A century-old wealthy family that rose from Shanghai

The next day, Chen Guangliang and Chen Wenkai visited the Rongchang Heavy Industrial Base, which is not only a smelting base but also a base for machinery and equipment production and yacht manufacturing.

In terms of smelting, Rongchang Heavy Industry smelts 300,000 tons of steel annually, supplying 70% of the local market and exporting steel as well. At the same time, it can also smelt copper and aluminum alloys, and produce aluminum alloy doors and windows.

The company mainly produces automatic rice conveying machines, rice washing machines, injection molding machines, and hardware equipment.

In yacht manufacturing, Wing Cheong Yachts maintained a record of exporting 2200 to 2500 yachts annually. Although other yacht manufacturers emerged in Hong Kong starting in the mid-1960s, their output was still only a fraction of Wing Cheong Yachts's, totaling only a few hundred yachts exported.

Chen Guangliang looked very serious as he inspected the workshop where injection molding machines were produced. Rongchang Machinery Equipment invested heavily in R&D for automatic rice conveying machines, rice washing machines, injection molding machines, and hardware equipment because of the demand from its subsidiaries, Hehe Zipper and Huatai Toys, under the Yangtze River Industrial Group.

As one of the world's three major zipper manufacturers and the first zipper manufacturer in Asia to use automatic rice feeding machines, Rongchang Heavy Industry began to independently research and develop and produce automatic rice feeding machines, automatic rice washing machines and other related equipment in the early 1950s. Currently, about half of the machinery used by Hehe Zipper is produced by itself.

Meanwhile, Hong Kong is also a major region for the global plastics industry. After World War II, many plastic engineering companies emerged, producing plastic buckets, bowls, and toys. In the 1950s, it pioneered the invention of plastic flowers, at one point accounting for 95% of global plastic flower production. In the mid-1950s, it also began OEM manufacturing of Barbie dolls, becoming a global leader in the plastic doll industry and a developed region for plastic toys, with toy exports increasing year by year. The need for injection molding machines was high, and Rongchang Machinery Equipment had the necessary conditions for research and development, so it began independent research and development in the early to mid-1950s.

"Mr. Chen, this 'Toy King' injection molding machine, our flagship product from three years ago, is affordable, highly automated, and easy to color change. It was very well received by the market as soon as it was launched. Therefore, this product has sold very well!" Sun Xiong, the chief engineer of the injection molding machine, introduced from the side.

Looking at the 'Toy King' injection molding machine in front of him, Chen Guangliang remembered that this injection molding machine was the first fully hydraulic four-ounce screw direct injection plastic injection machine in Hong Kong at that time. After this product was developed, he specifically instructed that the R&D team be rewarded.

"Yes, as we enter the 1970s, we shouldn't just focus on the Hong Kong market, but look to the world. Our injection molding machines must keep up with the world's advanced technology and truly become global leaders in this field," Chen Guangliang encouraged.

What greatly inspires Chen Guangliang about the development of Yangtze River Industrial Group to this day is that the group's culture and system, in the fields of research and development and production, are far superior to those of companies that "go it alone".

For example, in the injection molding machine industry, Chen Guangliang recalls a company in Hong Kong called Zhenxiong Machinery, which was a multi-billion dollar machinery equipment enterprise in its previous life. It was a leader in the Hong Kong injection molding machine industry, and its total production accounted for 20% to 30% of the entire plastic molding equipment market. However, in the Hong Kong injection molding machine industry today, Rongchang Injection Molding Machine leads in a tiered manner, while Zhenxiong Machinery and others can only rank behind.

This is the R&D advantage of large corporations. Companies like Pfizer and Procter & Gamble invest far more in R&D than ordinary companies.

The Yangtze River Industrial Group has gradually formed a kind of 'corporate culture', and its internal investment in research and development has always been very generous; more importantly, the Yangtze River Industrial Group's research and development direction and other advantages are very obvious.

Sun Xiong nodded and said, "We have been paying close attention to the technological development of injection molding machines globally, while seeking to increase our export share. This year, we expect our exported injection molding machines to account for 30% of our total exports."

"Good," Chen Guangliang said with satisfaction. "Let's maintain this momentum. In short, our group's investment in R&D has always been among the highest in the world. We allocate 4% of the group's annual revenue to R&D."

"Okay, we'll definitely try our best!"

This 4% revenue figure cannot be compared to Huawei in later years, because companies like Huawei are high-tech industries with high profits, so they can allocate 20% of their revenue to R&D. It can only be compared to companies like Midea and Haier. Even the profit margin of Yangtze River Industrial Group is not as high as these two companies, but its investment in R&D is truly high.

Cheung Kong Industrial Group's total revenue last year (1968) was HK$18 billion, equivalent to an investment of HK$60-70 million in research and development, while the profit was only HK$1.35 million.

Later, Chen Guangliang also inspected Rongchang Hardware, an industry that produces various tools.

In his heart, he hopes that Rongchang Hardware will have a place in the power tool industry in the future. In particular, by becoming the first in the world to integrate lithium batteries into power tools, it is very likely that it will develop into a world-leading large-scale hardware tool enterprise.

At that time, there was still no news about lithium batteries, so he naturally wouldn't mention developing them. Their current company couldn't afford that kind of trouble. In his previous life, lithium batteries took more than ten years to develop, going through many companies in the United States, Britain, and Japan, before Sony and the British Academy of Sciences finally got the deal. The British Academy of Sciences alone received $1 million in patent fees.

Chen Guangliang's idea was to intercept the development of lithium batteries in the 1970s, starting his research and development earlier than Japan but later than the United States, at which point he would have great potential for profit.

The last place we visited that day was Rongchang Yachts, a key industry for the Yangtze River Industrial Group.

"Manager Liu, has our acquisition of the Italian Riva brand yielded any results?" Chen Guangliang asked as he entered the manufacturing site.

In 1968, Rongchang Yacht acquired Riva, a century-old Italian luxury yacht company.

Pietro Riva founded the Riva shipyard in 1842, quickly gaining recognition for its elegant designs. This legendary carpenter, Pietro Riva, established his shipyard here and personally launched the first vessels bearing the Riva name. These boats, with their elegant and unique design, distinguished themselves among yachts and quickly earned renown and respect.

After World War I, Serafino Riva established Riva as a motorboat brand, breaking numerous records in racing. He further solidified the shipyard's renowned products into a true brand, a move that left a profound mark on Riva's development. With the transformation of its product line, Riva gradually expanded from traditional transportation tools to the motorboat sector. During the 20s and 30s, Riva's racing boats repeatedly broke records in various domestic and international competitions, winning countless honors and victories.
After acquiring the Riva brand, Rongchang Yachts retained the positions of Chairman of the Board and General Manager for the Riva family in order to gradually gain control of the yacht company. At the same time, they are also transferring Riva's advantages to Rongchang Yachts.

Liu Zhaoxian said, "Yes, our latest fishing boat has taken inspiration from Riva's interior design, and both are made of high-quality solid wood. Not only that, we obtained various technical parameters of Riva's first twin-engine yacht, Tritone, so we can launch our own engine in the 1970s."

The main reason for all that effort is undoubtedly the technology. And it's not a loss either; Rongchang Yachts introduced Riva to Asia, and Riva consequently benefited, effectively increasing Rongchang Yachts' assets.

"Yes, the yacht industry is a key industry for the future of Yangtze River Industrial Group, and we must do well in it!"

"Okay, Mr. Chen."

By this time, Hong Kong had caught up in its talent shortage. For example, in the 1960s, the Hong Kong Polytechnic and the University of Hong Kong had a considerable number of students graduating in the fields of electronics and mechanical engineering.

In fact, even without Chen Guangliang, VTech, a Hong Kong company founded in the 1970s, was a multi-billion dollar enterprise. This company produced its first game console in 1978 and later expanded into educational devices and telephones. VTech was established against the backdrop of a large number of electronics professionals emerging from the University of Hong Kong.

In this era, the Hong Kong Polytechnic and the University of Hong Kong have had very popular majors in electronics and mechanical engineering since the 1960s. This is firstly due to the promotion by Chan Kwong-leung and Cheung Kong Industrial Group; secondly, Hong Kong's electronics industry has been developing since 1957, and now there are 300 electronics companies and branches, employing as many as 50,000 to 60,000 people.

On the way back, Chen Guangliang said to his son Chen Wenkai in the car, "Do you know anything about integrated circuits?"

Chen Wenkai nodded and said, "Yes, I know. I've been paying close attention to the development of transistors and integrated circuits in the United States, especially when Intel was founded; I even considered investing in them." After all, he was a top student who graduated from MIT, and having traveled overseas on business trips, he had a good grasp of the direction of new technologies.

Chen Guangliang said, "The biggest change brought about by the emergence of integrated circuits will be in computers, no longer just in commerce. The personal computer industry may emerge in the 1970s. Of course, I'm not asking you to be in the limelight, but rather to pay attention to what the emergence of personal computers can bring to the Yangtze River Industrial Group. For example, injection molding machines; if personal computers emerge, then they can definitely be combined."

Chen Wenkai had long appreciated his father's foresight. He said earnestly, "Yes, I've remembered it. We will make sure that Cheung Kong Industrial Group's technology leads Hong Kong and integrates into the world. We will not be like frogs in a well."

Chen Guangliang said with satisfaction, "I have two important projects to discuss with Midea Appliances tomorrow."

Chen Wenkai's spirits lifted, and he said, "Okay."

He knew that many of the inventions and technologies of the Yangtze River Industrial Group were proposed by his father.

The next day, Chen Guangliang and his son Chen Wenkai arrived at the Midea Electrical Appliances Building in Kwun Tong.

Shortly after, they went directly to the conference room, where they saw Midea's products already laid out on the long conference table—from radios and cassette recorders to electric fans and telephones, and finally, military and civilian radars manufactured for the United States.

Yang Xiancheng, the newly appointed general manager of Midea Electric Appliances, is a young man under forty years old. He is a PhD who returned from studying abroad and is a tech expert.

As a leader in Hong Kong's electronics industry, Midea Electric Appliances, founded in 1957, has achieved considerable success. It exports 25 radios per month, totaling 300 million per year, though the profit margin is low, barely exceeding ten million. Its cassette recorder, released in 1968, was immediately welcomed in overseas markets, attracting pressure from Japanese companies like Sony and Sanyo—but who's afraid of whom? The fan industry is, needless to say, a small one, but Midea-branded telephones are already comparable to American and Japanese brands, boasting numerous patents and serving clients including the four major American companies, Bell.

"Today we won't talk about performance, but only about the two newly established projects and look to the future."

Everyone immediately focused their attention. When Philips invented the tape recorder, they immediately followed suit, which is why they released a best-selling video recorder at home and abroad in 1968.

Chen Guangliang continued, "The first project is about cassette tape recorders. There are two directions going forward. The first is to continuously reduce the size and continuously improve the sound quality. I believe you all think this way and are doing this."

Several managers (technical managers) from the radio and tape recorder division nodded in agreement.

Chen Guangliang took out a stack of documents and said, "So I've developed a new product—the Walkman. It copies music onto a cassette tape, and then you can listen to the music you want anytime, anywhere through headphones without disturbing others. This product needs to be small enough, have good sound quality, and a battery that lasts an hour. A tape recorder without the recording function and speaker, plus high-fidelity sound quality, becomes the Walkman. With such a product, we might be able to listen to an entire opera on a long journey."

To everyone's astonishment, the data from the Walkman was a simplified diagram, but its direction was undoubtedly very clear.

Upon receiving the information, Yang Xiancheng exclaimed excitedly, "This is truly a groundbreaking product. If it can be completed, it will definitely cause a sensation around the world."

Chen Guangliang said, "Therefore, I hope to start registering the patent in a year, and then conduct research and development while waiting for the patent to be approved."

"No problem, we'll set up a project team as soon as possible."

In its previous life, Philips actually had the opportunity to be the first to produce the Walkman. The inventor, Andreas, even told these equipment manufacturers about his idea, but Philips mocked them, saying: "Nobody's crazy enough to run around wearing headphones! It's just a useless gadget that crazy people like!"

As a result, in March 1979, Akio Morita had a brilliant idea, and Sony quickly invented the 'Walkman' based on its own Pressman TCM-100 tape recorder in just six months.

At this moment, Chen Wenkai was also taking notes. He was also very interested in this project and wanted to participate.

Chen Wenkai also suggested: "We need to invest heavily in research and development, and at the same time recruit relevant graduates from the University of Hong Kong and the Hong Kong Polytechnic to cultivate talent for the company in the long term."

Yang Xiancheng nodded and said, "We have been cooperating with these two schools, and many graduates join us every year."

He knew that Mr. Chan was the biggest supporter of the Hong Kong Polytechnic University and had also donated to the university’s related programs.

Later, Chen Guangliang took out the concept materials for the second product and said, "The emergence of integrated circuits has changed the world. This is a commercial video game machine, no longer limited to the laboratory, playing games on a commercial computer costing $40."

Upon hearing this, everyone's eyes widened; the boss's ambitions were far too great.

After receiving the materials, everyone began to read them. A little later, someone said:
"This is the coin-operated game feature we invented."

This looks a bit like a television set.

Coin-operated game machines were first used in claw machines.

Chen Guangliang said, "I remember an American once told me that whoever dares to underestimate the wisdom of Americans will make money. Computer games must be something that is not too mentally taxing. So this game machine is very simple. A ping-pong game machine is a small toy controlled by a computer program. Two vertical bars represent a paddle, and a small dot represents a ball bouncing on the screen. The bounce is controlled by a button operated by the user. If you miss, you lose a point. I call this machine an 'arcade machine.' After it was invented, I put it in a bar and guaranteed it would be packed with coins all night."

After reviewing the design draft, Chen Wenkai said, "This computer program control definitely requires integrated circuits, but with Hong Kong's technological level, it's not safe enough. I suggest we set up a research and development studio in Silicon Valley to conduct joint research and development."

Yang Xiancheng also agreed, saying, "I agree. Not only can we conduct joint research and development, but it will also be convenient to sell the products to the United States later. We can set up a branch company."

"You guys handle it as you see fit; I only care about the results."

"Yes, Mr. Chen." (End of Chapter)