Return to 1958 and build a century-old giant

Chapter 894 The Beginning of Industrial Transfer

"Really?" Robert was overjoyed. His reforms would inevitably face a lot of resistance, but having a major shareholder to support him would be much better.
Of course, there are downsides too. If things fall apart, his life as CEO will be difficult. But right now, there's nothing that can be changed. He's happy to accept the other party's goodwill.

Yang Wendong said, "Don't worry about that. I have invested in many companies, such as Walmart, Nike, Intel, Apple, etc. I have never interfered with their operations. As long as these companies don't make any major mistakes, I basically won't interfere. At most, I'll send one person to participate in the board meeting to understand the basic situation."

“Okay, if that’s the case, I have no problem with that,” Robert agreed. Since the other party supported him, he was naturally happy to oblige.

Yang Wendong smiled and said, "OK, let's leave the share issue at that. Next, I'd like to discuss our cooperation."

"How exactly will we cooperate?" Robert countered.

Yang Wendong said, “In the Asian market, I know that Coca-Cola does not like to invest in and build its own bottling plants, but I am interested. How about we take over the production of Coca-Cola? In addition, I also have sugarcane farms and sugar factories in Asia, and the prices are very favorable. We can definitely cooperate on a large scale.”

Robert frowned and asked, "But don't you have a partnership with Pepsi? Also, your investment in Coca-Cola this time might affect your partnership with Pepsi in Asia, right?"

Yang Wendong nodded and said, "Yes, but I'm only interested in OEM manufacturing. It's impossible for me to be tied to Pepsi. As for investing in Coca-Cola, if they're not willing, then forget about the cooperation. I can just cooperate with you instead."

In fact, in terms of global cola market share, Coca-Cola far surpasses Pepsi.

In terms of total size, the two companies are about the same, and Pepsi may occasionally be larger than Coca-Cola. However, Coca-Cola's main business is beverages such as Coca-Cola and Sprite, while Pepsi's main business is food, such as Lay's potato chips, cereals, Yum! Brands, Pizza Hut restaurants, etc. Its beverage business accounts for only about 40%.

If he had to choose between two manufacturing businesses, he would prefer to partner with Coca-Cola; it's just that the conditions weren't right in the early stages.

Of course, it would be better to have both.

Robert thought for a moment and said, "It still won't work. We have a contract with Swire Group in Hong Kong. Although the contract has a time limit, we have been cooperating for decades. There is no need for us to change our partners."

“I understand that,” Yang Wendong nodded and said, “but Swire only handles the contract manufacturing of Coca-Cola in Hong Kong and some Southeast Asian countries.”
"Regarding the mainland, although your company also ships directly from the Swire factory, there hasn't been a contract authorizing the Swire factory to have complete control over the mainland beverage market, right?"

"No, that's not it." Robert asked, "Are you very optimistic about the future of the mainland market?"

"Of course," Yang Wendong nodded.

In this era, there are actually not many foreigners who are optimistic about the mainland market, and few people can imagine the future potential of the mainland.
The term "demographic dividend" actually only appeared after it came into use in mainland China.

Before this, for example, India and some Southeast Asian countries had a higher population density than the mainland, but the large population made development even more difficult and instead became a burden on economic development.
India had good relations with several top alliances, including the US, the Soviet Union, and Europe, in the 50s, but decades later, it's still the same old story.

Robert thought for a moment and asked, "In the United States or Europe, there isn't much competition between our two companies, but in the mainland market, your Very Cola has already built a factory. Doesn't that make us competitors?"

Yang Wendong said, "Yes, they are competitors, but that doesn't affect our cooperation. There are only a few people out of a billion in mainland China who have ever drunk Coca-Cola. If we're talking about competition, it'll take at least 20 years. We don't need to think that far ahead, right?"

“That makes sense.” Robert nodded.
He's just an employee; in 20 years, he'll definitely be out of a job, so there's no need to worry about it.
Yang Wendong continued, “Foreign investment in factories in the mainland will cause a lot of trouble. You don’t understand much about the situation in the mainland, but we in Hong Kong are more familiar with it. This is a good thing for both of us.”

Coca-Cola's scale was so large that it had a very strong ability to create jobs. Beverage production in that era was not as fully automated as it is today.

Furthermore, if operating costs in mainland China are reduced to the extreme, it may even be possible to export in reverse.

Controlling employment is what Yang Wendong values ​​most. How much money he makes from contract manufacturing is not important, as he has many other ways to make money.

“Transferring production to you is indeed a good idea, but we also need to take a stake in the manufacturer, as is the tradition,” Robert continued.

Yang Wendong agreed, "No problem."

Investing appropriately in suppliers is a strategy employed by many large companies, including Cheung Hing Group in Hong Kong. Other top companies are not fools and will naturally consider this as well.

“Okay, I will also inform the board of this matter,” Robert said. “I think there shouldn’t be much of a problem with approval. Anyway, the initial scale of cooperation won’t be very large. Although there are many people in the mainland, their current consumption power is still not high.”

Yang Wendong didn't say anything more.
Despite having one of the lowest GDP per capita in the world today, China's consumption power, particularly for high-end products, remains strong.

For example, imported cars, such large items, accounted for over $85 billion in consumption in 20. That's an astonishing figure. Of course, this was also somewhat related to Hainan at that time.
The meeting with the Coca-Cola CEO was relatively successful; at least he won him over. Now it remains to be seen how he will persuade the board of directors.

This is also his advantage. He has abundant funds and has invested in many companies, but he does not participate in management. Instead, he gives the voting rights to the current CEO. As an employee, the CEO is naturally happy to have the support of a major shareholder and will naturally support him.

Under normal circumstances, there wouldn't be any investors like this. It's only because Yang Wendong knows the future and is only after economic gain that he would operate this way. Otherwise, spending hundreds of millions of dollars to invest in a company would definitely be for the purpose of pursuing certain rights.

The day after Robert left, Yang Wendong was greeted by another American business tycoon, Phil Knight, the founder of Nike.

After exchanging pleasantries, Phil Knight said, "Eric, I'm planning to move the shoe factory inland. What do you think?"

"All of them?" Yang Wendong asked in surprise.
Phil replied, "Not all of it, but we'll prepare for a gradual migration. Last year, I arranged for an American supplier to produce in the mainland, and we found that the local production costs were very low. Although there were some issues with the quality of the products, we were able to gradually improve them."

Yang Wendong nodded and said, "So you're planning to make the mainland Nike's main production base in the future?"

It has to be said that Nike's ability to develop and grow is truly remarkable;
After investing in the US in his early years, he basically stopped paying attention to the US side, only arranging for people to manufacture for Nike in Hong Kong. As a result, the number of orders from the US was so large that the Hung Hom factory in Hong Kong was overwhelmed and had to expand several times. Now, at a time when many Westerners are not optimistic about the reform and opening up in mainland China, he is preparing to make a big bet again. This is his vision for success.

Phil Knight said, "Yes, recently the mainland has approved the authority of foreign companies to dismiss employees, and several special economic zones can also operate independently. The time is ripe."
I've calculated the costs, and production costs in mainland China are far lower than in Hong Kong. That's why I'm here today to discuss relocating our Hong Kong factory to the mainland.

"I see, I understand." Yang Wendong nodded and said, "Actually, I had been planning on this as well. I was originally going to do it gradually, since there are tens of thousands of employees over there, but it seems you can't wait?"

Phil Knight said, "Yes, Nike is expanding on a massive scale across the United States now, and there are too many competitors in the athletic shoe industry. I have to find ways to reduce costs."
Relocating the factory to the mainland, where labor costs are extremely low, is the only unique advantage I can think of. Furthermore, the cost of labor in Hong Kong has exceeded US$250 per month, which is much higher than not only in the mainland but also in Taiwan and Southeast Asian countries.

I know you're from Hong Kong and probably want to set up a factory there, but our industry can't withstand excessively high labor costs.

“I understand what you mean.” Yang Wendong nodded slowly and said, “Well then, I’m going back to Hong Kong soon, I’ll take care of this.”

Nike will be a top giant in the future, but it is not now. At most, it can only be described as a rapidly developing company. Without unique advantages, it is much more difficult to develop into a giant in this traditional industry than in a newly emerging industry like computers.

Secondly, Hong Kong's property prices have skyrocketed several times over in just a few years, leading to a similar surge in labor costs. While some high-profit industries can withstand the pressure, the textile, footwear, and toy manufacturing industries cannot. Industries with lower profit margins, such as hardware, have already relocated.

This is a trend, and it can't be changed.

Phil Knight laughed and said, "That's good. I hope to start building the factory in the mainland next month, and ideally start small-scale production by the end of the year."

"You're really in a hurry. Alright, I'll try my best," Yang Wendong nodded in agreement.
This is a problem he will have to face sooner or later. Back then, Changxing Group recruited workers on a large scale in Hong Kong, which gave it a huge influence. But today, it has to relocate a large number of factories, which will also lead to a huge unemployment problem.
However, this is unavoidable. It can only be said that economic development inevitably has its sacrifices. The mainland in the past, or Europe, America, and Japan decades ago, all followed the same path.

On May 26, Yang Wendong returned to Hong Kong;
Various media outlets were already waiting at the airport, and as soon as Yang Wendong came out of the VIP channel, he was almost surrounded by reporters.

Fortunately, the group was well-prepared, and a large number of security guards managed to suppress the group of reporters, but Yang Wendong was still able to hear many of their questions:

"Mr. Yang, after Best Buy goes public, are your companies in Hong Kong also planning to go public?"

"Mr. Yang, what are your views on the future of Hong Kong's economy?"

Yang Wendong ignored these questions and walked straight out of the airport. After getting into his car, he asked his assistant who had come to pick him up, "What's going on?"

"Mr. Yang, with Best Buy's IPO, your shares are worth as much as HK$70 billion, which has caused a huge sensation in Hong Kong," the assistant quickly explained.

“I know about this; it was expected.” Yang Wendong frowned slightly. “But how did these people know when I was returning to Hong Kong?”

The assistant's expression changed, and he said cautiously, "Mr. Yang, the timing of your return to Hong Kong is top secret; very few people within our organization know about it."

At this point, another assistant said, "Could it be because of the plane? Your plane needs to apply for flight routes and airport runways in advance for each flight. The relevant personnel in the United States will know, and the relevant personnel in Hong Kong will also know."

"You mean, it was leaked by people from ancient times?" Yang Wendong said slowly.

This is indeed a loophole, but there's no way around it; while private jets offer convenience, they inevitably face this problem.
Of course, even if you don't fly on a private jet, the same applies to taking a regular flight; the airline is certainly aware of all the necessary information.

When it comes to flight, there is no such thing as absolute secrecy, unless it involves a national-level entity.

"We can only say that it's a possibility, and we will investigate it internally later," the assistant replied.

Yang Wendong said, "Okay, investigate. Whether it's an internal or external leak, we will not let it go unpunished."

If it's just being interviewed, he doesn't care; it's just a bit tedious. But leaks of information also involve security.
It's impossible to keep one's travel plans completely secret, but if relevant people know about them, it's not a big problem. However, if one of these people leaks the information to others, the risk becomes much greater.

"Yes, Mr. Yang," the assistant replied.
After returning home, Yang Wendong rested for two days. He had been busy with a lot of things in the United States for some time, so he took the opportunity to relax.
On May 30, Yang Wendong arrived in Hung Hom, and Su Yiyi accompanied him.
Looking at the numerous factories around him, Yang Wendong sighed and said, "These factories will soon all disappear."

“Nike has made the request, and there’s really nothing we can do. The labor cost gap between Hong Kong and the mainland is too big now.” Su Yiyi was also aware of the specific situation.

Yang Wendong said to one of the people next to him, "Old Huang, prepare to make arrangements and ask who is willing to go to Shenzhen to develop, especially technical personnel and high-quality personnel. These people should be retained."

Then we immediately partnered with the people sent by Nike to find a suitable location in Deepsea City to build a large factory, aiming to complete it within six months.

Textile factories are relatively simple; they provide shelter from the wind and rain, and a bucket of water and electricity is basically all that's needed.

Old Huang replied, "Okay, Mr. Yang."

Yang Wendong added, "Regarding personnel, for general employees whose contracts expire in the past year and are not renewed, we will give them a few months' salary as compensation. If their families have special difficulties, they can apply for assistance from the Changxing Charity Foundation. We need to expedite this matter."

"Yes." After Lao Huang agreed, Yang Wendong waved him away. Then Yang Wendong said to Zheng Zhijie, "Lao Zheng, there's something else. So many factories in Hung Hom will be relocated within a year. What do you think we can do with the remaining factories?"

PS: Ask for monthly ticket

(End of this chapter)