Chapter 394: Entering the Financial Sector
"Three million U.S. dollars? What do you need that much money for?" Yang Wendong asked with a puzzled expression. "Don't tell me you're planning to expand production again at a time like this?"
Wang Yongqing nodded and replied, "Yes. I still believe the Asian economy won't be significantly impacted by a minor global financial crisis. Global trade is now inevitable, and Asia—places like Japan, parts of Southeast Asia, Taiwan, and Hong Kong—will become the ideal base for receiving low-to-mid-end manufacturing industries from Europe and America.
"After all, there are two billion people in Asia. Once economic development picks up, even if we don't consider anything else, just imagine every household buying a few plastic basins and buckets—that alone creates astronomical demand. Ten years ago, didn't the plastic industry in Hong Kong explode for that very reason? In the future, a billion people in Southeast Asia are bound to go through the same process."
Yang Wendong replied, "That sounds reasonable. But aren't you worried that if you invest too aggressively and the economy doesn't recover in time, you'll go bankrupt?"
Industries, much like real estate, had their peaks and troughs. If your forecasts were off, you could easily crash and burn. Business was always a gamble to some degree.
Wang Yongqing continued, "That's why this three million dollars isn't going toward expanding plastic production equipment. It's for acquiring high-precision chemical manufacturing equipment necessary for plastic production. Equipment for making things like acrylics and their esters, fluorochlorinated compounds, acrylonitrile, and so on.
"Taiwan's chemical industry has developed decently over the years, but compared to Japan and the West, it's still lacking. Many raw chemical materials still have to be imported. If I can take advantage of current global conditions to acquire this equipment while it's cheap, not only will we no longer need to import, we could start exporting materials ourselves. It would kill two birds with one stone."
"So you're talking about expanding upstream along the supply chain?" Yang Wendong smiled. He didn't have expertise in chemical materials, but he understood the general idea.
What Wang Yongqing meant was clear: similar to how Changxing Industrial had grown, once an industry reached a certain scale, you had to push upstream. If you didn't control your supply chain, you could never rise to the level of a global industry leader.
Wang Yongqing chuckled and said, "Exactly. Your Changxing Industrial has been doing this for years already. From glue to paper, even investing in Formosa Plastics—that's all part of that strategy.
"Naturally, I'm not satisfied with Formosa Plastics just being a processor. We must gradually integrate upstream and downstream. Downstream is complex—there are too many kinds of plastic products, and I'm not sure where to start. So I'm starting from the upstream.
"The base raw material for plastic is naphtha, which I can't produce yet. But the chemical components derived from it are crucial and account for a significant portion of costs. Plus, prices for these chemicals fluctuate wildly. If I can produce them myself, cost control becomes much easier."
"Expanding into the petrochemical industry, huh? That's not a bad idea," Yang Wendong nodded.
It was the kind of industry he couldn't build easily in Hong Kong. If it involved toxic chemicals, he wouldn't even dare try—it was too risky. When it came to safety, he was willing to spend extra. He still remembered the horrifying gas leak disaster in India during the 1980s—one of the worst in human history.
But letting Wang Yongqing handle it was fine. In fact, Yang Wendong was pretty sure Wang had pursued similar industries in the original timeline. After all, without upstream and downstream integration, there was no way Formosa Plastics could have become a world-class enterprise. Perhaps now, due to his own early and significant investments, Wang was simply accelerating his plans.
Wang Yongqing added, "Mr. Yang, you're also planning to invest in plastics in Hong Kong, aren't you? Once I've succeeded with the chemical investment here, it'll make things much easier for you as well."
"Right," Yang Wendong said with a smile. "So this benefits me too."
There was no hiding the fact that he was planning to go into plastics. First of all, a petrochemical project involving pollutants would need to be cleared with the Hong Kong government. At the very least, he'd need verbal approval before approaching overseas equipment manufacturers. And once the government was informed, the news would spread among Hong Kong's business elite.
Even if the authorities kept it secret, he would still have to consult equipment manufacturers, engineers, environmental consultants… and eventually, the factory would physically exist. There was no point trying to keep it under wraps.
This wasn't a top-secret military plant. So rather than playing games, Yang Wendong had discussed the matter with Wang Yongqing early on. And Wang, being no fool, understood he couldn't stop a major shareholder and customer from investing where he pleased. Instead, he chose to offer advice and cooperate proactively.
Wang Yongqing nodded and said, "Mutual benefit, Mr. Yang. Whether it's Hong Kong or Taiwan, trying to build a full petrochemical supply chain centered around plastics is incredibly difficult if done alone. But we can work together.
"Taiwan has the talent, land, and government policies. Hong Kong has the capital and market. And the two places are close enough that we can use small ships to transport goods. Together, we can build a full-scale industrial base."
"Mr. Wang, I have to say—I'm impressed. That's a bold vision," Yang Wendong said, clearly surprised. Then he asked, "But aren't you worried I'll build out my own operations and stop working with you?"
Currently, Changxing Industrial was one of Formosa Plastics' biggest clients. Any supplier would be nervous if their major customer started building its own competing operations.
"Haha, of course I'm worried. I'd be lying if I said I wasn't," Wang Yongqing laughed. "But what can I do with that worry? Mr. Yang, your strategic layout is massive. I'm honestly amazed. So hearing that you want to venture into plastics doesn't surprise me at all.
"In fact, it makes me even more eager to partner with you. Because beyond Changxing Industrial and the Hong Kong market, there's the even bigger overseas market. Like I said yesterday—imagine ten billion Southeast Asians each buying just one plastic basin. And countless piping systems will switch to plastic over time. That's an unimaginably huge market."
"Exactly. Compared to that, Changxing Industrial is just a small piece," Yang Wendong nodded. "Alright then, I think this deal is feasible. Three million dollars is no issue. But I have two conditions."
"Please, go ahead," Wang Yongqing said, delighted.
Yang Wendong said, "First, you'll need to submit a detailed investment plan. Any expense over $5,000 has to be listed for review and approval. And once the funds are in, the use of funds will be monitored."
"Of course. That's only fair," Wang Yongqing agreed immediately. Asking someone for investment or a loan always came with strings attached.
Yang Wendong continued, "Second, 5% of the shares isn't enough. Let's make it 10%. How about that?"
"Ten percent?" Wang Yongqing paused. "Mr. Yang, you already own 20%. With another 10%, your stake will be quite significant."
Yang Wendong smiled and replied, "Mr. Wang, if I'm not mistaken, back when you founded Formosa Plastics—formerly known as Fu Mao—didn't one of your earliest partners hold 45% of the shares?"
Throughout human business history, there have always been tragic figures—those who once held great fortunes but gave them up due to shortsightedness. For example, Richard Li once owned 20% of Tencent stock, but sold it after a fivefold gain, earning just ten million USD. One of the original co-founders of Ele.me gave up his position to prepare for graduate school, missing the explosion of the startup entirely.
Wang Yongqing had someone like that beside him too. When Formosa Plastics was in its most precarious state, this person forced Wang Yongqing to buy back his shares at a low price. Now, he had completely missed the opportunity to create wealth.
"That's different," Wang Yongqing said with a chuckle. "At that time, it wasn't exactly an investment. He was a co-founder."
Yang Wendong nodded. "I understand, but I also have my own requirements. Since we can't finalize anything today, let's wait until I send someone over to negotiate.
There are a lot of details we need to sort out first—such as Formosa Plastics' current valuation, how many shares we're actually trading, our future cooperation plans, and the interest rate for the three million dollars."
"Alright, as long as we have a preliminary understanding," Wang Yongqing replied with a smile. "I'll work on a detailed investment plan and send it to Hong Kong within a week."
"OK," Yang Wendong said simply.
After Wang Yongqing left, Yang Wendong turned to Wei Zetao, who had been silent this whole time, and asked, "Old Wei, what's your take on all this?"
Wei Zetao replied, "If Wang Yongqing really manages to build a complete petrochemical supply chain in Taiwan, that will be tremendously beneficial for us.
In fact, we might even replicate it in Hong Kong one day—as long as he trains the talent."
In many industries, the most critical shortage wasn't capital but people. Without talent, money meant nothing. After all, it wasn't feasible for a Hong Kong company to fill all its junior positions by poaching talent from Japan or the West.
"Exactly," Yang Wendong said. "That way, our core raw material—plastic—will cost even less in the future."
Wei Zetao added, "It seems both we and Wang Yongqing are thinking the same thing. We want to move beyond dependency and control the supply chain ourselves, and he wants to make sure he's not overly reliant on us either."
Yang Wendong nodded. "Right. We're both smart people. It's a mutually beneficial relationship. He wants my financial backing, and I value his industrial capabilities.
That's a good thing. Working with capable people is far more worthwhile. Maybe we won't still be collaborating decades from now, but for the next few years at least, our relationship will be solidly beneficial on both sides."
In human history, many business collaborations began as mutually beneficial arrangements. Take Alibaba, for example: when Yahoo bought in, Jack Ma used their vast capital and resources to grow rapidly, eventually making Alibaba one of the top ten internet companies globally.
But Yahoo became Alibaba's largest shareholder through that deal. Years later, it cost Jack Ma a great deal to buy those shares back. It was a fierce game of strategy. Had Yahoo not declined in power, Jack Ma might never have succeeded.
Now, Wang Yongqing seemed to be playing a similar game—using Yang Wendong's capital to grow Formosa Plastics. But unlike Yahoo, Yang Wendong wasn't someone who could be easily cast aside.
A relationship that balanced competition and interdependence was one of the subtle arts of the business world. In the future, Yang Wendong might encounter similar situations with global giants like Walmart or other top-tier corporations.
And that would be normal. As a transmigrator with the advantage of foresight, Yang Wendong had strong investment capabilities. But those with strong operational capabilities were often of two minds: they wanted to leverage an investor's strength but didn't want to lose control or ownership. It was a fundamental contradiction.
This era was still somewhat manageable. In the internet age, such contradictions would become far more common.
Wei Zetao smiled. "Mr. Yang, the fact that you managed to invest in someone like him speaks volumes about your judgment."
"No point worrying about the future. As long as it benefits us now, we'll support Wang Yongqing. If he grows, we profit as well," Yang Wendong continued. "I'll leave this matter to you. Assemble a team to review Formosa Plastics, examine the materials he provides, and then start negotiations.
The interest rate is less important—but the equity is. He might not agree to 10%, so let's set our minimum at 7.5%."
Early on, it didn't make sense to demand too many shares—doing so would only push someone to restructure or rebrand. But now that Formosa Plastics had grown to a certain scale, that kind of maneuver was no longer viable. At most, Wang Yongqing could shift some profits through clever accounting, but it wouldn't change the fundamentals.
At this stage, Yang Wendong wasn't going to be polite.
Of course, if Wang Yongqing truly proved himself in the future, and could offer other benefits, giving up some of those shares later would simply be a bargaining chip.
"Understood," Wei Zetao nodded. "I'll put together a professional team to handle it."
"I've actually been thinking of something else as well," Yang Wendong added. "Let's discuss it after we return to Hong Kong tomorrow."
The next day, the group wrapped up their week-long trip to Taiwan.
Changxing Group had officially begun the early stages of its investment in Taiwan. However, since Taiwan hadn't opened up its real estate market to foreign investors, it could only serve as a production base and a partial market for certain industries.
March 10
Back in Hong Kong, Yang Wendong summoned Yao Jingyi from headquarters HR, Wei Zetao from Changxing Industrial, and Zheng Zhijie from Changxing Real Estate.
He announced, "I'm planning to establish a financial company of my own."
"A financial company? One focused on investments?" Yao Jingyi asked.
Yang Wendong nodded. "Yes. Up to now, our subsidiaries have each focused on their respective industries. A few acquisitions were handled by them directly—or by me personally.
But now that the group has reached a certain scale, it's time to create a dedicated financial arm for mergers, acquisitions, and investments."
While many people distrusted finance—believing it could destabilize nations—on a personal level, finance was incredibly profitable. And with his golden finger of foresight, Yang Wendong would be a fool not to make use of it. Moreover, profits from finance could be funneled back into real estate and industrial ventures.
Yao Jingyi said, "There are more and more listed companies in Hong Kong these days, and people are starting to get into stock trading. We could definitely participate in that."
Wei Zetao thought for a moment and asked, "Mr. Yang, if we have a financial company, will all equity acquisitions by subsidiaries also go through this new company?"
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