Chapter 392: External Revenues and Investment Strategy in Taiwan
Every market has a development process. Take labor conditions, for instance. In his previous life, many people from mainland China often praised the treatment of workers in Europe and the U.S., but in truth, those standards were the result of generations of labor struggle. Combined with the global advantages from industrial disparities, only then could Western countries offer such good living conditions to their workers.
Right now, the Hong Kong film market was still entirely dominated by the film companies and theater chains. Naturally, actors had no right to share in the profits. At best, once they became famous, they could negotiate for higher salaries or better contract terms—certainly not as stingy as Shaw Brothers, but still far from generous.
If anyone wanted better treatment, they'd have to earn it. If someone could rise to become a sensation across all of Asia, any film company would be willing to offer more generous terms and a share in the profits. The same would be true for Changxing Film Company.
"Understood, Mr. Yang," Zou Wenhuai nodded.
Yang Wendong continued, "Since we're on the topic of Jin Yong's novels, there's one more thing. TVB is set to launch this summer, and we're planning to start with a television series adaptation of The Legend of the Condor Heroes. I'll need your full cooperation on this."
"No problem at all," Zou Wenhuai agreed immediately.
All the companies under the Changxing Group had an obligation to support each other, especially when the boss had personally issued the order. And this kind of support wasn't free—the other side would still pay according to market terms.
"Good," Yang Wendong nodded, then asked, "How about the overseas box office performance?"
At any point in history, the majority of profits for Hong Kong films came from overseas markets. In the 1990s, when Southeast Asia was taken over by Hollywood blockbusters, combined with policy restrictions and the failure to seize the mainland China market, Hong Kong films essentially collapsed.
Zou Wenhuai replied, "As for overseas revenue, I've already been negotiating with foreign distributors. The deals aren't finalized yet, but I estimate the overseas box office for these five films will total about one million Hong Kong dollars."
"A million?" Yang Wendong chuckled. "That's not bad at all—that's pure profit, too."
"Yes, and there's more good news," Zou Wenhuai added. "Because our earlier films did quite well in the Southeast Asian market, we now have a track record. Going forward, it'll be much easier to sell overseas distribution rights."
Yang Wendong then asked, "What about the star development program?"
While Southeast Asian cinemas might recognize film companies, the true draw was always the stars. Once an actor gained fame, they could draw local audiences to the theaters. And regardless of anything else, consistent box office success was the only true guarantee of overseas revenue.
Moreover, his manufacturing businesses were still focused on consumer goods. Most of the products were meant for everyday people, and Southeast Asia represented a huge potential market. If his company's actors had strong influence in the region, it could bring added value to his core industries as well.
Zou Wenhuai replied, "I have an actor in mind—Wang Yu. He's well-trained in martial arts, and his fight scenes have a very authentic feel. He's already built some recognition in both Hong Kong and Southeast Asia. A lot of people enjoy watching his action scenes.
"So I'm planning to make him a focal point, have him star in more films to build his reputation. Once there's a strong foundation, we can also have Changxing Media run additional promotional campaigns."
"Alright, give it a shot then," Yang Wendong nodded his approval.
Becoming a celebrity was about 30% talent and 70% capital. It was the capital that really propelled someone to stardom. Even in the age of social media, only the music industry might sometimes see talent go viral independently.
Of course, the celebrity still had to be competent. Capital wasn't stupid—it wouldn't invest in someone with no potential.
"Understood," said Zou Wenhuai.
Yang Wendong continued, "And how's the construction going at the film city?"
Zou Wenhuai replied, "Everything's progressing smoothly. We've hired several teams to work simultaneously. It's not a complex structure overall, but the sections that replicate ancient architecture require more time and effort in decoration.
"Some parts should be usable by May, while others might need until August or September."
"Not bad. That's a pretty good pace," Yang Wendong said with a smile. "Once the film city is complete, your shooting costs will drop even more, and production speed will increase. That means your filmmaking efficiency should go up too."
Though they were aiming for quality productions, quantity couldn't be ignored either. Unlike mainland China, where there were countless production companies and cinemas, the number of release slots per year was limited. That market had to focus on high-quality, high-impact films.
But Hong Kong was different. There were only a few film companies here. Often, cinemas would have nothing new to show and had to replay old films. Outside of the summer and New Year seasons, the rest of the year needed a strategy of volume.
Different markets required different products and services. Of course, for international releases, the company would still rely on high-quality films—nobody in Southeast Asia would pay for trash. It was about balancing quality and quantity. Even if they couldn't have both perfectly, getting 70% of each would be enough.
"Don't worry, Mr. Yang, I understand," said Zou Wenhuai.
Yang Wendong added, "One more thing. In a few days, you'll come with me to Taiwan. One of my partners there is planning to invest in land for building theaters, but he doesn't know how to handle site selection or operations. I need you to assist and also help hire a local manager."
"Building theater chains in Taiwan? How many?" Zou Wenhuai asked excitedly.
Back in the early days, Yang Wendong had mentioned that the group would eventually invest in overseas theater chains. Zou Wenhuai assumed it would take a few years before that plan materialized. He didn't expect it to happen just six months later.
Yang Wendong grinned. "There's no real limit on the number. Build as many as you see fit—focus on cities, industrial zones, or any area with a large population and decent economic activity. If a location looks good, build one there—I have no objection."
Right now, real estate investments in Hong Kong were about to hit the brakes. Yang Wendong was even preparing to sell off some assets to cash out. Even if he managed to sell this year, next year wouldn't be the right time to reinvest. He had to wait until 1967 for the bottom.
In the meantime, he couldn't just let his funds sit in the bank collecting interest. Investing in Taiwan's real estate—especially with a focus on future returns—was a smart move. It also helped expand his group's other businesses.
While Taiwan's population was far smaller than Southeast Asia's, in every era, it had been Hong Kong cinema's most lucrative overseas market. That was because it was entirely Han Chinese, and the population had a high level of cultural acceptance for Hong Kong films. Once investment in cinemas started yielding stable returns, it would drive more aggressive content creation.
"Excellent. I'm ready to leave anytime," said Zou Wenhuai, visibly excited.
"Good. Someone will notify you in a few days," Yang Wendong nodded.
Of course, his trip to Taiwan wasn't just for this minor task. Since he'd be going anyway, he needed to check on several of his other businesses that involved Taiwan. Some important decisions had to be made personally.
March 6:
Yang Wendong traveled to Taiwan by boat, accompanied by Zou Wenhuai, Wei Zetao, and Zheng Zhijie. They arrived directly at the port of Taipei.
"Mr. Yang, Mr. Wei, Mr. Zheng," the person who had come to greet them was none other than Wang Yongqing, who shook each of their hands warmly as he greeted them.
Yang Wendong introduced, "Mr. Wang, this is Zou Wenhuai, the person in charge of Changxing Film Company."
"Mr. Zou, nice to meet you," Wang Yongqing also extended a handshake with a smile. "Hong Kong films are incredibly popular here in Taiwan. I watched several last year, including your production of The Legend of the Condor Heroes. It was very well done."
"Thank you for the compliment, Mr. Wang," Zou Wenhuai replied with a smile. "I also hope we can continue to produce more high-quality films so Chinese people all over the world can enjoy excellent works of art."
"Haha, wonderful," Wang Yongqing laughed. "Let's discuss the theater investment matter together in a bit."
"Sure," Zou Wenhuai agreed.
He already knew that Wang Yongqing was Changxing Group's strategic partner in Taiwan and one of the island's wealthiest and most influential individuals. If Yang Wendong hadn't personally instructed him to assist with this theater business, it was likely Wang Yongqing wouldn't have even entertained the idea, as it was a relatively small operation compared to his other enterprises.
Yang Wendong chuckled, "Yes, let's take a look together later."
"Business can wait until after we've eaten," Wang Yongqing added. "Mr. Yang, I've already arranged a banquet. Let's enjoy the meal first, and then we can talk business. How does that sound?"
"Sounds good," Yang Wendong nodded in agreement.
After enjoying a large seafood feast featuring local Taiwanese delicacies, the group headed to the city center of Taipei. Wang Yongqing pointed to a small general store ahead of them and said, "Mr. Yang, Mr. Zou, what do you think of this location?"
"Looks pretty good. There's quite a bit of foot traffic in the area," Yang Wendong observed after scanning the surroundings. This spot was clearly part of a commercial district.
Wang Yongqing smiled. "That shop was originally built in the 1930s. It's scheduled for demolition. I plan to purchase the land and build a movie theater here. It will serve as the flagship cinema for our operations in Taiwan. What do you think?"
"Sounds like a good plan. The area's large enough too," Yang Wendong said, giving the building another look. "What's the asking price here?"
Wang Yongqing considered for a moment and replied, "The total area is around 600 square meters. If we price it in Hong Kong dollars, it's about HK$500,000."
"HK$500,000? That's not bad at all," Yang Wendong nodded.
In Hong Kong right now, let alone Central or Causeway Bay—even in the center of towns on the Kowloon Peninsula, properties of similar size and with land included would cost over HK$2 million.
Although Taipei's economy wasn't as developed as Hong Kong's, it was still far stronger than many smaller towns in the region. Real estate in Taiwan hadn't yet experienced explosive growth. And since Taiwan had far more land than Hong Kong, the cost of land remained quite low.
Wang Yongqing added, "Exactly. Not too expensive. But constructing the theater and importing all the necessary equipment will likely require an equivalent investment."
"What about other locations? Roughly how much would one theater cost?" Yang Wendong asked.
Wang Yongqing replied, "It's much cheaper elsewhere. Land is more affordable, and you can scale back on equipment and interior decoration. A cinema could be built for around HK$300,000–500,000. Less than half of what this flagship one would cost.
"But Mr. Yang, Mr. Zou, you can't just compare investment sizes and assume Taiwan is cheaper. Ticket prices here are also lower than in Hong Kong, so it may actually take longer to recoup the costs."
"That's not a problem," Yang Wendong said with a smile. "What I care more about is controlling the market."
Whether the theaters made money or not wasn't the issue—future land appreciation alone would be enough to justify the investment.
It was just like in traditional industry—gradually building a vertically integrated chain. From production studios to film companies to theater chains, everything needed to be under the same umbrella. That way, it didn't matter which segment made money and which didn't—it was just a matter of shifting value from one pocket to another. Decisions could then be based purely on business strategy or tax planning.
"Great. Then I have no issues on my end," Wang Yongqing said with a cheerful nod.
"Thank you, Mr. Wang," Yang Wendong said before turning to Zou Wenhuai. "Mr. Zou, coordinate this on your side. Start by deciding which cities and regions need theaters. Then, based on the local population and economy, determine how many should be built in each area.
"As for the specific locations, we don't need to finalize those just yet. That can be sorted out later."
"Understood. I'll get on it," Zou Wenhuai nodded. "In the next few days, I'll visit some friends in the film industry here in Taiwan. I can ask for their opinions as well."
"These friends of yours—they run theater chains too, right?" Yang Wendong asked with a grin.
"Yes, I met them back when I was working at Shaw Brothers. But they don't know our group is planning to invest in theaters in Taiwan. I won't be revealing anything either. After all, technically, we're not the ones investing."
"Haha, right. It's Mr. Wang who's making the investment," Yang Wendong laughed.
Taiwan's current laws and regulations prohibited direct foreign investment in the service and real estate sectors. That meant Yang Wendong couldn't invest openly. Instead, he had to operate indirectly through Wang Yongqing's name.
But there were guarantees in place—namely contractual protections across other business sectors. Besides, Yang Wendong was already a major shareholder and customer in Wang Yongqing's core businesses. The risk of a deliberate breach of agreement was low.
Zou Wenhuai soon left to get to work, knowing full well that Yang Wendong hadn't come to Taiwan just to handle cinema investments. That was merely a side project. Changxing Group had more important things to take care of here.
Yang Wendong and Wang Yongqing then headed to another part of Taipei, arriving in front of a large supermarket—Taiwan's very first Carrefour location.
Looking at the crowds coming in and out, Yang Wendong smiled and said, "Business seems to be booming here."
"Yes, I didn't expect it to take off like this either," Wang Yongqing said with some amazement. "Honestly, I never used to shop for groceries myself. But after this place opened and drew such large crowds, I looked into it and realized everything is significantly cheaper than in other stores."
Yang Wendong turned to Liu Huayu and asked, "Was the cost of living in Taiwan higher than Hong Kong before this?"
Liu Huayu nodded. "Yes, and I was surprised too. With the exception of basic grains, pretty much all industrial goods are more expensive than in Hong Kong.
"That's largely because Hong Kong's industrial base is much stronger. Plus, Hong Kong is a trade hub, so the transportation costs for foreign goods are much lower. Not to mention, we also have access to a lot of inexpensive supplies from the mainland."
"So, in some Southeast Asian countries—despite being poorer—are prices also very high?" Yang Wendong asked, continuing his line of inquiry.
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