A century-old wealthy family that rose from Shanghai

Time flies, and it is already 1965.

The booming industrial sector in Hong Kong spurred the real estate market to flourish.

截止1964年底，香港的楼价旁边攀升至80~100港币每平方尺，一个普通的单元也要6~10万港币，而高级住宅单元更是达到10~25万港币。

In this context, Chinese-owned banks seized the opportunity to provide subsidies to real estate developers and homebuyers.

At this time, mortgages became popular in the banking and real estate industries.

After paying a deposit for land with their own funds, real estate developers can use the remaining land price as collateral for loans. They can then pre-sell properties to buyers without completing construction, using the proceeds to repay the bank's principal and interest in installments.

The bank also offers mortgage services to homebuyers. Once the homebuyer has paid the down payment, they can use the purchased property as collateral to repay the loan principal and interest to the bank.

The mortgage system has greatly alleviated the funding difficulties faced by real estate developers and homebuyers, stimulating the rapid development of the already booming real estate industry. Bank mortgages, secured by land and property, are a relatively safe loan service.

However, it also has a significant drawback: the capital recovery cycle is too long.

Chinese-owned banks are keen on mortgage business, and Ping An, Hang Seng, and Bank of East Asia, the three largest Chinese-owned banks, are no exception.

The Hong Kong government has long pursued a high land price policy, resulting in a supply shortage of land and soaring land prices, which has fueled rampant speculation. Some banks have blindly lent out huge sums of money, further encouraging land speculation.

Some banks, seeing an opportunity, couldn't resist the urge to invest and used their own funds and depositors' funds to directly enter the real estate industry, just like Liao Baoshan did back then, devoting themselves to becoming real estate developers and speculating on real estate properties.

As a result, small and medium-sized banks with weak financial strength generally suffer from anemia, with empty coffers and depleted liquidity.

Some banks are even unable to promptly process large withdrawals from depositors. The financial strain on many banks is causing anxiety among depositors.

The banking sector is fraught with crisis and could erupt at any moment.

Shortly after New Year's Day, Chen Guangliang, along with Chen Wenkai and other management members of the Yangtze River Industrial Group, visited Tsing Yi Island to inspect the Rongchang Yacht Manufacturing Plant.

Since the launch of Wing Cheong Yachts' 'Neptune Series' in Monaco two and a half years ago, orders from the United States and Europe have poured in. The yacht manufacturing plant in Tseung Kwan O could no longer meet production capacity, so a second yacht manufacturing plant was opened on Tsing Yi Island.

As Chen Guangliang walked into the Rongchang Yacht Manufacturing Plant on Qingyi Island, he was struck by the fact that shipbuilding was indeed a major employer, with a huge number of shipbuilding workers.

"Manager Liu, how many people work at this factory?"

Liu Zhaoxian immediately said, "With more than 1620 shipbuilding workers and technical managers, plus the yacht manufacturing plant in Tseung Kwan O, our Rongchang Yachts has about 3100 employees. This number is half of the more than 6000 workers that Hong Kong's shipbuilding industry had at its peak. It was the boom of our Rongchang Yachts that saved Hong Kong's shipbuilding industry. Currently, there are about 8000 shipbuilding workers in Hong Kong."

At this point, many people present were excited, and some foreign engineers also showed happy expressions.

The success of Rongchang Yachts can be attributed to many factors, including: first, Hong Kong's shipbuilding industry itself has a solid foundation; second, the strong support of the Cheung Kong Industrial Group; and third, choosing the right path – starting in the late 1950s, it focused on using fiberglass in three key technologies: hull, flybridge system, and duplex bridge, aiming to make it the target for the next generation of yachts.

Of course, key components such as engines for Rongchang Yachts are imported, since Hong Kong's industrial chain is not complete; however, Hong Kong's advantage is that it is a free port with very low taxes, so import taxes are almost non-existent.

Chen Guangliang said with satisfaction, "This is indeed encouraging. So, how are the orders going now?"

Liu Zhaoxian pointed to the Poseidon series yachts under production and said, "We have too many orders from the United States. Our production schedule for the entire year is already full. This year (1965), we expect to export 1000 Poseidon series yachts, with a total export value of US$2500 million (HK$1.45 million). This is because our production capacity is still insufficient; otherwise, we could have received even more orders."

"So many?" Chen Guangliang asked with delight.

Hong Kong's GDP exceeded HK$113 billion last year (compared to less than HK$89 billion in the previous year), and Wing Cheong Yacht Manufacturing alone accounted for about 1.3%.

That's absolutely terrifying!
On the other hand, in the decade following World War II, the global annual production of yachts was 3100 vessels, with a value of US$5200 million.

Liu Zhaoxian said, "The main reason is that the global yacht market has exploded since the mid-to-late 1950s. Last year alone (1964), the sales of outboard motorboats in the United States exceeded 45,000 units, and this year it is expected to exceed 50,000 or even higher. This is very rare. The United States has already ignited a yacht craze, just like the popularization of automobiles back then."

No wonder, with such a huge market, even if Rongchang Yacht only gets a sip of soup, it's enough to fill them up.

Chen Guangliang said, "Can we increase our production capacity this year or next year?"

Liu Zhaoxian said, “This year, 1000 ships is just our conservative production capacity. Next year, our two factories will be able to produce at least 1200 yachts.”

Chen Guangliang nodded. Their Poseidon series is a mid-to-high-end yacht, and the unit price is quite high, almost enough to buy a luxury residence in Hong Kong.

“I heard that Taiwan has also introduced yacht technology, so it seems that our competitors have arrived. I attach great importance to the future of Rongchang Yachts. We cannot be satisfied with our current achievements, but must continue to invest in research and development, accumulate technology, and produce better yachts in the future, so as to truly become a world-renowned yacht brand.”

"Yes"

At the site, Chen Guangliang spoke with all the key management and technical personnel, emphasizing that Rongchang Yachts could not become a yacht brand that was merely satisfied with the current situation and whose technology stagnated, but rather that it should continue to develop future yacht technologies.

Larger, more advanced yachts.

In the 1970s and 80s of my previous life, Hong Kong also developed a yacht industry, and it was quite large. But it was just large; it didn't have much technological content. To put it bluntly, it was just assembled goods.

However, in this era, Hong Kong's yacht industry pioneered three major technologies in the world: fiberglass hulls, duplex bridges, and flybridge systems. What followed was even larger and more advanced technological development.

When the time is right, Rongchang Yachts even plans to enter the luxury yacht market and compete with Italian yachts.

On the way back, Chen Guangliang said to Chen Wenkai, the third son of the eldest branch of the family, "I have a concern about the Yangtze River Industrial Group."

Chen Wenkai asked with a question, "What is Father's concern?"

What do you think of the Yangtze River Industrial Group?

Chen Wenkai stated without hesitation, "It's enormous, and possesses technology and a research and development spirit that other factories in Hong Kong lack. From plastic flowers to plastic dolls, from Rubik's Cubes to claw machines, from plastic building blocks to the current yacht industry, we have inventions, not just blind imitations. Besides inventions, we also hold various patents and technologies in many industries."

These are all the fruits of my father's labor, and they are truly remarkable.

To everyone's surprise, Chen Guangliang shook his head and sighed, "In Asia, apart from Japan's dominant economy, Hong Kong is arguably the region with the best export-oriented economy. However, Park Chung-hee, who succeeded in the coup in South Korea in 1962, formulated South Korea's first Five-Year Plan, proposing to 'solidify the industrial base' and build power plants and steel mills to pave the way for manufacturing. Then there's Taiwan and Singapore. These three regions pose the greatest threat to Hong Kong's economy. South Korea, needless to say, with the support of the United States, will likely surpass Hong Kong soon in industries such as textiles, footwear, plastics, hardware, electronics, and machinery. Taiwan only began to lower its currency in 1955 to stimulate exports. Although Singapore hasn't found a way out yet, it is, after all, a predominantly Chinese country. Once South Korea, Taiwan, and Singapore compete with Hong Kong, forming the trend of the Four Asian Tigers, then Hong Kong's industry will face great pressure. Of course, there's also the mainland, which cannot be blocked or be blocked indefinitely. Therefore, many industries of the Cheung Kong Industrial Group cannot maintain their competitiveness in the long run."

These insightful words had a great impact on Chen Wenkai. He had never imagined that such a massive Yangtze River Industrial Group was just a 'paper tiger'.

It's worth noting that Cheung Kong Industrial Group's export revenue exceeded 11 billion last year, generating a profit of 1.05 million. In industries such as textiles and garments, plastic toys, metallurgical machinery, electrical appliances, shipbuilding, and zippers, it is undoubtedly a dominant force in Hong Kong.

"Dad, the textile and garment industry of Yangtze River Industrial Group has now expanded into brands, including Lacoste and Travelpro suitcases. We also have significant investments overseas, such as in Nigeria. Not to mention Huatai Plastics' plastic flower and wig industries, our toy exports are showing substantial growth every year. With such a large-scale industry as electrical appliances, zippers, and yachts, we would be considered a major enterprise in any country in the world. As long as we continue to invest in the research and development of new products and technologies, we will definitely be able to maintain our competitiveness for a long time."

"So we must focus on the key points! Just like with plastic flowers and wigs, everyone rushes in, and soon the industry becomes mass-produced with low profits. You must remember, in all the industries of the Yangtze River Industrial Group: in the textile and garment industry, we must ultimately develop brands; in the toy industry, we must develop IP and brands; in the electrical and electronic industry, we must develop technology and new products. For example, I have them invest in the research and development of cassette recorders. The yacht industry is a long-term industry, and we must pay attention to it."

"Ok, I see!"

Instill in your son the risks and opportunities of the future, so that you can prepare for the future!
January 25th, on the eve of the Spring Festival. Mingde Bank is a small bank without a legal entity. In recent years, it has been keen on directly intervening in real estate speculation, resulting in a quagmire of financial difficulties.

On that day, Sun Benzhong, a major client of Mingde Bank and a factory owner, approached Zheng Wensheng, the head of Mingde Bank.

"Mr. Zheng, could you please cash this HK$700 million US dollar check for me? My factory needs investment in factory buildings."

Zheng Wensheng was startled. Mingde Bank's money had all been invested in real estate, leaving only HK$500 million in the account. If Sun Benzhong were to withdraw it, the bank would go bankrupt.

He quickly said, "Mr. Sun, we've been friends for many years. How about I convert this check into a fixed deposit for you, with an interest rate of 6% per year?"

"This is ridiculous!" Sun Benzhong said angrily. "I'm going to invest it in a factory. Time is of the essence. How could I possibly put it into a fixed deposit? Mr. Zheng, I heard you've made a lot of money investing in real estate. You don't actually have this 700 million in your account, do you?"

Zheng Wensheng thought to himself, "I have indeed invested in a lot of real estate, but the key is that I haven't sold any of it yet!"

He could only vaguely say, "We have indeed made a lot of profit, but our funds are currently being used for interbank lending at other banks!"

Sun Benzhong wasn't so easily fooled. He said, "I don't care. You have to pay me back today, or you'll be violating the bank's credit."

"I really can't give you that today!"

"well"

Sun Benzhong stormed out of Zheng Wensheng's office in anger.

the next day.

News that Mingde Bank was out of money had already spread throughout Hong Kong, and a large number of depositors immediately lined up at the door demanding to withdraw their funds.

Upon hearing the news, Zheng Wensheng felt as if the sky had fallen and exclaimed, "It's over!"

How could a small bank withstand the surging run on withdrawals? Depositors who couldn't withdraw their money cried and wailed in the streets, which quickly alarmed the media and the Hong Kong government, and for a time, Hong Kong people were filled with panic.

One depositor was yelling outside, "Damn Mingde Bank, give me my money back right now!"

A depositor picked up a stone and smashed it against the glass of Mingde Bank, causing chaos at the scene.

Mingde Bank disregarded the interest rate agreement of the banking association and insisted on pursuing a high-interest deposit strategy.

When the bank run occurred, the bank's supervisory officer inspected Mingde Bank and found that "it not only had no liquidity, but also no ability to repay its debts."

Things suddenly became serious.

Back then, Liu Chuang Hsing Bank at least had the ability to repay its debts, but now Ming Tak Bank has no ability to repay its debts at all.

The squeeze began to spread quickly.

February 4th, the third day of the Lunar New Year.

Hong Kong has resumed normal work, and major Chinese-owned banks have also reopened.

Instead of a successful start, depositors were met with long queues of customers, and various degrees of bank runs occurred at major Chinese-owned banks in Hong Kong.

At the entrance of Ping An Bank's headquarters, some depositors also came to inquire about the situation.

If public sentiment is not appeased, a bank run is inevitable. No bank in the world can remain unscathed during a full-blown bank run.

Because let's say you have 10 billion in savings, but you also have at least 4 million in loans. If depositors want to withdraw this 10 billion, you will have a shortfall of more than 4 million, not even counting the bank's investments.

In fact, no bank in the world can withstand a bank run that drains its coffers—unless the central bank of a country whose reserves are not tied to gold or foreign exchange reserves, allowing it to print money at will. This is because the total amount of liquid funds of commercial banks cannot equal the total amount of deposits. Otherwise, how would banks support depositors' interest payments?

Ping An Bank is no exception; their total deposits are over 12 billion yuan, and their loans are around 5.5 million yuan.

So early in the morning, Chen Guangliang personally took a megaphone and went outside, shouting, "Everyone, I am Chen Guangliang, a major shareholder of Ping An Bank. What concerns do you have? You can tell me."

He didn't make any promises from the start, but instead built relationships with these depositors.

Upon hearing that it was Chen Guangliang, all the depositors gathered outside were immediately surprised, as he was Hong Kong's "God of Wealth".

"Mr. Chen, many people outside are saying that Chinese-owned banks don't have any money. Does Ping An Bank have any money?"

Chen Guangliang said with a smile, "Ping An Bank is definitely rich, extremely rich. Or rather, do you think I, Chen Guangliang, am rich or not?"

Everyone laughed. In Hong Kong, no one should question whether Chen Guangliang was rich or not.

Chen Guangliang continued:

"So please rest assured, Ping An has a total deposit of 12 billion and loans of 5 million. This deposit-to-loan ratio is as compliant as that of British banks. Furthermore, Ping An Bank is backed by CK Asset Holdings, Global Group, and Cheung Kong Industrial Group, so it is impossible for it to be short of funds."

"Of course, if you want to withdraw money, Ping An Bank will provide the funds immediately. However, you need to consider that if you withdraw money early from a fixed-term account, you will lose interest."

As soon as he finished speaking, many people shouted:
"We won't take it anymore; we trust Mr. Chen."

“That’s right. There are 10 people in Hong Kong working for Mr. Chen. Their money is all deposited in Ping An Bank. How could Ping An Bank be short of money?”

This scenario is unfolding in every branch of Ping An Bank. Just yesterday, Chen Guangliang mobilized all the management team to be stationed at each branch to stabilize the situation.

After all, if it spreads, the consequences will be very serious.

However, Chen Guangliang also realized today that the situation at Ping An Bank is indeed very optimistic.

There might even be a crowd gathered outside the British-owned banks.

In fact, Ping An Bank has over 12 billion yuan in deposits and 5.5 million yuan in loans. Of this, 3 million yuan is deposited by Chen's company and 2 million yuan is in loans, making the actual risk quite low.

Of the HK$200 million in loans to the Chan family businesses, the majority came from loans to Cheung Kong Holdings, due to investments in the Hung Hom Tunnel.

Of the 3 million in deposits, more than half belong to the Yangtze River Industrial Group, followed by Universal Group and Times Pictures. (End of Chapter)