Chapter 627: Building a Foundation

Chapter 627: Building a Foundation

Chapter 627: Building a Centennial Foundation

Originally in history, Hong Kong's economic crisis collapsed in early 1973, just one year from now;

But now, because of his existence, no one knows what will happen next. It may break out earlier or it may be delayed. The only thing that can be confirmed is that this crisis will inevitably occur. This is also the most uncertain time of the economic crisis since Yang Wendong traveled through time.
Fortunately, the decline this time is not very large. If a company does not over-leverage, it can generally survive. As for the next economic crisis in 1983, he is very sure that nothing will change, because the next economic crisis cannot be influenced by human power at all.

But after all, the economic crisis may come, and even if we don’t know the exact time, it’s okay to be a little prepared.

"Mr. Yang, do you think the real estate bubble is getting bigger now?" Zheng Zhijie asked quickly;

You should know that Yang Wendong's predictions about the real estate market and the stock market are also very accurate. The reason why Changxing Real Estate seized the opportunities and took off several times before was because of Yang Wendong's many advance arrangements, buying low and selling high.

Yang Wendong said: "There is a little bubble, but it may not be a big deal in the short term. It is similar to the situation in 63. Do you remember it?"

Zheng Zhijie nodded and said, "Remember, that means we need to shrink in the real estate market?"

In 1963, the real estate market had not reached its peak, but Yang Wendong ordered to stop purchasing land and only develop existing land. Then at the end of 64, the Hong Kong real estate market began to decline, which was enough to prove Yang Wendong's keenness at the time.

Yang Wendong said: "Yes, almost, but this is only for those projects that are ready to be sold for cash. They should continue to be developed, and those that have not been developed should not be started. The same applies to cooperation with outside parties.
But for self-sustaining projects, or if there are some good locations outside, you can buy the land and build it for self-sustaining. In short, long-term self-sustaining will not be affected.”

In 1967, housing prices were at their lowest point. At that time, apart from the most prime locations, nothing else needed to be considered.

But the next wave of real estate crisis is actually just a halving of housing prices. It seems like a lot, but compared with the future increase of ten times or even dozens of times, it is just a small downturn. So except for real estate projects that make short-term profits, everything else will be as it is.

A truly large enterprise will not make major policy changes because of a small market fluctuation. It will even do so in the next 83 wave. After all, the decline is really far less than that in 1967.

Zheng Zhijie said: "Okay, I know what to do."

"Another point is that the scale of our real estate group in Hong Kong is already quite large. In the future, Fang Xianming will make some moves to increase our land reserves, so we need to participate less in real estate projects." Yang Wendong suddenly said.

Zheng Zhijie asked, "Mr. Yang, do you mean that we only participate in large properties?"

This is actually normal. When a large enterprise has a large scale in the industry, it is unlikely to do all kinds of small businesses.

Yang Wendong nodded and said, "Yes, in the future we can just focus on building large office buildings, hotels, and shopping malls. We must choose the right strategic direction and hold a large amount of capital ourselves. Although the returns will be lower in the short term, after the housing prices and rents rise sharply in the future, the current investment will have a very stable long-term income in the future."

The rental income of office buildings and shopping malls in Hong Kong's Central, Admiralty, Causeway Bay or some prime areas is enough to make the world's top 500 companies jealous. In the 21st century, the annual rental income of an office building exceeds HK$ billion, and that of IFC is even more than several billion.
Of course, the property with the highest rent is still Wharf's Harbour City, which has an annual rent of over 10 billion. However, Wharf has not started this project yet, so it can only wait until it acquires the property in the future and then build a similar or even larger "Harbour City".

Zheng Zhijie said: "Then our behavior is a bit like today's Jardine Matheson."

"Yes, from the perspective of property holding, we can only develop in this direction. After all, the Hong Kong real estate market is so small." Yang Wendong paused and said, "But we can't learn from Hong Kong Land in terms of management. Hong Kong Land has no growth in the past because of its long-term stable income. I won't allow this.
Therefore, the core development direction of Changxing Real Estate Company is to expand overseas, including Southeast Asia and Japan. The details will require your internal investigation and decision. "

Although Hong Kong real estate makes money and the upper limit of profit is not low, the upper limit of scale is not high. In other words, it is not possible in this era. After all, even if Yang Wendong is rich, it is impossible for him to build a skyscraper of 70 or 80 floors in this era, and the Hong Kong government will not agree.

In this case, if Changxing Real Estate Company wants to develop, it naturally has to go overseas. The economies of Southeast Asia and even Japan will take off in the next 20 years, which is the best choice.

Zheng Zhijie thought for a moment and said, "Mr. Yang, we have already invested in Singapore, so why don't we make Singapore our first target and focus on investing in office buildings and shopping malls there?"

"Yes, but you can also consider some other cities." Yang Wendong said: "What do you think of Japan?"

"It's a bit difficult. The Japanese market is very exclusive. Even if we can successfully enter, it will probably be difficult to operate well. This is not an industry, and local dealers will be responsible for it." Zheng Zhijie reminded.

Yang Wendong nodded and said, "Alright, then the investment in Japan can just be to buy a suitable office building. The office building can only be responsible for leasing, and the property management can also be contracted out to a local company, so that we can be at ease and be a hands-off boss."

"This is also a good method." Zheng Zhijie agreed.

Yang Wendong smiled and said, "It's just talk now. Let's arrange the projects in Hong Kong first. We have to invest overseas step by step. Let's choose Singapore first and invest more in office buildings. The management cost of this thing is the lowest."

"Yes, Mr. Yang." Zheng Zhijie agreed and said, "Mr. Yang, we still have Changxing Infrastructure Company under our umbrella. I think we can focus on developing infrastructure projects."

"Infrastructure?" Yang Wendong said, "I have thought about this, but there are no large-scale infrastructure projects in Hong Kong. We have ports, but other roads are usually built by British companies, so we can't get involved." Although Hong Kong is "free" economically and does not need to pay taxes to the UK, there are actually many ways to operate it. The simplest model is that Hong Kong's fiscal funds can buy British government bonds, reserve British foreign exchange reserves, or use some financial means, etc.
In addition, many infrastructure projects in Hong Kong, such as reservoirs, road construction, public construction, etc., are mainly given to British capital. The funds eventually flow to British financial tycoons. Only a few are given to Chinese capital, not because of good intentions, but to beautify "equality between China and Britain". Moreover, the Chinese companies that are contracted are mainly those that have defected to the past.

Zheng Zhijie said: “Yes, this is indeed the case in Hong Kong, but we can also consider investing in some basic vehicle infrastructure overseas, such as ports, bridges, or some other basic supporting measures;

These businesses are indeed not as good as Hong Kong real estate, but they are more stable. Even if we have confidence in Hong Kong, we cannot put all our eggs here. As for real estate in other places, except Singapore, it is difficult for us to be absolutely sure that it will continue to rise. "

"What you said makes sense. We can't always just focus on the real estate industry. Appropriate infrastructure is indeed necessary." Yang Wendong nodded and said.

Knowing the future, Yang Wendong dared to invest heavily in real estate in Hong Kong and Singapore. Knowing the future, he knew that real estate returns would definitely be better than ordinary ports. Speaking of economic benefits alone, a container terminal in Hong Kong cannot compare with the future Harbour City.

But outside of Hong Kong, even for Singapore, he can only say that the general benefits will be good. Singapore is not small in size, and he doesn’t even know which places have the highest benefits. In this case, it may not be better than some core infrastructure.

Of course, there are relatively few infrastructures in core areas, and it is difficult for ordinary people to have the opportunity to participate in such places.

Zheng Zhijie continued, “Mr. Yang, another thing I am considering is that our group cannot put all its funds into real estate with high risks and high profits in the long term. We also need to invest moderately in some low-risk and stable returns.

This way, we have stable returns without risk, which is the cornerstone of our group, and we can also make appropriate high-risk investments and obtain high returns. "

Yang Wendong smiled and said, "From a risk perspective, it is indeed very good. I am also optimistic about the long-term stability of these industries. Perhaps decades or even hundreds of years later, they will be able to generate long-term stable returns."

As a professional manager, Zheng Zhijie's suggestion is completely correct. After all, he is not a time traveler. When Changxing Real Estate is very large, he naturally needs to consider the risks. After all, only small companies like to gamble, and large companies are all seeking stability to a certain extent.
On the road of entrepreneurship, in the early stage you have to make money by taking unconventional means, but in the later stage you have to take a stable route.

For example, in his previous life, after Bill Gates made a fortune from the technology industry, he turned around and invested in oil, railways, hotel chains, agriculture and mining; after Li Jiacheng made a fortune in real estate, he invested in electricity, ports and natural gas; other wealthy people have similar operations.

Are these electricity, ports, natural gas, and power generation more profitable than the technology industry and real estate?
of course not!

When the capital of any family, individual or consortium reaches a certain level, what they begin to pursue is not "a hundredfold profit" but "an eternal foundation"; there is a saying from the ancients that "a family income of a thousand gold is not as good as a daily income of a penny", which is the same truth.

Moreover, after the assets reach a certain level, it would be incredible to have a three-fold profit, let alone a hundred-fold profit, but the risk is still that great.

Even Yang Wendong, a time traveler, cannot guarantee that his future investments in the technology industry will be absolutely accurate. He has some confidence in real estate in Hong Kong and the Mainland, but it is impossible for him to invest all his capital in it.

Zheng Zhijie smiled and said, "Then I will focus on increasing investment in infrastructure, but it is a bit difficult for us to enter overseas infrastructure at present."

Yang Wendong thought for a while and said, "This matter is not urgent. It may take more than ten years or even decades to complete step by step. One or two years is not a big deal. But we can consider it from two aspects;

The first is the container terminal. This industry is considered semi-new. In places with good economies, container terminals have basically been built, but there are still many places with poor economies that do not have container terminals.
The second is agriculture, purchasing farms, similar to Watsons' investment in Malaysia. No matter how the economy develops in the future, agriculture will always be the foundation, and the amount of arable land in the world is limited."

Zheng Zhijie thought for a while and said, "Mr. Yang, these two industries are indeed very stable. It's just that we have to pay great attention to the initial selection. They are both heavy asset investments. Once a political problem occurs, we will suffer heavy losses."

"Yes, this is the highest priority, so for the farm, Malaysia will be the investment for the time being. This place is relatively trustworthy." Yang Wendong nodded and said, "As for the container terminal port, we will not invest in overseas construction for the time being. Instead, we need to form a professional construction team, such as United Kinmen Construction to develop in this direction;

Previously, I worked with Huo Yingdong to build a small container terminal in Brunei. We can do the same thing in the future. We can be responsible for the construction first and then invest when there is an opportunity in the future. "

The inland ports of the future will be the most valuable. It is just right for us to spend about ten years learning about their construction now, so that we can directly participate in them when the time comes.

As for the farm, South America is actually the most suitable place. However, the economy in South America is very good at this time, and it is very expensive to invest in a farm there, which is not cost-effective.

The second is that South America is the backyard of the United States. Without the participation of trustworthy American capital, the risk of investing there will be much greater than in Asia.

Of course, Australia might be a possibility, but the labor costs there are too high, there are too few people, and there are also monopoly consortiums locally, so there is no need to get involved.

Zheng Zhijie agreed: "Okay, I know what to do."

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(End of this chapter)