Chapter 390: Preparing for the Coming Real Estate Crisis
"Changxing Shipping's vessels are all large-scale. They won't be suitable for transporting this," Yang Wendong said after thinking it through. "We'll have to get them to purchase a small tanker. Large ships can't dock at small ports."
Even used second-hand cargo ships were too large for this task. The shipment volume of naphtha would be small at first, and using big ships for that was a waste. More critically, they couldn't even dock at the smaller harbors near where the future plastic refining factory would be located. Infrastructure for that would have to be built from scratch.
Wei Zetao nodded. "Exactly. Japan has small coastal tankers used for short-range petroleum transport. The cost isn't too high—about a hundred thousand U.S. dollars. But in Hong Kong, we'd also need to build a small harbor near the future plant. That would make it easier to receive naphtha and later to export the refined plastics. Altogether, we're looking at an investment of at least one million U.S. dollars."
"Yeah, but there's no helping it. Unlike Taiwan, Hong Kong has no existing petrochemical infrastructure. We'll have to fund it ourselves," Yang Wendong agreed. "Still, if we don't at least try, we'll never know if it can be done. So we must invest."
Plastics had already become one of Changxing Industries' core components—if not the most important one. And in the future, as he entered the home appliance industry, plastic would be used in large quantities. Hong Kong's economic development would follow the same pattern.
Even though he had invested in Formosa Plastics, it didn't mean he couldn't try doing it himself. After all, he'd likely never secure controlling interest in Formosa. Once they grew into a top-tier Asian company, they'd no longer be under his influence. A contingency plan was essential.
If it turned out Hong Kong wasn't suitable for petrochemical production, he'd pivot and invest in Singapore. That country had already proven its capacity for this industry in his previous life. At the very least, it was a viable option.
"Alright, I'll select a site and report back once we have detailed figures," Wei Zetao said happily.
For any project involving a million-dollar investment, only Yang Wendong could give the final approval.
Yang Wendong added, "When you choose the site, keep future expansion in mind. Don't model it after other factories that hoard land.
It's okay to choose a remote location. This industry is inherently polluting. We can't risk harming surrounding communities."
Land speculation could be lucrative, but for factories that had real environmental impact, that shouldn't be the objective. Even if land values rose, the cost of later cleanup could be enormous. It simply wasn't worth the trouble. If he really wanted to profit off land, he could just wait two years and buy town center property—or build another breeding farm. Simpler investments, better returns.
That said, if the petrochemical industry scaled up and naturally formed an industrial zone, the value of surrounding land would inevitably increase. In that case, any future relocation would leave behind valuable land. But that was beyond his control. He certainly wouldn't intentionally hinder economic growth for profit.
Wei Zetao thought for a moment and said, "Then how about Tsing Yi Island? Mobil Oil has already relocated its storage tanks there, and I've heard that the government is also planning to move China Light & Power's power plant to the same area.
I suspect the government wants to turn it into Hong Kong's heavy industry zone. That way, necessary industries can grow without affecting residential areas—and it would help stimulate the local economy."
"Tsing Yi Island? That's fine," Yang Wendong nodded after some thought.
In his past life, Tsing Yi Island had indeed become a hub for heavy industry—at least relative to the rest of Hong Kong. Compared to other countries, it was minor, but for Hong Kong, it was significant.
And that made sense. Heavy industry could only thrive with government support. Whether in mainland China, Japan, South Korea, or Singapore, all had developed their heavy industries through state-backed initiatives or encouragement of large conglomerates.
Hong Kong, by contrast, had always favored laissez-faire capitalism. Except for essentials like power generation or fuel supply, the government didn't push heavy industry.
This gave Hong Kong a major disadvantage compared to the other "Four Asian Tigers." When the time came for industrial upgrading, the lack of a heavy industry foundation meant that its light industries were little more than castles in the air. Once labor or land costs rose, they'd collapse. Even without mainland China's reforms, Hong Kong's industrial fate might have been the same.
"Alright, I'll start gathering data immediately," Wei Zetao said, visibly excited.
After Wei Zetao left, Yang Wendong turned to Zheng Zhijie and asked, "How many residential or commercial projects do we still have in the pipeline?"
"Seven in total," Zheng Zhijie replied. "Five residential and two small commercial buildings. We're expecting to start selling pre-construction units in the second half of the year."
"Alright. From today onward, stop all new land acquisitions. Put a full freeze on all new projects across Changxing Real Estate," Yang Wendong instructed.
Hong Kong's laws around pre-construction sales were not like mainland China's future policies. Developers couldn't start selling the moment they acquired land—even before laying the foundation. In Hong Kong, sales could only begin within the last eight months of a project's completion. That meant buyers could see physical progress, and the window for risk was small. It dramatically reduced the chances of projects being abandoned midway.
It was a reasonable compromise—allowing developers to recover capital early while also protecting buyers and minimizing systemic risk.
In his past life, if the mainland had implemented similar policies, real estate giants like Evergrande might not have ended up with RMB 2 trillion in debt. Millions of people wouldn't have bought unfinished homes and had their lives ruined.
Knowing the real estate market would falter in early 1965, Yang Wendong had to halt all activity immediately—at the start of 1964. There was no point in trying to squeeze out a last bit of profit. If his own actions triggered the crisis early, it would backfire badly.
Of course, it was also possible the crash would be delayed. But one couldn't bet on that.
"Understood," Zheng Zhijie replied quickly. Everyone already knew Yang Wendong was bearish on Hong Kong's property market, and no one dared question his judgment.
Yang Wendong added, "This doesn't apply to Carrefour projects—but even there, be cautious. Unless it's a top-tier location, don't proceed. If you find something promising, let me review it first."
It was all about balance. Carrefour's expansion mattered, but a six-month delay wouldn't kill them. If a truly prime spot became available, Yang Wendong would approve it.
"No problem." Zheng Zhijie paused, then asked, "So should we begin liquidating our current holdings now?"
This step was absolutely necessary. The majority of properties and land held by Changxing Real Estate had been acquired through early-stage loans. That was standard practice in the real estate industry—any company that tried to buy real estate entirely with its own funds would quickly bleed itself dry.
Once a drop in property prices became foreseeable, the only rational strategy was to sell at high prices while the market was still hot. This served two purposes: first, it generated large amounts of cash that could be used later to buy at the bottom; second, it reduced overall debt exposure.
Because once the market began to fall, the high-value assets that had previously been used as collateral would decline in value. To mitigate risk, banks would then either demand repayment or additional collateral. That was the number-one reason many property developers collapsed during crises.
"No need to rush," Yang Wendong said after some thought. "Here's the plan: for now, release news that some of our larger or more valuable properties—excluding those in Central—are available for sale. If buyers show interest, we can negotiate.
For the smaller, more numerous assets, we'll wait until the second half of the year. They're easier to liquidate."
High-value assets took longer to sell and couldn't be offloaded at the last minute. Smaller properties didn't have that issue—but they also couldn't all be dumped at once in the final two to three months. That kind of mass selloff would spook the market and possibly trigger the real estate crisis prematurely—something that would backfire on Yang Wendong.
So: one year for the big ones, half a year for the smaller ones. Give the market time to absorb the inventory—just like selling stock. Don't dump all at once unless you want to crash the price.
"Got it. Understood," Zheng Zhijie said with a nod.
As someone from the industry, he fully grasped what the boss was aiming for. This was, after all, standard operational logic.
Yang Wendong continued, "The same goes for all other subsidiaries. Any property-related purchase under HKD 500,000 that's tied to real business needs can go ahead without approval.
But if the value exceeds HKD 500,000, or if it's not urgently needed, I want to be informed before anything is purchased. I'll give the final go-ahead."
Previously, during the property boom, any project under HKD 2 million that was deemed essential for business was left to the discretion of his managers—with the caveat that the headquarters audit department had to approve it, and the final transaction had to be reported to him at the end of the month.
The goal had been to let his subordinates gradually learn how he thought about such investments. If he said nothing, they could act on their own judgment next time. If he criticized something, they'd be more cautious in the future.
Yes, some of their early decisions might not meet his standards. But the risks were low—these were small deals, and with the market going up, it was hard to actually lose money. More importantly, it helped train his managers to take more initiative and eventually reduce his own workload. Otherwise, if he insisted on micromanaging everything, he'd burn out.
But now that a real estate crisis was looming, the situation had changed. It was time to rein things in.
"Understood. I'll let everyone else know," Zheng Zhijie replied.
Yang Wendong took another sip of tea and continued, "Also, starting this year, I want a comprehensive survey of economic hubs on Hong Kong Island and in Kowloon. Focus on town centers with strong economic activity. I want data on large properties, major land holdings, and other high-quality assets—specifically their square footage, ownership, and operating conditions.
In addition, gather detailed profiles on major British and Chinese companies operating in Hong Kong. I don't need private or personal data—just business operations, debt levels, and real estate holdings. The more accurate, the better."
Zheng Zhijie's eyes lit up. He knew exactly what this was for: Yang Wendong was preparing to buy the dip. "Understood. I'll see what I can gather from the Trade and Industry Department and the Lands Department."
"Wouldn't this kind of data be considered classified? Could it get us in trouble asking the government for it?" Yang Wendong asked.
While the underworld in Hong Kong was chaotic, things were more orderly at the higher levels—especially among the Chinese elite. They couldn't afford to leave any openings for legal liability. Even if they wanted to play some tricks, they'd do it through legal grey areas, never crossing the line outright.
As a time traveler, Yang Wendong had to be even more cautious. His long-term vision—and his public reputation—meant he needed to avoid scandal at all costs. Unless absolutely necessary, everything should be handled legally—even if it meant paying more.
"If it's just surface-level data, it's not illegal," Zheng Zhijie reassured him. "Some journalists with connections can also dig this stuff up.
The only catch is, the information can't be taken offsite. We'd have to read it in person. But I can send in more people to rotate shifts. Worst case, we rely on memory and take notes after the fact. That way, nothing is technically in violation."
"That's fine. Just remember the important parts. I don't need everything—start by surveying the core areas like Central and Causeway Bay," Yang Wendong said. "Oh, and Oriental Daily has a lot of reporters. Those guys in media tend to have excellent memory."
"Great idea!" Zheng Zhijie laughed. "I'll speak with Mr. Qin about it."
Yang Wendong nodded. "Good. You'll definitely need his help. When it comes to collecting commercial intelligence in Hong Kong, journalists are the best. And it just so happens that he's already working on some business rankings."
"Rankings?" Zheng Zhijie caught the hint. "Publishing those might offend quite a few people, no?"
"Yes, that's why I'm not planning to release anything right now," Yang Wendong said. "We'll start slowly, with the entertainment industry—rankings for celebrities, music, movie box office, TV ratings, variety shows, and so on. Then later, if there's a good opportunity, we can gradually expand."
Back in 1961, Qin Zhiye had proposed this idea to Yang Wendong. It seemed promising, but after asking around, they found that most tycoons were against it. The idea was shelved.
Even now, as one of Hong Kong's wealthiest and most influential figures, Yang Wendong knew it wasn't worth offending half the business elite just to boost newspaper sales.
But now that Hong Kong's economy was growing rapidly—box office numbers rising, and TVB about to launch—a ranking system for entertainment was finally feasible. It would help the public discover quality content more easily and give celebrities greater exposure, which they would actually welcome.
As for the business world, that would come later. They could start with public companies—since their financial data was already disclosed.
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