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Author: nanoguy One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 259  
Subject: Re: Q1 2012 Date: 5/14/2012 1:49 PM
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Good to see Lekitkat and Mekong weighing in here. Have really missed LKK posts in MDP, and sure have found MK comments interesting.

I really don't want to try and convince anyone of anything wrt buying or selling YONG at the moment. I'm long, and plan to stay there unless something mind boggling happens, like a complete change in management.

So please bear with me while I share an opinion. I think YONG is dirt cheap now compared to its potential. Rather than re-analyzing the numbers which have already been done to death, let's think about some of the subjective reasons for watching (and having some fun with) this little company.

First, political smarts. For a business to succeed in the PRC today, it must have the continuing approval of the existing political structure. Zishen Wu has a proven track record of knowing how the system works, and shows great skill in gathering support for his company and its products in the enormously complex and varied provencial system. Look at the endorsements gained and the tax and license concessions acquired. He is also on the right side wrt national party goals and the new leadership. He has aligned the company with national as well as consumer interests.

Second, marketing smarts. Blue Ocean has been an enormously successful strategy. To understand just how successful, it is necessary to understand that "relationship" is the single most important factor in any ongoing business arrangements in the far east (as it actualy is in most places). Put in westernese, product territories are controlled by usually long-term and often extremely powerful alliances. Entry into those alliances is not simply a matter of offering a "newer" or "cheaper" product. It requires the establishment of a particular level of understanding and trust, as well as a belief that everyone directly involved will benefit sufficiently. YONG's provencial expansion is not just a matter of advertising and marketing, it is a matter of acquiring what almost amounts to exclusive product territory while at the same time being allowed entry into those alliances.

Third, a vision with merit. The company is not just another fertilizer company. Look at the products carefully. They are "designed" to help the small farmers with poor land and horrible growing conditions improve their crop yields and condition. For goodness sake, we're talking about growing stuff in Mongolian environments. Look at the amount of time and effort spent educating the farmer and building local relationships wrt the branding. I know that I tend to have a certain amount of loyalty toward companies that have shown they care about me and whose products have been reliable. Well, the shengmingsu products have been out there long enough now for it to have been rejected by the user community en masse if it didn't perform sufficiently to justify the price. It is entirely possible that CGA humic acid market share is declining because they are losing that market share to YONG, and therefore have changed focus to the standard fertilizer products.

I could go on and on here, but the point I'm trying to make is that when you are dealing with a startup, the numbers don't always tell the whole story. The fact that YONG's numbers look pretty good at this very early stage is just icing on the cake.

Onward thru the fog,
nano
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