Chapter 322: Vertical Expansion of Changxing Industries
Zheng Zhijie understood instantly and said, "Alright. If property prices really start to fall, we'll need to sell off a large number of properties to generate cash flow."
"Exactly," Yang Wendong nodded. "Otherwise the banks will pressure us heavily. But if we're sitting on more liquidity, we can buy back even more properties later—at a fraction of the price."
Knowing that the real estate crisis was coming, reducing leveraged assets was absolutely necessary.
All of Changxing's properties were used as collateral. If property prices dropped sharply, the value of those assets would shrink. The banks would then demand additional collateral or payment, which would put massive pressure on developers.
In his previous life, very few Chinese real estate tycoons were well-known before 1965, because most prominent developers before that didn't survive the 1966 crisis.
Yang Wendong had already decided to sell most of his non-core assets in 1964 to raise capital. Once the crisis hit, he'd be in a position to protect his holdings in core areas like Hong Kong Island—or even scoop up more properties in Central during the downturn.
Zheng Zhijie smiled. "Understood."
"Good," Yang Wendong continued. "For now, our top priority is to get that office tower on Queen's Road built as fast as possible."
Zheng Zhijie asked, "What should we name the building?"
Yang Wendong thought for a moment. "We'll probably have a lot of buildings in the future, so I want to keep the naming system simple."
"What kind of system?" Zheng Zhijie asked, curious.
"All of our buildings will begin with the character '华' (Hua)," Yang Wendong explained. "For the first one, I'd like to name it Hua Jin Tower—'Jin' as in brocade, with the gold radical."
"Hua Jin Tower?" Zheng Zhijie repeated. "That's a good naming convention."
Yang Wendong smiled. "Then it's settled. Let's aim to finish Hua Jin Tower by mid-next year at the latest."
"Understood," Zheng Zhijie replied.
To build a new high-rise office tower in the most prosperous commercial district of Hong Kong—and one entirely his own—was enough to lift Yang Wendong's spirits.
After all, few investments in the world had returns as consistently high and low-risk as Hong Kong real estate. From the 1950s all the way into the 2020s in his past life, there had only been a few small downturns. Everything else had been steady growth.
Even without price appreciation, rental yields—adjusted for inflation—were incredibly lucrative.
And Central was the crown jewel of the Hong Kong property market. In terms of global assets, it ranked among the top-tier locations with the highest returns.
—
That afternoon, when Yang Wendong returned home, he found an unexpected guest waiting.
"What brings you here?" he asked his sister-in-law Bai Yujie with a smile.
Bai Yujie, munching on a mandarin orange, replied, "Just came to see my sister. She hasn't been feeling well, so I thought I'd keep her company."
"Thanks," Yang Wendong said. "But the due date's close—she's about to head to the hospital."
Bai Yushan was pregnant with twins. At nine months, her belly was enormous, making her quite uncomfortable. Even though there was a personal doctor on standby, most of the time she just had to endure it.
"I know. I'll be going with her. There's space for me to stay over there," Bai Yujie said.
"Alright." Yang Wendong nodded, then asked, "Didn't you take a teaching position at the university? You're not working now?"
The hospital arrangements had long been made. The most luxurious VIP rooms were just the beginning. Family members also had places to stay.
"I'm not working at the moment," Bai Yujie said with a grin. "The colonial government is planning to establish another university. I'll be assigned there. Until then, I'm technically on hold."
"Another university?" Yang Wendong raised an eyebrow. That had to be the Chinese University of Hong Kong.
Even though his presence had caused a butterfly effect in Hong Kong's business and political circles, he hadn't influenced education much.
Historically, CUHK was established in 1963—this very year. But planning had begun as early as 1957. It took six years to win British approval.
The delay stemmed from colonial policy. In the early days, each colony was only allowed one university—likely because the British feared that too many educated locals would threaten their rule.
After WWII, many colleges were established in Hong Kong to absorb those who couldn't get into The University of Hong Kong (HKU) due to quota or background limitations. The three most famous were New Asia College, Chung Chi College, and United College.
In 1957, they proposed a merger to form CUHK. The British resisted at first, but after years of negotiations, they finally relented.
Bai Yujie nodded. "Yes, the new school will be called The Chinese University. I'll be teaching physical education there."
"Oh, not bad. Being a university lecturer is very prestigious," Yang Wendong praised.
Some professions may not make a ton of money or carry much power, but they come with high social status—like elite doctors or professors. Even billionaire tycoons tend to show extra respect to such professionals.
"Well, I'm only teaching PE, not really a professor," Bai Yujie said with a grin.
"You never know—you might become one someday," Yang Wendong laughed.
Just then, Bai Yushan, supported by Su Yiyi, slowly made her way into the room. Little Zhiwen ran ahead, shouting, "Daddy!"
"Hey!" Yang Wendong caught him mid-run and scooped him up.
After cuddling with his father for a bit, Zhiwen noticed Bai Yujie, then looked back at Bai Yushan, a flicker of confusion in his eyes.
Bai Yushan smiled and said, "Come, let Auntie give you a hug."
Zhiwen reached out his hands and was passed over.
Then Bai Yujie chimed in, "I'm your real auntie! Let me hold you."
Zhiwen glanced between the two, momentarily lost.
"Haha! Don't confuse him," Su Yiyi laughed.
"If we don't mess with him now, it won't be fun later," Yang Wendong chuckled.
Kids under three were just adorable—as long as they weren't too naughty.
—
The next day, Yang Wendong headed to Changxing Industrial Park in Kwun Tong. After touring the factory, he stopped by the plastic bag production workshop.
"What's our current plastic bag output?" he asked.
Wei Zetao replied, "We're producing over 100 million bags per month now. Most of them are the small kind—for wet markets, convenience stores, or packaging little items. Demand is enormous."
"Sounds about right. Small plastic bags are much more practical," Yang Wendong said. "Even baozi sellers at wet markets have stopped using wax paper. It's all plastic now."
Before plastic bags, buns, dumplings, and fried dough were wrapped in waxed paper. If people thought it was unsanitary, they had to bring their own clean cloth.
With plastic bags, everything was easier—and cheaper.
For other small items, the convenience was even greater. In the past, you had to carry them by hand or bring a basket. Now, a plastic bag solved the problem.
While carelessly discarded plastic bags might cause environmental pollution, the same could be said for the paper bags that came before them. The difference was simply that the pollution from paper bags occurred at the production stage, not at the consumer end.
"Exactly," Wei Zetao agreed. "It's the same overseas. The bags we export are also mostly small plastic bags."
Yang Wendong asked, "What's our factory price per bag?"
Wei Zetao picked up a sample bag and explained, "These thin ones cost 1.5 cents for five bags—they're our cheapest product. Larger and thicker ones range from 0.3 cents to 1 cent each.
The most expensive are the ones we make for Carrefour. Those are heavy-duty bags, suitable for export and used by high-end retailers."
Yang Wendong quickly did the math and asked, "So that's over HK$1 million in monthly revenue?"
"Yes, last month we hit about HK$1.3 million," Wei Zetao replied. "But our profit was only HK$110,000—and that's while competition is still minimal."
"That's fine," Yang Wendong said, nodding. "Even if we don't have many competitors now, keeping prices low can block others from entering the market."
Plastic bags were never a high-margin industry. By design, they had to be cheap to encourage widespread use. Profits came from volume, and the key was to lower unit costs through scale.
This had always been part of Yang Wendong's early plan.
Wei Zetao continued, "Yes, we've even begun exporting our plastic bags to Japan. Their chemical factories have also started producing polyethylene, so they now have domestic production.
Other countries will follow. Polyethylene has a high production cost, but as long as they have the equipment, they can start making bags. The market demand is still very high."
"Then keep expanding production," Yang Wendong said. "We need to secure market share first. Only then can we establish ourselves firmly."
"Understood," Wei Zetao replied. "I've already instructed Dongsheng to begin manufacturing our own bag-making equipment. If they succeed, not only will our costs drop, we'll also be able to speed up equipment acquisition."
"Good." Yang Wendong nodded again. "What about the woven plastic bags investigation?"
Wei Zetao reported, "I've sent someone to check. In Germany, they already have similar technology. They can semi-melt plastic and then draw it into long, thin strips.
Europe has started using this method in the packaging industry, mainly as a replacement for wooden crates. But they haven't yet developed it into bag form."
"Drawn plastic threads?" Yang Wendong asked, not fully understanding.
Wei Zetao explained, "It's a type of industrial extrusion technique. For example, aluminum profiles in construction are made this way. You heat metal until it's soft, but not liquid, then extrude it through a mold."
"Oh, I see," Yang Wendong nodded. "Then send someone to Germany to assess the equipment's output and cost. We need to calculate whether it's viable."
Sometimes, a technology might exist, but the costs are prohibitive.
"I've already dispatched a team," Wei Zetao replied. "They're in contact with several German companies that produce this kind of machinery. We'll have detailed data soon."
"Great." Yang Wendong followed up, "And how's the paper mill project in Taiwan coming along?"
Wei Zetao said, "We've scouted the area. Taiwan already has a complete supply chain for paper production. As long as we invest, there won't be any issues."
"Excellent," Yang Wendong smiled. "Now that the Post-it notes and suitcase production lines have stabilized, our next step is to expand into new product markets.
Since we're already producing both plastic and paper—the core raw materials of our earlier products—we should use that to diversify and grow."
That was the logic behind big enterprise growth: start with product success, then expand upstream into the supply chain to gain control or reduce costs.
Eventually, there were two routes: either go further upstream or use the economies of scale to enter adjacent industries.
Plastic originated from the petroleum industry, while paper came from recycled materials or forestry—industries Yang Wendong wasn't involved in (yet). So for now, he would focus on plastic and paper-based goods to maximize returns.
"That's a solid idea," Wei Zetao agreed. "The market for both plastic and paper is huge. Just Hong Kong's demand alone is massive. If we can break into the paper market here, it'll easily outpace our plastic business."
"Exactly," Yang Wendong smiled. "From basic office paper to packaging and toilet paper, the market is enormous."
In his past life, several Fortune 500 companies were paper manufacturers. Even Hong Kong itself produced a paper industry giant in the 1980s.
Just from Post-it notes alone, Yang Wendong had already proven the demand. Once he entered the paper industry, it would be natural to expand further into related fields.
"I'll make sure the Taiwan paper mill is built as quickly as possible," Wei Zetao promised.
"Also, like we did early on, we need to train enough talent to support future expansion," Yang Wendong added. "Paper is expensive to ship. In Southeast Asia, none of the paper giants own their own fleets—but we do.
Once our scale increases, Changxing Shipping can get involved—from importing waste paper and pulp to exporting finished paper."
That was the advantage of a full vertical supply chain. As long as it was in place, and you controlled everything from processing to logistics, you could bring your costs to the lowest level.
From there, you could either capture more market share or maximize profits.
Coincidentally, once Hong Kong's water shortage was resolved, his ships would be freed up for other orders.
"Understood," Wei Zetao said with a smile.
He now fully appreciated just how comprehensive his boss's strategic vision was. Bit by bit, entire industries were being folded under their control.
"If we enter new industries in the future, we can apply the same model," Yang Wendong said. "But Changxing Industries still has one issue—you know what it is, right?"
Wei Zetao hesitated. "Yes. Right now, most of our products are based on ideas from a few years ago—your ideas, Mr. Yang. We haven't had any major breakthroughs lately, apart from the plastic bags."
"Exactly. You can't always depend on me," Yang Wendong said. "That's why we need to increase R&D investment."
"Yes," Wei Zetao replied, a little embarrassed. The company still relied too much on the boss's creativity.
Yang Wendong said, "But that kind of investment requires a lot of talent. Are you aware that the government is about to establish a new university?"
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