Chapter 583 The Significance of Industrial Upgrading

After Zheng Zhijie left, Yang Wendong said: "Yiyi, in addition to our own industry, you should also try to do clothing OEM in Hong Kong. Although it seems a bit low-end, with OEM, you can support more people, optimize your own technical quality and reduce costs;

Only in this way will we be more comfortable when we create our own brand in the future.”

"I understand. What Hong Kong savviest is OEM. Even if it is a joint venture factory, we cannot rely solely on the United States, otherwise we will all be controlled." Su Yiyi nodded and said.

Yang Wendong smiled and said, “Yes, although it is a joint venture factory, we also have a part of it. If we want to have a say, we must have orders;

In addition, the larger the scale of the joint venture factory, the larger the industrial chain remaining in Hong Kong will be, which is what we need.”

Su Yiyi asked again: "Which direction should we go? There are many kinds of clothes?"

Yang Wendong thought for a while and asked, "What is Berkshire's main clothing? Let's start with what they are good at. This way, we will be more confident in manufacturing such products for other brands, and the risk will be much smaller."

When doing business, one naturally has to start with what one is best at, and then gradually spread to the surrounding areas;
Except for a few, most of Changxing Group's products follow this logic, and some even have channels established before production.

However, he didn't know much about the specific situation of Berkshire. Su Yiyi was in charge of the clothing industry of Changxing Group and was considered half an insider in the industry. She was the one who communicated with Berkshire during this period.

Su Yiyi said: "Berkshire is good at many textile products, but this time the factory in Hong Kong mainly produces suits, short-sleeved shirts, jeans and winter down jackets."

"Four kinds, that's quite a lot." Yang Wendong said with a smile.

Su Yiyi said: "For a large company like Berkshire, four types are nothing. Anyway, they have all the channels, and we also have Asian channels, and we may enter the Commonwealth market."

Yang Wendong nodded and said, "That's right. I don't have any good ideas. You still have to figure it out on your own. But I think we can try to enter the Japanese market for suits. People there really like suits."

Speaking of the 1970s and 1980s, the country that liked suits the most was not Europe and the United States, the countries where suits were born, but Japan;

The entire workplace in Japan, in the past few decades and even later, is dominated by suits, even in the cold winter. Especially for girls, they have to wear short skirts, freezing to death, but they have to do it;

This may also be the result of the strong culture. In fact, this kind of thing happened in the mainland in the past, but later, with the gradual development of national strength, this trend gradually dissipated. Although Japan almost challenged the United States economically, it was suppressed in other aspects, and then its economic upward momentum was also abolished.

"Japanese market? That's fine." Su Yiyi asked, "Brother Dong, I remember you said before that you are also optimistic about the real estate market in Japan. If we open a store, should we operate it ourselves or franchise it?"

"Join us? The cost of buying a house in Japan is still too high. It's a waste of money. It's not necessary." Yang Wendong shook his head and said, "The core of our investment in Japan is still our respective industries. For example, the core of my cinema chain is film-related business, not waiting for the land to appreciate in value."

The land price in Japan will naturally be high in the future. It is not an exaggeration to say that Tokyo alone can buy half of the United States.
However, the housing prices really started to rise sharply around the 80s, and coupled with the currency surge caused by the Plaza Crisis, the prices increased tenfold in just a few years. Before the 80s, there were indeed increases, but not much. The degree of increase was far less than that of Hong Kong, so there is naturally no need to invest now.

"Okay, that will be much more convenient." Su Yiyi said with a smile.

Yang Wendong said: "That's it, our textile industry and Berkshire will all depend on future development.

If we can, we might be able to create several very large industries.”

The reason why the textile and clothing industries have always been described as sunset industries is not because they are not large enough, but because the entry threshold is too low and anyone can come in, just like restaurants and small supermarkets in the service industry.

Although many people did not develop well and even went bankrupt in the end, countless people continued to pour in, resulting in extremely fierce competition, and in the end no one made much money.

However, the reason why so many people and capital are pouring in is because the market is very large. It is no exaggeration to say that the market is worth one trillion US dollars a year, second only to core commodities such as oil, automobiles, real estate and food.

No matter how difficult the competition is in the entire industry, there will always be many top companies born, such as Adidas, Nike, Uniqlo, ZARA, Gucci, The North Face, etc. in the past.

If you plan early enough, you may become one of them.

However, compared to those industries that seize the opportunity, he is not sure about this traditional industry. He can only try his best to promote it with capital and take advantage of some opportunities to see if he can grow.

Su Yiyi nodded and said, "I know. I can't say whether it can be developed into a world-class company, but it will definitely gain a certain market share in Asia."

"Haha, be a little ambitious." Yang Wendong smiled and didn't say anything more.

In fact, if there is no large population dividend and huge domestic market after the reform and opening up of the mainland, it is really not easy to expand in the clothing industry, because this industry, like retail supermarkets, must have a basic market. Without a basic market, it is also very difficult to rely on continuous development in overseas countries.

The mainland is the best capital base for Hong Kong capital.

……

Soon it was May, and the joint venture between Berkshire and Changxing Group, Changbo Textile Group, was officially established;
The Hong Kong government finally approved the 40.6 square feet of land, and Changxing Group also readily paid for it in one lump sum. Then various infrastructure works began to be prepared. More than Hong Kong technicians who knew English went to the United States to study. The US side also began to dismantle a factory workshop equipment in New York State and prepared to move it to Hong Kong.
After everything went according to plan, Yang Wendong no longer cared about it. It was estimated that the textile factory in Hung Hom would start operation in half a year, which would help Hong Kong's already large textile industry move towards a "strong" path, because Hong Kong's current textile exports are mainly low-end.

After entering the 70s, the "volume" of Hong Kong Chinese has begun to affect the world. Even if the initial base of various export amounts is low, as long as they increase by more than % or even dozens of percent each year, in a dozen or twenty years, they will become a very scary number.

Textiles, plastics (plastic flowers, toys), and watch processing have all become well-known processing bases around the world. Some countries have even imposed sanctions on some of Hong Kong's industries, which in itself is a testament to the strength of the industry.

However, starting from the 60s, many Asian countries also began to develop normally, gradually following the path that Hong Kong had taken in the 50s. Although these countries have many shortcomings, they have a large population and cheaper labor, so they will naturally gradually compete for some of Hong Kong's business.

This is not a unique experience for Hong Kong. Any developed country will inevitably be overtaken by developing countries. In addition, capital flows to lower places like water. There is no way to stop it. The only way to avoid industrial hollowing out is industrial upgrading.

In the 70s, the best way to upgrade industries was the electronics industry which was about to explode. For this reason, Yang Wendong specially planned an electronics industrial park in North Point, Hong Kong Island.

On May 5, the sky was fine, and Yang Wendong came to the Changxing Electronic Industrial Park in North Point;
Bai Yushan, sitting in the car, looked at the surrounding factories and asked, "Brother Dong, there are many companies here that are not from Changxing Group?"

"Yes, many of them are other factories. After Honor built the industrial chain here, it built a lot of properties. The Hong Kong government and Hang Seng Bank also cooperated to guide enterprises to concentrate, and then many electronic factories came here." Yang Wendong smiled and said, "This way, everyone will be convenient and costs can be reduced a lot."

Although this place is named Changxing, there are actually many other electronic factories, especially those making radios;
In the electronics industry, Honor also has many industries on the raw material side, such as motors, wires, transistors, etc. These are the core components of electronic products. After being concentrated, with the support of policies and finance, they will naturally come.

As for the terminal, Honor Electronics also has many home appliance factories, such as color TVs, black and white TVs, microwave ovens, rice cookers, electric fans, etc. The parts factories of these companies naturally listen to the client and come here to build factories.

Bai Yushan asked again: "How big is this factory now?"

Yang Wendong recalled and said, "It should be 900 million feet, almost one square kilometer."

"It's so big." Bai Yushan immediately understood.

Yang Wendong smiled and said, “It’s not that big actually. If it were in a large place like Taiwan, then the area of this park could be tripled or even five times larger.
There is too little flat land in Hong Kong, especially since it is Hong Kong Island, so many factories can only build industrial buildings and then divide them into multiple floors to open factories, otherwise there will not be enough land.”

Given the current scale of Honor Electronics, the entire industrial chain cannot be handled in one square kilometer. In this era, there is no automation and everything depends on people, and it occupies a large area.

This is also the reason why Hong Kong's industrial development did not work later on. There was no land and not much water, so even if there was no reform and opening up nearby, Hong Kong's industry would have been difficult to maintain. Even if Yang Wendong deliberately controlled it, he could only leave a little bit of industry.

However, for Hong Kong, which has a population of several million, it will be enough to keep a few industries if it seizes the financial future and receives special care from the mainland government.

Bai Yushan asked again: "The output value of the electronics industry should be very high, right?"

"Of course, the export volume of this park exceeded 6 million last year, far exceeding that of Changxing Industrial Park in Kwun Tong." Yang Wendong said with a smile: "Although there are not as many people here as there, the value of each product is much higher."

This is the difference between high-end industries and local industries. A low-end container may not be as valuable as several high-end products.
For example, if there are no copyright fees and a container of plastic toys is outsourced to someone else, its price is really not as much as a few RCA color TVs.

"Yeah, no wonder those Westerners live such a good life. We Hong Kong people work so hard that we can't even afford to buy a TV in a month, but they just throw away one when it breaks." Bai Yushan shook her head and said.

She has also been overseas many times, so she naturally knows the gap between people in Hong Kong and those in developed countries overseas.

Yang Wendong nodded and said, "It's normal. Their ancestors also fought hard for it and once seized the wealth of the world. We are catching up now. It will naturally take many years to have such a life.
And the most important thing is to successfully upgrade the industry. Only by mastering high-end industries can ordinary people live a good life. "

Hong Kong is actually not that bad, there aren't that many people there. In the past, the 14 billion people in the mainland wanted to live a good life, which was the difficulty of hell mode;
There was a statistic at that time that even if China took over all the global high-end industries, it could only allow 14 billion Chinese to live with an average annual GDP of 2 US dollars; there is still some gap from developed countries, but it is actually possible to move towards that goal.

However, we cannot just look at the GDP figures for this kind of thing. The level of price control is also very important. If prices are controlled low, then people with low incomes can still live a good quality of life.

To achieve this, high-end industries must be upgraded, which is the final competition between major countries.

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(End of this chapter)

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