Return to 1958 and build a century-old giant

Chapter 864 The Establishment of the Four Special Zones

The group first took a look around the Home Depot supermarket, but business seemed slow and there weren't many people.

However, Marcus was a very eloquent person. He explained that Home Depot is not Walmart and does not rely on a huge flow of people to drive demand. Although there may be fewer people, almost everyone who comes here will place an order. Moreover, as a home furnishing store, the size of each order is hundreds of times larger than that of a supermarket like Walmart, so their business is still very good.

Yang Wendong naturally understood that many businesses could make money even if they seemed deserted. For example, some high-end clothing stores in shopping malls in his previous life were empty to most people, yet they remained open for many years without closing down.
The Home Depot supermarket wasn't very big, and they finished looking around in no time. Soon, everyone arrived at a conference room on the second floor.

Marcus said, "Mr. Yang, my place is rather simple, please don't mind."

“It’s alright. You’ve only just started your business, and you’ve already achieved a lot.” Yang Wendong said with a smile, “As far as I know, Walmart probably didn’t do as well as you did in its third year of operation.”

"Haha, thanks for the compliment," Marcus said with a laugh.

Walmart is now a dark horse in the US retail industry, with more than 300 stores, annual revenue of more than $15 billion, and an annual growth rate of more than 20%, making it a target for entrepreneurs in the US retail industry.

While Home Depot is not a consumer goods retailer, it can still learn a lot from Walmart.

Yang Wendong continued, "You should know that I invested in Walmart back then, and now I also want to invest in your Home Depot. I heard that you and I have almost reached an agreement on the price, but you want to meet with me. I wonder why?"

Marcus said, "My main question is, why do you have such a positive outlook on my Home Depot?"

“On the one hand, your past performance has been quite good.” Yang Wendong had already prepared for this, and said, “On the other hand, I am optimistic about this market, and your business model is very innovative and can reduce a lot of transportation costs, so I think it’s good and I’m thinking of investing.”

Home Depot's success was not only due to Marcus's strong operational capabilities, but also to a very strong innovation.
Traditional furniture is transported from the production site to the retail site. This model has very high transportation costs. For example, a cabinet is such a large piece, but it is hollow. In addition, the appearance cannot be damaged in any way during the journey, which makes the transportation cost higher than the production cost. Moreover, it is very difficult to transport the cabinet from the store to the customer's home. If it encounters stairs, it will be too much trouble.

In his early years, Yang Wendong started his business, and his second business was to exterminate rats in warehouses in Hong Kong. Some of these warehouses contained furniture, and if the furniture had even the slightest scratch, its value would plummet or it would become unusable.
Later, containers appeared, which reduced costs considerably, but it was still a huge waste, as a 20-foot container could only hold a few cabinets.

So Marcus came up with a plan: his furniture supermarket wouldn't sell products, but rather various types of wood boards, like building blocks. He would sell the boards directly to customers, who would then take them home and assemble them themselves, and even paint them.
The advantage of doing this is a sharp reduction in transportation costs. The factory only needs to process the wooden boards according to the drawings and then transport them over with peace of mind, without having to worry about them getting damaged.

Although this approach requires customers to do more work, it can save a large portion of the cost, and customers are generally willing to do so. If a customer is unable to install the equipment themselves, Depot can arrange for someone to come and assemble it. As long as the customer pays, everything is negotiable.
However, most customers are still happy to assemble it themselves, since saving money is the most important thing.
Thus, a perfect business model was born;
However, this business model is suitable for Europe and America where labor costs are high, but it will not work in mainland China in the future. Therefore, Home Depot will basically have no market and very low brand awareness in mainland China.

Marcus nodded and said, "Yes, I also came up with this idea from Walmart's operations. However, there is a problem: this business model cannot be patented. Once other competitors realize it, they can also follow suit."

Yang Wendong said, "That's right. So right now you need more funds to expand your scale and take over the market as soon as possible. Once you achieve scale, you can further reduce costs. Even if others copy you, as long as their scale is not as good, they can't do anything about it."

True monopoly is not based on patents or technology, but on scale;

Larger companies have more production experience and lower production costs, which allows them to strike at competitors more effectively. Coca-Cola is a prime example of this, which has resulted in it having no competitors in the cola industry other than Pepsi.

Even competition between nations is like this. In the 20th century, the United States replaced Britain as the global hegemon by virtue of its scale. In the future, the rise of Tokyo in the 21st century will also rely on its powerful industrial scale to crush everything.
Of course, copyright is not a barrier to scale, because it is not a patent and cannot be bypassed. Therefore, Yang Wendong has also developed the film, animation, TV series and even novel literature industries in Hong Kong, which is also the strongest moat.
Marcus said, "That's right, but at our current size, even with financing, we don't have much money."

"Perhaps we can discuss this further," Yang Wendong said with a smile. "How about I invest in 30% of your shares, and I'll lend the joint venture an additional low-interest loan?"

Today, Yang Wendong has substantial capital, with sufficient liquid funds on hand, and even if that's not enough, he can borrow money from the bank.

Many emerging industries need capital to expand, so this is a perfect solution.
“No, 30 points is too many.” Marcus quickly shook his head and said, “As you know, although Arthur and I are the founders of the company, we are actually a team, and many other people have shares.”
"Giving you 30% would make you the largest shareholder in the company, which would definitely cause disagreement among the rest of the team. And from my perspective, I also disagree; the risk is too great."

Everyone dreams of growing their own company, but the premise is that the company is in your own hands. Don't work hard to raise your company like a child, only to have it snatched away by someone else.

Yang Wendong nodded and said, "Alright, let's discuss the shares again. Let's add another cooperation method. Don't you need a lot of wood? I have a trading company in Asia that can get a lot of wood or finished planks."

We can sign a long-term supply agreement. As long as my products don't have any serious quality issues, then Depot will have to rely on us for all future supplies. What do you say?

This is similar to the investment model of Walmart and Nike, where investors can supply goods themselves after investing, achieving multiple benefits in one fell swoop.
Forestry is also a huge industry in Southeast Asia, with local plywood factories that provide employment for many people. His ally, Guo Henian, also has this business.

Home Depot is poised to become a furniture giant in the US, controlling the procurement of its wood panels. This would allow it to influence the employment of hundreds of thousands more people in Asia and even impact exports from agricultural and forestry countries. The return on this investment might be even more lucrative than investing in Home Depot itself.

"Give it to you? Then you can set the price?" Marcus quickly shook his head.

Yang Wendong explained, "Regarding the price, we will have an agreement based on the market price of that year. In fact, if your quantity is large, I will even give you a certain discount. How about it?"

Larger volumes reduce costs, just like with Coca-Cola; this is an eternal truth.

Marcus asked, puzzled, "Then what are you after? The wood plank industry shouldn't be profitable."

“We each have our own agendas. I have trading companies and shipping companies in Asia, and I can even invest in timber and forestry. In short, as long as we cooperate, it will definitely be a win-win situation.” Yang Wendong didn’t elaborate further.

Because Marcus, at present, cannot know how large Home Depot will be in the future. Such a large-scale industry will have a huge demand for wood panels and forestry, which is what Yang Wendong wants.

However, it's not a loss for Marcus either, because as an American, he can't have a huge influence in Southeast Asia, so he doesn't lose anything. Besides, his energy is limited, and it's good enough that he can do a good job with Home Depot.

This is truly a win-win cooperation plan.

Marcus thought for a moment and said, "No matter what, it's definitely not possible to give you all of it. I can only say a portion. The exact amount will depend on the subsequent negotiations, as well as how much funding you can provide and the future supply price."

"No problem, everything is negotiable, as long as we reach these cooperation agreements today," Yang Wendong said with a smile.

As with any other investment, the details are naturally handled by professionals; all he needs to do today is reach a cooperation agreement.
As for financial support, he was quite willing. Once a future giant like Home Depot gets funding and starts developing, it's impossible for it not to be able to repay the debt. The funds themselves are also safe. Moreover, for an industry like Home Depot that doesn't have technological barriers, it's better to have enough funds and develop sooner rather than later.
Although it had developed in the past, with its own help, it might have developed even faster and stronger. After all, the furniture industry is not just Home Depot; there are other giants around the world, such as Lowe's and IKEA.
Both of these companies were established a long time ago, older than Yang Wendong, and have already reached a considerable scale. Naturally, they have little investment value for him, far less than new companies like Home Depot.

Marcus nodded and said, "Okay, then I will hold another internal board meeting to discuss this further."

“Okay, I’ll be back in Hong Kong right away.” Yang Wendong then took out a business card and handed it to him, saying, “This is my assistant’s phone number in Hong Kong. If you have any questions, you can call her directly, and she will reach me.”

"OK." Marcus didn't think much of it and accepted the business card.
Little did they know that the people around Yang Wendong were immediately surprised. Given Yang Wendong's status and position today, this business card was not something that just anyone would give out.

It seems that my boss values ​​this person a lot.

On July 22, Yang Wendong returned to Hong Kong by private jet;
During this trip to the United States, he also accomplished many important things for the local industry, including selling his Apple shares, investing in Microsoft and Home Depot, and setting the direction for the listing and financing of Best Buy and KFC.

My own industries in the United States have also developed quite well. In the 80s, when the United States was experiencing economic prosperity during the Reagan era and the government had little intervention in foreign and domestic capital, it was very important to take the opportunity to develop.

After returning to Hong Kong, Yang Wendong also learned about the economic situation in Hong Kong during that period;
Property prices in Hong Kong are still rising, but because they are nearing their peak, the rate of increase has slowed considerably.

Yang Wendong also summoned Zheng Zhijie and directly instructed him to gradually stop developing non-core real estate projects, while continuing to develop those projects. This was because the real estate market would not begin to experience stagnation and a decline in transaction volume until 1981, and projects still under development would still be profitable.

Zheng Zhijie, a veteran in the real estate industry, understood Yang Wendong's judgment: Hong Kong's housing prices seem to be nearing their peak.

Other industries are developing normally. Although the proportion of Hong Kong manufacturing exports in Asia has decreased due to overseas competition and the impact of the domestic real estate market, the overall market is growing too fast, so Hong Kong manufacturing is still growing rapidly.
This model is quite good in the short term. It feels like almost everyone in Hong Kong is wealthy. Except for a few special groups, almost everyone feels that life is very easy. The various luxury stores in Causeway Bay are also doing exceptionally well. Taxi drivers are even picking and choosing passengers based on tips.
Everything was so beautiful;
Yang Wendong was quite happy about this. Although the economy was a bit weak, at least most people no longer had to worry about food. Of course, "housing" gradually became a major problem.

However, he can only provide appropriate assistance in this matter; there's not much he can do. This is an inevitable consequence of economic development.

Time flew by and it was almost the end of August when news came from the north that the central government had announced that Shenzhen, Zhuhai, Shantou, and Xiamen would become special economic zones for reform and opening up.

Special economic zones are regions with special policies and management. In these places, foreign capital can invest wholly, and the government of the special economic zone can also explore various cooperation with foreign companies to facilitate forward-looking exploration for the future reform and opening-up policies of the entire mainland.

Simply put, it means that when a large army is about to set out, a small detachment is first sent out to scout ahead.
Yang Wendong had been waiting for this day for a long time. However, after the news was confirmed, Yang Wendong did not go directly to people in the mainland. Instead, he called Wei Zetao and said, "Spread the word that Changxing Industrial is preparing to build another large industrial park with 10,000 people outside of Hong Kong."

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(End of this chapter)