO.

1. Three major decision-making committees

Group Strategy Committee: Song Ci serves as Chairman. Responsible for approving the Group's overall strategic direction, strategic plans for each business unit, annual business targets, and all major investment and M&A projects.

The Group's Finance Committee, led by the Chief Financial Officer (CFO), has final approval authority under Song Ci. It is responsible for approving the annual budget, major financing plans, capital expenditures, and managing the Group's funds and capital structure.

The Group's Talent and Development Committee, led by the Chief Human Resources Officer (CHO), with Song Ci holding final approval authority, is responsible for approving appointments, salary adjustments, and equity incentive plans for core employees at level T14 and above.

2. Core Functional Platform

Group General Office (Chairman's Office): As the nerve center of the group, it is responsible for managing the chairman's schedule, important documents, meetings, and supervising the implementation of major decisions to ensure that the will of the group's senior management is carried out efficiently.

Strategic Development Department: As the executive and research arm of the Strategic Committee, it leads macro-industry research, competitor analysis, and spearheads major mergers and acquisitions and investment projects.

Financial Governance Center: Establishes and implements a unified financial system and accounting system across the entire group, assigns financial managers to each business unit, and implements dual-line reporting management.

Human Resources Center: To build a group-wide job level system, compensation and performance management and talent development mechanism, and promote the deep implementation of corporate culture.

Legal and Compliance Department: Handles global legal affairs, intellectual property protection, and compliance reviews, safeguarding the Group's business.

Internal Control and Audit Department: Independently exercises investigative powers and is responsible for internal risk control and anti-fraud.

Public Relations Department: Responsible for the group's brand image, media relations, and government affairs.

Asset Management Center: Manages heavy assets such as global fixed assets, real estate, and data centers.

Research Institute and Enterprise Development Department: Oversees cutting-edge research institutions such as AI, big data, blockchain, and quantum communication laboratories, and is responsible for incubating disruptive innovative products such as "Star Map".

HarmonyOS Business Unit: Builds and maintains the group's unified digital infrastructure to ensure the autonomy of all business strategies and data security.

Chip and Hardware R&D Center: Focuses on self-developed server chips, AI acceleration chips, etc., to provide computing power support for the group.

II. Business Fleet: Business Groups and Subsidiaries

First Dimension: Core Business Groups

Social Networking Group (SNG)

Positioning: The cornerstone of the group's C-end traffic and connectivity.

Jurisdiction: WeChat, Weibo, and Mini Program ecosystem.

Responsibilities: To consolidate the social foundation and build a three-dimensional social network of "acquaintances + strangers".

Interactive Entertainment Group (IEG)

Positioning: Core cash cow and creative engine.

Jurisdiction: TD Game Platform, PC Game Center, Mobile Game Center, TT Voice, Spark Live, Huya Live.

Responsibilities: Lead global game development and publishing, and build a complete game live streaming and entertainment ecosystem.

Platform Content Group (PCG)

Positioning: A core platform for content aggregation and distribution.

Jurisdiction: Advertising platforms, Toutiao (Toutiao.com), Toutiao Video, TT Mail, Toutiao Input Method, and Qianqian Music.

Responsibilities: To create a leading information flow and digital content ecosystem driven by the dual engines of "technology + content".

The Digital Media and Entertainment Group (TEG)

Positioning: A builder of an IP-based, full-chain cultural and entertainment ecosystem.

Jurisdiction: Reading Group, Tengda Culture, Tiangong Special Effects, Southern Cinema Circuit, Mtime.com.

Responsibilities: To achieve integrated IP development and operate the entire chain of production, broadcasting, promotion, and distribution.

Strategic Investment and Capital Operations Group (SIC)

Positioning: The group's strategic radar and capital armor.

Jurisdiction:

Strategic Investment Department: Responsible for domestic ecosystem enhancement and strategic defensive investments.

Industry investment fund: Incubating and developing cutting-edge industries around core businesses.

Overseas Mergers and Acquisitions Department: Acquire core technologies, top-tier IPs, and strategic market entry points globally.

Post-Investment Management and Empowerment Center: Systematically delivers traffic, data, and technology to portfolio companies to ensure ecosystem synergy.

Second Dimension: Strategic Subsidiaries

Douyin Group

Positioning: An independent short video and live e-commerce giant, whose products include Douyin and CapCut.

Local life service company

Positioning: A comprehensive platform connecting people and services.

Business: Integrating Today's Choice (food delivery), Today's Express (ride-hailing), shared bikes, and Gaode Maps.

Third Dimension: Infrastructure and Finance

Technology Engineering Group (TEG)

Positioning: The group's technology engine and capability foundation.

Jurisdiction: Cloud computing (Storm Engine), AI hybrid model, big data platform, data center (global server cluster and network architecture optimization).

Responsibilities: Build a stable, efficient, and scalable technical infrastructure; provide digital transformation solutions to external parties and offer technical platform and computing power support internally.

Financial Technology Group (FTG)

Positioning: Commercial and financial infrastructure.

Jurisdiction: YiPay, MYbank, MYfund, Lingqiantong, Licaitong, WeChat Pay Score.

Responsibilities: To provide payment and financial services for the entire ecosystem.

Corporate Development Group (CDG)

Positioning: Enterprise-level ecosystem builder and operator.

Jurisdiction:

WeWork: A collaborative office platform that integrates internal management with external business connections.

Tengda Enterprise Credit (Qichacha): A business information and credit platform for enterprises, serving as the data foundation of the business group.

Enterprise Application Platform: Based on the above systems, develop and introduce third-party SaaS applications to form a thriving enterprise service market.

III. Globalization Strategy: International Business Group and Overseas Structure

1. International Business Group (IBG)

Positioning: The headquarters for all of the Group's overseas non-fully independent businesses.

Architecture:

Greater China region (including Hong Kong, Macau and Taiwan)

Asia Pacific, Europe, and the Americas (with country or regional companies)

Scope of Responsibility: Responsible for the localization, operation and promotion of mature products in China (such as ReelFlow, the overseas version of Toutiao Video).

2. Overseas independent subsidiaries

For strategic or geopolitically-critical businesses, we operate them as independent subsidiaries to ensure flexibility and focus.

TikTok Group (Global)

WeChat & WeWork LLC (Global)

(End of this chapter)