Hong Kong 1980: The Savage Era

Chapter 141 [Hexiang Trading Company]

Luo Qihong has mastered the art of making big promises, and it is no problem for him to deceive a few foreigners.

Only by replacing foreigners can the impact be minimized.

"The boss's promise will definitely make them ecstatic. In fact, the conflicts among the foreigners are also quite big. The two deputy managers have been suppressed too much by the department manager. If they don't join us, it is basically certain that they will have to resign." Su Qishan said flatteringly.

The flattering words did not make Luo Qihong's worries disappear, but made him more alert. Luo Qihong smiled and said, "Stop flattering! We are not like the Paramount Company in China Gas Company. We need to be more prudent and be careful not to fall into the hands of these foreigners."

"Boss, don't worry. We are all very careful in doing things. I have also told the people we brought with us to be careful with their words when they come into contact with all the management." Su Qishan said seriously.

"Well, it's better to be careful!" Luo Qihong immediately changed the subject and said, "How is the data collection going for companies such as trade, electronics, and department stores?"

This was Luo Qihong's private matter, but he also entrusted Su Qishan to do it. After all, Luo Qihong had too few people he could use.

"Boss, to be honest, department stores are an industry with the most brutal competition. Even the four major Chinese department stores from the 60s and 70s are now in financial difficulties. The China Department Store has even been acquired by Lane Crawford. Wing On Department Store is also on the decline and no longer has its previous market share." Su Qishan rarely refuted Luo Qihong.

"Is it because of the massive invasion of Japanese department stores?" Luo Qihong asked with a frown. In fact, he didn't have much hope for the department store industry. He didn't have that much money to compete. He just took a look with a fluke mentality.

Su Qishan nodded. "Most of the blame lies with Japanese department stores, and a small part is due to the supermarket plans of Jardine Matheson and Hutchison Whampoa, which have dealt a heavy blow to the department store industry."

"What about the trade and electronics industries?" Upon hearing this, Luo Qihong naturally would not worry about the department store industry anymore.

"Most electronics companies in Hong Kong are OEMs. Although the electronic export trade is worth hundreds of billions of dollars, there are still many electronics companies in Hong Kong. The average annual profit does not exceed 2 million yuan. The degree of competition is only slightly less severe than that of the department store industry."

"As for export trade, it is not optimistic, but it can still have a high profit margin." Su Qishan handed over a document. "This is some information suitable for the company in the trade and electronics industries."

Luo Qihong took the document, stared at Su Qishan and asked, "Do you think we are in the electronics industry or trade?"

Su Qishan didn't expect Luo Qihong to ask for his opinion. After careful consideration, he replied, "Trading is better than the electronics industry. Today, most Hong Kong electronics companies are hand-assembled, which is at the bottom of the entire industry. The profit earned is less than 5% of the brand fee. If we want to build our own electronics industry, we need a lot of funds and a large number of R&D teams, which will take a long time to accumulate."

"Trade requires connections and relationships. If you acquire a small trading company, you can expand while making money, and the current situation will not be affected. Therefore, I am more optimistic about the trade industry."

Luo Qihong nodded and said, "It coincides with my idea. Let's enter the trade industry."

After saying that, Luo Qihong directly skipped the information of the electronics company and started reading from the chapter on the trading company.

Half an hour later, he asked Su Qishan, "According to the analysis of the data, Hexiang Trading Company is the most suitable for us, and the capital required is only 8 million yuan."

Su Qishan hesitated for a moment and said, "In fact, Li & Fung Trading Company is more suitable for us, but the Feng Bailiao family holds 46% of the shares of Li & Fung Trading Company, so we have no chance to make a move."

Founded in 1906, Li & Fung Trading Company is a medium-sized trading company in Hong Kong that mainly engages in garment trade and a series of durable consumer goods such as toys, furniture, gifts, cooking utensils and tableware.

Luo Qihong nodded and said, "Since we can't take it down, let's not worry about it. Let's just take over Hexiang Trading Company."

"Boss, do you plan to have China Gas acquire the company or have Zhaoan Real Estate Company acquire the company?" Su Qishan asked. Luo Qihong shook his head and said, "Neither. My private company will acquire the company."

Su Qishan said, "Hexiang Trading Company mainly deals in ready-made clothes, toys and dried seafood. It is currently negotiating with Japan's Isuzu Motors for agency rights. The problem is that Isuzu Motors hopes that Hexiang Trading Company can establish an auto repair company that specializes in repairing Isuzu Motors' auto products."

"Unfortunately, Gong Guoyan, the boss of Hexiang Trading Company, disagrees and hopes that the capital contribution of the auto repair company will be 50/50 to reduce the expansion pressure of Hexiang Trading Company."

"Gong Guoyan only holds 37% of the shares, so we do have a relatively large opportunity. The current share price of Hexiang Trading Company is 1.46 yuan, with a market value of 1.5 million yuan. Even if a takeover war is triggered, we have the strength to carry out a full acquisition," said Luo Qihong.

The funds for the acquisition of Hexiang Trading Company naturally came from the equity of China Gas Company and the mortgage loan of Garden Terrace Residential Building.

Small meeting room at Citigroup Finance

Sitting opposite Luo Qihong was Liang Botao, who was reading some documents that Luo Qihong brought.

"Mr. Luo, do you want to acquire Hexiang Trading Company?" Liang Botao had already heard about Luo Qihong's acquisition of China Gas Company. Now he turned around and acquired a trading company. He really couldn't keep up with Mr. Luo's thinking.

Luo Qihong's businesses involve two industries, gas energy and real estate. Now he is heading into the unfamiliar trade industry. His thinking is indeed a bit strange.

"Yes!" Luo Qihong thought for a moment and explained a little, "The market conditions have not been very good recently (compared to the first half of 81). I am also in a lot of debt now, and I need to make up for it by earning profits from other industries."

Liang Botao doesn't know much about cities and counties, but he has handled many real estate company acquisitions and has some understanding of the current situation in cities and counties.

"Luo Sheng, this is a simple acquisition, but I still need to understand the situation of Hexiang Trading Company before I can discuss the next plan with you. It will take about a week." Liang Botao closed the file and said, "Why don't we talk about some insights into the trade industry first."

Luo Qihong laughed and said, "Mr. Liang, do you think it's not the right time for me to acquire a trading company?"

Liang Botao was silent for a few seconds, then responded, "To be honest, Luo Sheng is a client, and we have no right to interfere with what kind of company he wants to acquire. But Luo Sheng and I have some friendship, so I want to say a few more words. If Luo Sheng doesn't want to listen, I can shut up."

Luo Qihong smiled and said, "Mr. Liang, please tell me. If it makes sense, I won't act on my own."

"As far as I know, most of the trading business is controlled by four companies: Jardine Matheson, Hengchang Enterprises, Swire Group, and Wheelock. A small part is divided among large and small trading companies. Hop Cheung Trading Company is not large in scale, so it will be difficult for it to occupy more market share."

"Luo Sheng's personal debts should be very serious. If the funds invested in the acquisition cannot be quickly recovered, I am afraid that even greater disasters will occur."

Liang Botao said a lot, all to dissuade Luo Qihong from impulsively acquiring Hexiang Trading Company.

This is sincere. Once Luo Qihong cancels the acquisition, Liang Botao will be pushing the business away. It will not benefit the Wan Guo Bao Tong Financial Company at all, but only harm it.

"I know Mr. Liang means well by saying this." Luo Qihong smiled faintly, "In fact, I started doing business in September 80, and it has been exactly one year and one month until now, but I have made at least 9 million yuan in profits from the local market and the stock market, so please believe me, Mr. Liang, the mere 1 million yuan acquisition payment is not a big sum for me."

"And Hexiang Trading Company is involved in my bigger plan. Once the city collapses, the trading company can provide me with a large amount of funds."

(End of this chapter)