Chapter 426: The Beginning of Controlling Hong Kong’s Manufacturing Industry

Chapter 426: The Beginning of Controlling Hong Kong’s Manufacturing Industry

Chapter 426: The Beginning of Controlling Hong Kong’s Manufacturing Industry

December 12, Christmas Day:
Many British-owned companies in Hong Kong have already taken holidays, but Chinese-owned companies obviously have not. The same is true for Changxing Group, which does not take Western holidays.

Of course, for many Chinese-owned enterprises in Hong Kong, there is no Sunday at all, at most there is the Spring Festival.
This is also the result of the balance between supply and demand of labor. In the 50s, there were more workers than enterprises, and everyone was looking for work, so there was no room for choice.
996? That’s really a blessing. In the early days, most companies used to work 7724/24, starting at am and leaving at pm, seven days a week. Some bosses even locked up the factory and didn’t allow employees to leave. Even so, many people still didn’t have stable jobs and begged the capitalists.

Now, with the development of Hong Kong's industry, the situation in this regard is much better. First, the British Hong Kong government has begun to impose moderate restrictions on capitalists. After all, the polar bear is still there. Second, with more factories, the number of workers has become tight. This is also the benefit of industrialization. Only when the industry is more developed can the workers live a better life. This is true in any society.

Having come to Hong Kong for almost 7 years, Yang Wendong has witnessed such changes with his own eyes and feels that the changes are really fast. Hong Kong has been developing at a very fast speed in recent years, just like the earliest Shenhai City after the mainland's reform and opening up, which had all the favorable conditions.

"Knock, knock, knock~" The knock on the door brought Yang Wendong back to his senses. He turned around and saw Zhou Haoran from Watsons. He smiled and said, "Come in."

Zhou Haoran walked in and said with a smile: "Mr. Yang."

"Well, sit down," Yang Wendong nodded and asked, "Has the second phase of our sugar factory been built?"

The core of any manufacturing industry of Changxing Group is to expand both forward and backward. The back-end sales is under the charge of the big capitalist Yang Wendong, while the improvement of the early industrial chain is the responsibility of each subsidiary.

After forming a strong demand through OEM for Pepsi, Watsons began to enter the sugar industry. This was also a requirement of Pepsi, and they also hoped that costs would be further reduced.

"Yes, we started trial production two days ago. We have confirmed that there are no problems. We will gradually increase production capacity later." Zhou Haoran replied: "Once this phase of the workshop is in production, our sugar production capacity will reach 3 tons per year."

"Okay, this data is very good and can meet Pepsi's requirements." Yang Wendong nodded and said.

3 tons a year, this number may not seem like much, compared to food and the like;

But sugar is different. In the past, the mainland's annual sugar production capacity was only tens of millions of tons. A factory could produce 3 tons a year, which was considered medium-sized. Especially here is Hong Kong, and raw sugar still needs to be completely imported.

Zhou Haoran added: "For now, it is definitely enough, but PepsiCo's production in Southeast Asia has developed very well in the past two years, and our costs are lower than Japan, and the distance is close, so a large number of production orders were given to us.

China Resources is also purchasing sugar from us through a third-party company. Their demand is even greater. If they really give us 1/10 of it, I'm afraid our factory won't be enough."

"This is indeed an opportunity, a good opportunity to expand in the sugar industry." Yang Wendong agreed and said, "Then expand according to demand, but remember, you can't rely entirely on two large factories. It's very dangerous to rely only on core customers. If they don't cooperate, it's all over."

For a long time, Changxing Group has controlled many factories in Hong Kong as a major customer. It can be said that to a certain extent, it controls the fate of these enterprises. Once they are not given orders, they will be seriously damaged at best, or even go bankrupt;

But even if he is a time traveler, it is impossible for his industries to be able to completely control everything. Some industries also rely on other people's industries to survive. This is a similar situation. He also wants to get rid of this passive situation;
This is the case with sugar factories. Although Watsons itself has demand for sugar, the quantity is too small. It mainly relies on orders from PepsiCo. Even the competition for mainland orders is to avoid the risk of relying on only one company. Over-reliance on two companies is also risky. The best model is to have a few large customers plus many small customers.

Enterprise diversification also has many aspects, whether it is suppliers, customers, factories, businesses or other aspects, diversity means low risk.

Zhou Haoran replied: "I understand. I have also contacted distributors in Japan, some countries in the Middle East, India, South Korea, and the United Kingdom, and will start to develop their markets as soon as possible."

"India?" Yang Wendong thought for a moment and said, "It's okay to do business with India, but you must collect the full payment first, otherwise you'll be easily cheated."

The third brother's thoughts were not born in the 21st century in his previous life. It was just that in the pre-Internet era, it was too easy to deceive people. If you didn't have enough experience, you would definitely be deceived. If you were deceived, you could only tell the people around you, and other outsiders would have no way of knowing. This led to countless injustices.
"Full payment?" Zhou Haoran was stunned, and then asked: "Isn't this a bit difficult to trade?"

Yang Wendong shook his head and said, "Don't think too much about this. India often cheats people in trade. Although the person you found may not be like this, I don't want to take the risk.

If he doesn't want to, forget it. I don't do business with India. If he wants to, then he can pay the full amount upfront. After multiple collaborations, we can do the same as in other countries."

"Okay." Zhou Haoran also realized that the boss had made up his mind, and he didn't want to get involved.

Yang Wendong added: "If Pepsi has a lot of orders, will there be enough production lines for cans?"

"We still need to purchase it later." Zhou Haoran said: "Dongsheng has also developed some production line equipment. In this way, except for some core equipment, everything else can be produced in Hong Kong.

This can save a lot of money and time.”

"Dongsheng is really capable." Yang Wendong also praised.

In the past, in the 1970s and 1980s, Dongsheng was not well-known. Perhaps it was because of its emergence, coupled with the support of capital and orders, that it developed and has now become a company specializing in the production of various equipment.

This type of enterprise is also the core of a region's manufacturing industry. Otherwise, the corresponding equipment cannot be produced locally, but many industries will not be able to grow, such as textile factories, injection molding factories, mold factories, etc. These all rely on companies that can produce equipment locally to be competitive. Zhou Haoran smiled and said, "Yes, not only my beverage factory, but also many equipment of Changxing Industrial and many simple assembly lines of Rongyao Electronics are produced by Dongsheng;

In addition, many small factories in Hong Kong also rely on Dongsheng for production. Now Dongsheng has become very large in scale.”

"Yes, I remember that I still hold 35% of their shares." Yang Wendong then asked, "What is Dongsheng's current annual turnover?"

Zhou Haoran said: "I don't know the exact amount, but it should be around 20 to 30 million. It's considered a pretty big company in Hong Kong."

"Well, let him develop well." Yang Wendong nodded and said, "Next time, tell the boss of Dongsheng that although making non-standard equipment is very profitable, it is difficult to scale up;
If you want to make a lot of money and expand your business, you have to choose a technical direction and work hard to overcome it. For example, if you can make a beverage production line well and cheaply, you can export it to Europe, the United States, and Japan. The same is true for other textile and injection molding equipment."

The profit margin of non-standard products is very high, but the essence is that high profits are achieved because there are few orders. This industry is not bad, but its potential is limited. Any large-scale equipment manufacturing company has a direction if it wants to grow bigger, such as beverage production lines, machining production lines, etc.

"Okay, I'll discuss it with Mr. Lin." Zhou Haoran agreed.

Yang Wendong added: "Also, tell him again that I encourage him to make mechanical processing equipment, such as turning, milling, polishing and grinding."

"Mechanical processing equipment?" Zhou Haoran was puzzled and asked, "Mr. Yang, there is a market for these equipment in Hong Kong, but it is still relatively small."

Yang Wendong said, "It's okay. Tell him that if he can make these devices and the quality is good, I will mobilize the resources of Changxing Group to help him expand overseas markets."

The core of the manufacturing industry is these processing equipment. When we enter the home appliance market in the future, although we do not directly need these processing equipment, we can trace back to the source and find that various parts are still made by these equipment.

The scale is small now, and the existing processing equipment in Hong Kong is sufficient for the time being and can supply itself. But when Honor Electronics becomes bigger in the future, things will be different.

Moreover, in the future, or rather the current mainland, the mainland will also need a large amount of such equipment. These are means of production, and the mainland is still willing to spend foreign exchange on this.

As long as it is not a high-precision device, it is not subject to the restrictions of the Batumi Protocol. What's more, the overseas market is also very large. In the 90s, Taiwan's various processing equipment industries were at their peak.

"Okay, Mr. Lin will definitely be very happy when he knows this." Zhou Haoran asked again: "Mr. Yang, you are so optimistic about Dongsheng, why don't we buy it all."

"Funding is not a problem. I once sent someone to ask him, but Mr. Lin was not willing to do so. Even if I acquired the company, he would start another business and would not work for me." Yang Wendong shook his head and said, "For such a company, the core is the founders. If you acquire the company and they leave, who will manage it? Non-standard companies or technology companies like this are not what we are good at managing."

Dongsheng Manufacturing has become one of the foundations of Changxing Group and even Hong Kong's manufacturing industry. If this company continues to develop smoothly, it will be of great help to the entire Changxing Group and even Hong Kong's manufacturing industry.

However, Changxing Group and even Honor Electronics are good at consumer market products rather than equipment. This business is similar to a country's heavy industry. It is very important, but not everyone can do it.

Therefore, he previously supported Dongsheng through investment rather than acquisition, because after acquisition, he might not be able to manage the company better than the original team.

"That's true." Zhou Haoran nodded and said, "Then if we allow Changxing Trade to expand its overseas market, we can also indirectly control them."

"Well, but this kind of trade is different from before. Let Zhang Zefei study it carefully." Yang Wendong said, "To control a company for our own use, we don't necessarily have to buy its shares. Controlling both ends of the company is also possible."

There are many plastic manufacturing industries in Hong Kong, and all of them are controlled by the Changxing Group in this way.

At the front end, they need to rely on Changxing Trading to buy plastic particles. At the middle end, some of them still rent the land and properties of Changxing Industrial Park. At the end, some of their products are also OEM for Changxing Industrial or rely on Changxing Trading's channels.
The entire closed loop is controlled by Changxing Group. However, unlike the previous British capital that cut flesh and drank blood, Changxing Group's business model, although it seems to have eaten up a large part of the profits, also made the pie bigger due to the entire industrial chain, and even found overseas customers for local enterprises.
Therefore, for all kinds of small businesses, although their lifeline has been grasped, as long as they focus on doing their own business and ensuring quality, their profits will be higher and more stable than before, and they don’t need to worry much about orders. This is the business that many small bosses dream of.

In the future, when we have achieved success in other industries, such as paper, textiles, electronics, etc., we can also replicate the layout of the plastics industry.

After all, a group cannot make unlimited acquisitions, and its personnel management capabilities are limited. A company with too many employees is more likely to breed corruption, chaos, inaction, etc. This is why so many large companies in the past always tried to adopt light asset and outsourcing models in the later stages of development.

Nowadays, this model can achieve mutual benefit and win-win results with many companies. They only need to control the front and back ends and invest a part of the capital externally to obtain most of the profits of the entire industrial chain. Management is also much easier, and small businesses themselves can make more profits. Only such a model can last long.

You can even do this in Taiwan and Singapore in the future.

Of course, it is very difficult to replicate in these places, especially in the mainland, but the principle is similar. If you can't do the whole thing, you can always do part of it.

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(End of this chapter)