Chapter 427: A New Venture for Watsons
Zhou Haoran chuckled and said, "That strategy really makes sense. If our sugar refining operations grow large enough, maybe one day we can implement something similar here in Hong Kong."
"The main client base for sugar refining will be beverage companies, but transporting beverages is expensive. It's hard to centralize production," Yang Wendong shook his head. "In the end, sugar refineries will serve countries that either can't produce sugar themselves or that have major shortages.
That kind of competition comes down to raw cost control. We do have our own shipping, so we have a slight edge—but compared to Southeast Asian sugar producers, we're not in a great position. So, to gain a competitive advantage, we either need to refine sugar extremely well, or build a recognizable brand. After all, regular consumers buy sugar from supermarkets, corner stores, or wet markets."
"Got it. We'll need to work on both fronts—get the product right, then build a brand with strong marketing," Zhou Haoran nodded.
Sugar was a basic commodity, not something that carried big profit margins like daily-use consumer products. Under normal circumstances, sugar from different sources was more or less the same.
Yang Wendong continued, "Changxing Industries already has a fully developed plastic packaging solution. Talk to Wei Zetao and have him handle your packaging. As for marketing, reach out to TVB. They've got ad slots available right now.
Let's start selling our own branded sugar domestically and compete with Taikoo. Consider it a learning experience. Once we gain a foothold in Hong Kong, we'll move on to Taiwan and Japan."
"Understood. It'll come down to who can control costs better," Zhou Haoran agreed.
"That's right. This is the first time Changxing Group is engaging in a true head-on competition. I'm curious to see whether we can pull it off," Yang Wendong added.
Many of Changxing Group's earlier products had unique advantages—creative concepts, innovation, or exclusive access. But the sugar business had none of that. This was pure commerce, grounded in cost, distribution, and execution.
Of course, having your own sales channels, media contacts, and deep financial resources was still an advantage—but business is always about leveraging every edge you have. No one plays "fair."
"Understood. I'll do everything I can to develop the sugar business," Zhou Haoran said seriously, feeling a growing sense of pressure—but that was just how business worked.
Yang Wendong continued, "If you can achieve solid results across Asia, we can consider purchasing sugarcane or sugar beet farms later. Only when we control the agricultural source can we truly dominate the market."
In agriculture, land was everything. Without it, you were just a trading company at best. But success had to be built step by step. First you gained traction in trade, then expanded upstream into production—just like in manufacturing. It was a universal law of business.
"Thank you, Mr. Yang," Zhou Haoran said with a smile.
The most profitable model was always full-chain integration. At present, only the plastics division within Changxing Group had achieved that. But based on Yang Wendong's plans, multiple industries would follow the same path—so long as results proved promising.
"Alright. That's all for sugar refining. What about beverages? I know Pepsi's doing well. What about our herbal tea?" Yang Wendong asked.
"Our herbal tea is selling decently in Hong Kong, Taiwan, and parts of Southeast Asia," Zhou Haoran replied. "During summer, daily sales reach about 80,000 bottles. But now that it's not so hot, demand has dropped. Hong Kong doesn't get cold, but the thirst for herbal tea still declines.
Before next summer, I plan to push into the Japanese market and hire a local celebrity to endorse it. We're currently negotiating with several entertainment companies over there."
"Hmm. We're already targeting the premium segment, so selling 80,000 bottles per day in places like Taiwan and Hong Kong is already solid," Yang Wendong nodded. "The Japanese market should be even stronger—there are more people. But don't they already have similar products?"
Herbal tea wasn't unique to Hong Kong. In fact, many parts of Asia had tea-based drink cultures.
"Yes, Japan has their own version—mostly oolong tea," Zhou Haoran explained. "But their tea is more traditional in flavor—bitter, no sweetness. Ours is sweet, which makes it a completely different experience."
"That's great. I still believe that at the end of the day, everyone loves sweet drinks," Yang Wendong said with a smile. "In that case, I think our herbal tea has massive potential in Japan."
Sugar activated neural responses and gave the brain pleasure. That was evolutionary biology at work. All living creatures needed energy to survive, and over millions of years of evolution, our taste buds had been programmed to crave sugary foods as a reward.
People who avoided sugary drinks usually did so through willpower. If sugar didn't harm the body, almost no one would resist it. Of course, those who were sick of soda after drinking too much were a separate matter.
"Exactly. The Japanese actually love sugar," Zhou Haoran added. "They're one of the world's largest sugar importers."
"Then we definitely need to make money from them," Yang Wendong said. "Over the past few years, we've bought quite a few ships from Japan. Time to claw some of that back by tapping into other segments of their economy."
Changxing Group's main business model was exporting goods to make money from overseas markets. Japan was an exception—because of their advanced shipbuilding, Changxing had a trade deficit with them. But there was no helping that—Japanese ships offered the best value.
"Understood. I'll do everything I can to expand into Japan," Zhou Haoran said with determination.
Yang Wendong nodded, then asked, "Aside from sugar and beverages, Watsons also deals in pharmaceuticals and cosmetics. Those two divisions haven't seen much development in recent years. Got any ideas?"
When Watsons was first acquired, its core businesses were pharmacy, beverages, and cosmetics. But in recent years, only the beverage side had received focused investment.
Yet in his past life, Watsons under Li Ka-shing had become one of the world's top cosmetic retail chains. So Yang Wendong had no intention of giving up on that sector—especially since ethnic Chinese brands were nearly nonexistent in the global cosmetics space. If he could take control of the retail terminal, perhaps he could change that landscape.
Zhou Haoran responded, "Those two segments have been operating as usual, but development is slow. Both rely heavily on store networks, and the company hasn't allocated much capital toward them."
"Fair enough. Your budget is already stretched thin with beverage and sugar operations," Yang Wendong acknowledged. "In that case, I'll give you about a year to research Hong Kong's demographics in detail and select the best locations.
Once the timing is right, I'll have Changxing Real Estate begin large-scale purchases of commercial retail space. But it'll be targeted—we'll prioritize the sites you've identified."
This was a clear signal: Yang Wendong was preparing to re-enter the pharmaceutical and cosmetics markets through a large-scale, real estate-backed expansion strategy—laying the foundation for Watsons' next phase of development.
Even if property prices were to collapse in 1967, and even though Yang Wendong had already prepared the necessary funds in advance, it didn't mean he would start acquiring real estate blindly. Random acquisitions would still be profitable, of course—but targeted acquisitions would be just as lucrative, if not more, and would also benefit his various business sectors in the future.
"Alright, I'll lock in the best locations," Zhou Haoran said, inwardly delighted. He was well aware of Yang Wendong's approach to real estate investment: buy low, sell high—with purpose.
Yang Wendong added, "Once the group starts putting more capital into overseas ventures, we'll also begin international expansion, helping Watsons establish a foothold in the global cosmetics retail market.
As for the pharmacy side of things, it'll be a bit trickier. Watsons' strength lies in traditional Chinese medicine, which isn't recognized in many countries. The legal framework abroad is vague at best. If you want to expand Watsons' pharmacies internationally, it'll have to be through Western medicine channels."
While Yang Wendong personally believed in Chinese medicine to some extent—especially for long-term health and physical maintenance—the challenge lay in its reliance on individual experience and the "one illness, one treatment" approach. This made it virtually impossible to standardize or scale. According to the logic of modern economic development, any product or service that couldn't be systematized would eventually be marginalized. Even in mainland China during his previous life, the trend was moving in that direction.
The core issue was that it was simply too difficult to train competent Chinese medicine practitioners.
"Setting up a Western pharmacy chain is also hard," Zhou Haoran noted. "A lot of countries have strict legal requirements, and the regulations vary drastically from one region to another. From a capital expansion standpoint, running pharmacies isn't really cost-effective."
"That's true," Yang Wendong nodded.
In his previous life, most large-scale pharmacy chains—whether in China or abroad—only succeeded through strong government connections. And even then, they rarely expanded beyond their home turf. Once they tried to go global, they almost always failed.
In Hong Kong, his group had enough influence. Overseas? Not so much. Even if he had a bit of clout abroad, it wasn't worth getting involved in such a high-risk industry.
Zhou Haoran added, "However, Mr. Yang, I do have another idea. Though it does carry some risk."
Yang Wendong raised an eyebrow. "You're not thinking of getting into pharmaceuticals, are you? That industry might've been manageable back in the day, but now it's practically off-limits."
In earlier years, Watsons had manufactured and sold its own medicines. That was acceptable during times of poverty, when most people couldn't afford hospital visits. But as economies grew and legal frameworks matured, the pharmaceutical industry became one of the most regulated sectors—on par with aerospace, automobiles, and semiconductors. In the end, only a handful of global players managed to survive.
"No, no," Zhou Haoran quickly clarified. "I know pharma is nearly impossible to break into. And even our traditional Chinese remedies, though effective, can't be patented. What I'm talking about is the medical device industry."
"Medical devices?" Yang Wendong thought for a moment. "I remember there are some companies in Hong Kong doing that."
"Yes," Zhou Haoran replied. "In Hong Kong, some manufacturers make stretchers, scalpels, tweezers, forceps—these products are actually extensions of the local metalworking industry.
Back when plastic manufacturing replaced a lot of metal household goods, many metalworking factories collapsed. But a few managed to pivot, shifting into simple medical device production."
"That's actually a smart pivot," Yang Wendong nodded. "A small industrial upgrade of sorts. But you're not saying you want to start making scalpels and tweezers, are you? We don't have any competitive edge there."
There were countless ways to make money, and no company—or even country—could do everything. You should only dive into sectors that align with your strengths. If it doesn't fit, no matter how profitable, you shouldn't blindly jump in.
Zhou Haoran laughed. "Of course not. What I'm thinking is more targeted—devices used for wound care. Things like bandages, or the adhesive bandages everyone uses at home."
"You mean taking advantage of Changxing Industries' existing adhesives business?" Yang Wendong immediately understood.
Sticky notes were one of the earliest products in the Changxing Group, and their development marked the beginning of forward integration. The core of that product was glue and paper. Among them, glue was the first industry in which Yang Wendong had invested to build a factory in Hong Kong.
Over the years, Changxing's adhesives division had grown significantly. Besides supplying glue for sticky notes, it also provided adhesives to 3M's massive tape factory in Hong Kong and produced various types of glue for export. By now, the Tuen Mun facility was one of the largest local employers, supporting nearly a thousand jobs. But since the product wasn't consumer-facing, it had a very low public profile.
"Yes," Zhou Haoran continued. "I visited the Tuen Mun adhesives factory and found out that they've invested heavily in R&D and patents over the years. They've also developed the ability to produce basic medical-grade adhesives. In fact, they've been supplying some Japanese medical equipment companies for the past two years.
Given that, we're fully capable of producing bandages ourselves. The raw materials are just gauze and cotton fabric—easy to source."
"Getting started is easy," Yang Wendong nodded. "But the real challenge is distribution."
A lot of products were easy to make. Small factories could churn them out without issue. But without distribution channels, it was all meaningless.
Zhou Haoran replied, "Actually, in South Asia, the moment we can produce, we'll have more orders than we can handle."
"You mean Vietnam?" Yang Wendong asked, catching on immediately.
In the 1960s, Asia was a hotbed of activity. The Americans were deeply embroiled in conflict with "the monkeys," and though it wasn't as large-scale as the Korean War a decade prior, it was much longer—and far more draining for the U.S. This chaos opened up major opportunities for surrounding Asian countries.
"Yes," Zhou Haoran said. "In wartime, the demand for medical supplies skyrockets. If we can seize this opportunity, we won't have to worry about sales. And if we establish ourselves now, even after the war ends, we'll have a solid foothold.
This could be Watsons' once-in-a-lifetime chance to enter the medical field. Otherwise, we'll be stuck selling medicine in Hong Kong forever."
"Alright then. Let's start with basic wound care products like bandages," Yang Wendong said after some thought. "Once we're more capable, we can expand into other areas. Medical devices are a massive market."
Truthfully, he'd never planned on entering the medical device field. But as a conglomerate grew, its subsidiaries would naturally look to branch out. That was how large companies operated. For example, in his previous life, Juhuasuan had started as a side project by a few employees at Alibaba, and after proving itself, it gained the backing of the larger group.
The same pattern would apply to Changxing Group. Yang Wendong would oversee the core industries himself, but when it came to peripheral opportunities, as long as his subordinates were competent and the industry didn't pose clear risks—he wasn't going to stand in their way.
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