Chapter 579: The Profitable Shipping Industry
Chapter 579: The Profitable Shipping Industry
The first large-scale commercial complex in Hong Kong is actually the Harbour City in its previous life. The most important reason why Hutchison Whampoa was able to build it was that it had a large piece of land.
Although he could build Harbour City after acquiring Wharf Holdings, he could not stop doing other similar businesses just because he had Harbour City. Hong Kong can still accommodate multiple commercial complexes. In his previous life, Hong Kong had more than just Harbour City.
Choosing a location near Hung Hom on Hong Kong Island will make it farther away from Harbour City, so basically it will not have a big impact in the future.
"Close to 100,000 square feet?" Zheng Zhijie was shocked. He then calculated in his mind based on his industry experience and said, "Mr. Yang, with this area, there must be hundreds or even thousands of shops inside. This will require a large flow of people to be successful."
"Yes, the flow of people is the key." Yang Wendong nodded and said, "But I also believe in the future economy of Hong Kong. As long as the economy is good enough and the consumption capacity is strong enough, it can naturally support such a large commercial complex."
The premise for the emergence of a commercial complex is that the local economy is good enough and there must be a sufficient population. In its previous life, Wanda only began to build complex projects in large quantities in the early 21st century, with big cities as the first choice, and then gradually moving down.
In the early days of Hong Kong, the overall economy was poor and the population was small, so naturally there were no large-scale businesses, and it was enough to place them in office buildings. However, as the economy developed, people's demand for shopping became higher and higher, so large-scale businesses began to emerge.
Zheng Zhijie thought for a moment and said, "That's fine. Our group does have enough capacity to attract people here. China-Bus is also ours. We can even build a new economic center directly in one place."
"Well, the Hung Hom Tunnel will not decline in the next few decades. There will be no risk if we build a large commercial building there." Yang Wendong said with a smile: "Japan already has large shopping malls. Although they are not the commercial complexes I mentioned, we can learn from their pure commercial layout.
As for other apartments, office buildings, hotels, etc., they are also what we are good at, so we just need to combine them.”
Hong Kong is a place that will go down in the history of human business, not because of its industry, but because of its real estate development. Many of the things invented by Mr. Huo have had a huge impact on the global real estate industry, especially on the future of the mainland.
"Okay, I understand." Zheng Zhijie nodded and said, "I will discuss the design with Kinmen Construction in this regard."
"Well, okay. If there is not enough funds, tell me and I will mobilize funds from Changxing Shipping." Yang Wendong said again.
The Suez Canal has been blocked for more than three years. During these three years, shipping companies around the world have made a lot of money. Many ships can earn back their capital within a year, and then sell them second-hand for twice the price of new ships.
Shipping companies naturally earn cash, and it is impossible to keep such a large amount of cash in a bank to earn interest; it needs to be invested.
It happened that Hong Kong housing prices plummeted in 67. Although they rebounded in 68 and 69, the total price was still not high. Therefore, these funds, combined with bank loans, could be invested heavily in Hong Kong real estate.
Otherwise, even if the land prices in Hong Kong plummet, it would still cost a lot to hoard large tracts of land.
However, now that it is the 70th year, although it is cost-effective to continue to acquire land, it also needs to be properly developed. One is to return cash, and the other is to have stable properties that are more suitable for future borrowing. Otherwise, it is not good to leave large tracts of land vacant for a long time.
Fang Xianming smiled and said, "The shipping industry has really been picking up gold from a gold mine recently. It is said that Japanese shipyards have orders scheduled for five years in the future."
"Yes, Zheng Yuhua also managed to grab a few orders two years ago." Yang Wendong nodded and said, "But once the Suez Canal is opened, the shipping industry may face a crisis. The risks involved are actually very high.
I have also stopped expanding my fleet. It has been almost impossible to buy ships in the past two years anyway.”
In most industries, risks and opportunities coexist. Take today's shipping industry for example. It seems to be profitable, but most shipping companies order ships at high prices. Once the Suez Canal is opened, those companies that are last to get on board may go bankrupt on the spot if they cannot recover their costs.
If Yang Wendong didn't know the future, even if he would participate in this industry, he might not dare to make large-scale gambles.
The same is true for real estate companies. Several real estate crises in Hong Kong in the 20th century almost wiped out more than 9% of previous real estate companies, while the four major families rose to prominence. This is what it means to seek wealth and fame in danger, the winners will take off and the losers will go bankrupt.
Fang Xianming also agreed: "Yes, there are indeed more and more ships now. If the Suez Canal is opened, the consequences will be disastrous. We also need to prepare early."
"Don't worry, I have already made plans." Yang Wendong said with a smile.
Originally in history, the Suez Canal would be opened in 1975. This matter should not change because of my butterfly effect. I don't have the ability to do that yet.
But we can’t wait until then. When the oil crisis broke out in 1973, the shipping industry suffered a big blow. In addition, shipbuilding companies have been working hard to build ships in recent years, which has also increased the number of ships in the world.
Although the shipping market recovered somewhat in the late 70s, the century's shipping disaster broke out in the early 80s. Shipping magnate Pao Yue-kong went ashore before that. Several other Hong Kong shipping magnates almost collapsed at this time. Orient Overseas also almost went bankrupt. Later, mainland capital stepped in to rescue them.
In other words, the shipping industry will not be doing well for most of the next 20 years, so we will naturally make preparations early.
In the afternoon, Yang Wendong called Zheng Yuhua from Changxing Shipping and said, "Come, have some tea. This is something that someone from China Resources sent to me."
Starting this year, trade between the mainland and Hong Kong and even overseas has recovered. As a major customer of China Resources, Changxing Group has also begun to increase its purchases in this area. It is normal to send some gifts unique to the mainland.
"Thank you, Mr. Yang." Zheng Yuhua said after sitting down. Yang Wendong asked, "How is the shipping business this year?"
Zheng Yuhua said: "It is still very popular. The net profit in the first three months of this year was as high as 3800 million Hong Kong dollars. The market is still in a serious state of supply and demand."
"Haha, your profit is much better than that of real estate and several other manufacturing companies." Yang Wendong said with a smile.
These few years can be said to be one of the most profitable periods in human history for shipping companies. In order to lay out this opportunity in the early years, he also prepared for a long time and bought a large number of second-hand ships that many people did not want at the time;
When there are not enough ships, second-hand ships are more cost-effective because merchants often have no choice.
In the past few years, Changxing Shipping's annual profit exceeded more than 100 million Hong Kong dollars, and its ability to attract money ranked first in the entire group.
You know, Pao Yu-kang, Tung Chao-Yen and others became shipping tycoons with the help of these few years, surpassing many century-old European giants. If it weren't for such opportunities, they would not have been able to do it no matter how strong they were.
Zheng Yuhua smiled and said, “Yes, but a large number of new ships are being launched internationally, and some countries are starting to produce products locally due to high freight costs;
This has resulted in this year not being able to compare to the previous three years, and looking forward, it will get worse and worse, but the overall benefits are still very high. The only uncertain factor is the Middle East. If the Suez Canal is reopened, that will be a big problem.”
"Yes, that's what I'm worried about." Yang Wendong nodded and said, "Although there are still mines on both sides of the Suez Canal, it will take a long time to open it, but as long as the news gets out, the spring of the shipping market will be over."
"From the perspective of the Middle East, the situation won't end so soon." Zheng Yuhua asked again, "Mr. Yang, do you want to cash out some of the ships?"
"I have this idea, but not all of it. We are carrying it out in a planned way." Yang Wendong nodded and said, "The first step is to use those older traditional cargo ships. Nowadays, containers are popular and these are of little use. It's only because of the current shipping crisis that they would have been sent to be dismantled as scrap metal.
The second is that the shipping company has begun to transform internally. In the future, we will only do three businesses: oil transportation, container transportation, and large bulk cargo ships. Other ships will be sold gradually.
To accomplish all this within three years, you have to prepare early.”
Container transportation will definitely be feasible in the future, and the same goes for oil. As for large bulk carriers, they are used to transport bulk commodities such as staple food, ore, etc.
"Okay, the second-hand ship we have now can still be sold at a certain price. If we wait a few more years, it will definitely be out of service. It is too old and often has problems." Zheng Yuhua agreed.
Many of the old ships she has are cargo ships that are more than 20 years old and were bought seven or eight years ago. In addition, they have been used for excessive transportation to make money in recent years. It is indeed time to dispose of them, otherwise safety accidents may really occur.
Yang Wendong added: "Also, don't order new ships in the next two years. Ship prices are too high now. The Suez Canal cannot be closed forever. Europe is not going to be a sucker, and they will definitely mediate."
In fact, in many international conflicts, it was Mr. Europe who paid the bill, while the rest of the world made a fortune;
When problems arise in the Middle East and the Suez Canal cannot be used, the prices of goods shipped to Europe skyrocket; when problems arise in Eastern Europe, Europe suffers as well; even when problems arise in Africa, refugees also flee to Europe.
After the first oil crisis broke out, Europe really couldn't bear it anymore, and all parties in the Middle East couldn't stand it after a few years, so they just reconciled.
Of course, the oil crisis itself was a big problem, but it was not easy to tell anyone about it.
"Well, it's very difficult to buy a new ship. Even the Taiwan Shipyard is full of orders during this period." Zheng Yuhua said with a smile.
Yang Wendong nodded and said, "Well, let's talk about it later. There are more and more ships in the world now, and I'm afraid it will be difficult in the future."
Zheng Yuhua said: "Then we can only make more money now."
"Yes, just seize the present and we can worry about the future later." Yang Wendong also said with a smile.
The shipping companies invested a lot of cash earned from the real estate in Hong Kong. Even if the shipping crisis collapsed a few years later, the real estate industry would have increased by dozens of times with the help of leverage, so they would not care how much the shipping industry could not earn.
Even the shipping industry may not make money in the future, but just rely on Hong Kong real estate to make money, and then rely on ship orders to influence multiple countries. This can be considered a relatively good comprehensive model.
PS: Ask for monthly ticket
(End of this chapter)