A century-old wealthy family that rose from Shanghai

In November 1970, the Wah Tai Toys Factory in Kowloon, Hong Kong, was filled with the constant roar of machines day and night.

Outside the workshop, cardboard boxes bearing the words "DIAKRON" and "MICROMAN" were piled up on the open ground. Forklifts shuttled back and forth, transporting goods to the port. With more than a month to go before Christmas, orders from the European and American markets were pouring in like snowflakes. Telegrams from agents and wholesalers urging delivery were piled up on Su Dongsheng's (President of Huatai Toys) desk.

"Manager Su, the distributor on the West Coast of the United States called again, saying that the first batch of 50,000 units has sold out and they are requesting another 50,000 units, which must arrive before December 10th!" The sales manager rushed into the office with a report in hand, his tone urgent.

Su Dongsheng rubbed his temples, looking at the data on the table: in the first half of November alone, the total value of orders from Europe and the United States had exceeded HK$30 million, twice the sales volume in the Asian market over the past six months. He walked to the workshop window, watching the workers wearing masks assembling toys, a smile appearing on his lips—these two toys, developed under the leadership of the Chen family, had not only established a foothold in the Asian market through Kidswant stores, but had also sparked a craze for "transforming toys" in Europe and the United States.

"Have the production department work extra night shifts, and urge the raw material suppliers to prioritize delivery. We don't care about higher freight costs; we must use the fastest shipping routes," Su Dongsheng decisively ordered. "In addition, compile a sales data set for the European and American markets and send it to Chen Wenkai, the vice president of Yangtze River Industries, to tell him that our 'stepping stone' has already knocked open the door to the European and American markets."

He knew in his heart that the hot sales of these two toys were not only a victory for Huatai, but also a success for the Chen family's "channel + IP + product" strategy - and even greater opportunities might be yet to come.

At almost the same time, in the conference room at Mattel's headquarters in New York, the atmosphere was solemn yet somewhat excited.

Chairwoman Audrey Hepburn sat in the main seat, dressed in a well-tailored black suit, exuding elegance and presence. Since Mattel went public in 1968, under her leadership, the company acquired Romper Room children's television station and launched the "My Little Pony" project, achieving tremendous success within two years. The management team had long been convinced of the value of this "major shareholder and helmsman."

"The G1 animated special of 'My Little Pony' has exceeded expectations. How is 'Escape from Catrina' progressing next year?" Audrey Hepburn spoke first, her gaze falling on CEO Oris.

Oris immediately stood up and reported: "The animation production of the special episode has entered the final stages and will be broadcast in February next year. The design of the peripheral toys has also been completed at the same time, and it is expected to drive the sales of the 'My Little Pony' series up by another 30%."

“Very good.” Audrey Hepburn nodded slightly, her tone approving. “This is the power of IP—diversification doesn’t mean deviating from the core toy business, but rather using content to empower toys. Now, when people mention Mattel, they no longer just think of Barbie, but also My Little Pony. This is the result we wanted.”

Applause filled the conference room as the management team looked at the leader, who possessed both beauty and business acumen, with admiration in their eyes.

Just when everyone thought the meeting was about to end, Audrey Hepburn gestured to her assistant to place three boxes on the conference table.

The moment it was opened, everyone's attention was drawn to it—it was a toy sample of Diaclone and Microstar Superman.

"This is a product from Hong Kong Huatai Toys. It can transform with just a light press." She picked up a Diaclone toy, pressed the button on the top, and the sports car instantly unfolded its wings and transformed into a "robot" form.

What potential do you see in this toy?

Oris paused for a moment, then said, “Huatai is our long-time partner. They manufacture Barbie dolls and ‘My Little Pony.’ These two toys are indeed excellent, but they are already being sold in Europe and America through distributors. Is it still necessary for us to get involved? After all, ‘My Little Pony’ still needs to focus on developing its core business.”

Many managers nodded in agreement, agreeing with Oris's point—Matteo already had two major IPs, Barbie and "My Little Pony," so there was no need to divert resources further.

"wrong."

Audrey Hepburn put down the toy and said firmly, "With just two IPs, we can't completely shake off Hasbro. These two toys are our opportunity to create a third super IP."

She stood up, walked to the whiteboard, and wrote the four characters "Transformers" in large letters. "We will develop a new IP, 'Transformers,' based on Diaclone and Microstar Superman: dividing them into multiple levels such as Legendary, Commander, and Leader according to toy size and complexity; at the same time, we will produce comics and animations to tell the story of the Autobots, led by Optimus Prime, fighting against the Decepticons led by Megatron."

The meeting room fell silent for a moment, then erupted in even more enthusiastic applause.

Oris was the first to react, excitedly saying, "This is simply a brilliant idea! 'Transformers' can fill the gap in our male children's toy market. With it, Hasbro is no match!"

Other members of the management team echoed this sentiment, eager to launch the project immediately.

"No need to rush."

Audrey Hepburn raised her hand to signal everyone to calm down. "I've already spoken with Huatai, and they're willing to cooperate. Oris, you take the team to Hong Kong and finalize the contract as soon as possible. We must secure the joint development rights for 'Transformers'."

Her tone was calm, yet it exuded an undeniable confidence.

In reality, the two companies that appear unrelated to outsiders are actually both owned by the Chen family.

The day after the Mattel meeting, at Hasbro headquarters, the second-generation CEO, Meryl Hasenfeld, stared intently at the Diaclone toy on the table, his expression grave. "This toy sells very well in Europe and America. Just what is the background of Huatai Toys?"

He asked his son, Stephen Hasenfield, who was sitting next to him.

Stephen handed over a document: "Wah Tai is a toy giant in Hong Kong, backed by the Chan family, and... they are Mattel's long-term OEM manufacturer, producing Barbie dolls and 'My Little Pony'."

Merrill's eyes dimmed instantly, then a glimmer of hope ignited again: "Mattel may not be willing to cooperate deeply with them, after all, 'My Little Pony' is still in its growth phase. Stephen, go to Hong Kong immediately and tell Huatai that as long as they cooperate with us, we can hand over the OEM business of 'Special Forces' to them."

He knew that while Hasbro had an advantage in the men's toy market, the emergence of "transforming toys" could potentially disrupt the existing landscape, and he had to seize this opportunity.

Stephen didn't dare to delay and booked a flight to Hong Kong that same day.

But when he arrived at Huatai Toys headquarters, he saw Oris leading Mattel's team out of Su Dongsheng's office, the two sides shaking hands and exchanging pleasantries, clearly having reached a cooperation agreement. Stephen stood in the corridor, his face pale—he was too late.

After seeing Oris off, Su Dongsheng saw Stephen at the door and shook his head helplessly: "Mr. Stephen, I'm really sorry. Huatai and Mattel have been cooperating for nearly twenty years, accompanying each other since the beginning of Barbie dolls. Moreover, they were ahead of us."

He didn't say it explicitly, but he knew more about the deep relationship between the two toy factories than Oris did.

Stephen gave a bitter smile, knowing that it was useless to try any further, and could only leave dejectedly.

He knew in his heart that missing out on "Transformers" might be a "fatal step" in Hasbro's competition with Mattel.

Mattel and Huatai have officially signed a joint development agreement for "Transformers." According to the agreement, Huatai will be responsible for auxiliary R&D and OEM manufacturing of the toys, while Mattel will lead the R&D, IP operation, animation production, and promotion through European and American channels. Both parties will enjoy a proportional share of the "Transformers" intellectual property rights. The news has sent shockwaves through the toy industry—a collaboration between two toy giants is a major move.

Meanwhile, in the European and American markets, Diaclone and MSI Superman continued to sell well. On the eve of Christmas, many department store shelves were already empty, and parents were even willing to pay double the price to buy "transforming toys" for their children.

No one knows that behind this global "transforming toy" craze lies a meticulously planned business strategy by the Chen family.

The birth of "Transformers" is just a key step in this grand scheme—in the future, with the broadcast of the animation and the expansion of related products, this super IP will bring a continuous stream of wealth to the Chen family and Mattel.

As Diakron and Microman sparked a "transformation craze" in the global toy market, Chen Wenkai, deputy general manager of Cheung Kong Industrial Group, stepped into the Midea Electrical Appliances Building in Kwun Tong. His purpose was to inspect a key project handpicked by his father, Chen Guangliang: arcade games.

To overcome the technical challenges in arcade game development, Midea Electric Appliances had already established a branch in Silicon Valley and recruited three engineers specializing in integrated circuits and programming; a four-person team was also formed in Hong Kong to handle all the research and development; and the two places achieved real-time technology sharing.

In reality, the research and development itself wasn't particularly difficult; Midea's gaming division primarily trained local engineers. Meanwhile, in Hong Kong, starting in the 1960s, electronic engineering at the University of Hong Kong became highly sought after, and graduates began to emerge. Furthermore, the Hong Kong Polytechnic, with the support of Chen Guangliang, had already established a department of electronic engineering early on.

"Mr. Chen, Manager Yang, you've come at the perfect time!" Lin Botao, the head of R&D, saw Chen Wenkai and Yang Xiancheng, the general manager of Midea Electric Appliances, enter the R&D room and his eyes lit up immediately. He quickly stepped forward.

A device, entirely black with a display screen embedded in the front, appeared prominently. The words "Midea Ping Pong Arcade Machine" were printed on the side of the machine, with a coin slot at the bottom and an adjustment knob on each side.

"The arcade machine has been successfully debugged; both the hardware and software have undergone hundreds of tests!" Lin Botao said, unable to hide his excitement, handing over a one-yuan coin. "Would you like to try it yourself?"

Chen Wenkai took the coin and gently inserted it into the coin slot. With a soft "ding," the screen lit up instantly, displaying two white horizontal bars on either side, with a white dot bouncing in the middle like a ping-pong ball. He skillfully turned the knobs on both sides, moving the horizontal bars up and down, accurately hitting the "white ball" to the other side—as a core member who had participated in the development plan discussions, he knew what this seemingly simple game meant in 1970, when electronic entertainment had not yet taken shape.

"It's fun, and even smoother than I expected!" Chen Wenkai played two rounds in a row before stopping and glancing at the circuit board inside the device. "If the hardware stability is fine, start production immediately and prioritize its deployment in bars, nightclubs, and other places where young people gather."

Yang Xiancheng immediately approved the plan: "The first batch will produce 500 units, with 250 units each for Hong Kong and the United States. The Silicon Valley branch will handle the distribution channels in the United States, while in Hong Kong we will directly contact popular entertainment venues in Wan Chai and Tsim Sha Tsui. We must get the goods on board before Christmas."

Although no snow fell in Hong Kong on Christmas Day 1970, the city was filled with a festive atmosphere—the fusion of Chinese and Western cultures allowed the city to retain the liveliness of traditional festivals while incorporating the relaxation of Western holidays. Christmas holidays are a unique feature of Hong Kong, a predominantly Chinese region.

On this day, Midea's Ping Pong arcade machine quietly landed in 20 top bars and nightclubs in Hong Kong, and was also launched simultaneously in 30 entertainment venues in New York and Los Angeles, USA.

As evening fell, a ping-pong arcade machine was prominently displayed next to the bar counter at the "Starry Night Bar" in Wan Chai. At first, the customers simply watched out of curiosity, until a young man in a suit inserted a coin, and the screen lit up, causing a gasp of surprise from the crowd.

"What's this new gadget?"

"Like a ping-pong ball, but without a table!"

As the young man manipulated the knob to hit the "white ball" back and forth, more and more people gathered around, and some even started queuing up to "try it out".

The same scene was simultaneously played out at the Regent Nightclub in Tsim Sha Tsui, Hong Kong, and the Manhattan Bar in New York, USA.

Adult men almost fell in love with the machine at first sight – at that time, entertainment options were limited to drinking, dancing, and listening to music, and the "real-time competition" and "score thrill" brought by the ping-pong arcade machine perfectly filled the demand for "interactive entertainment".

Some people would insert coins more than ten times in a row in order to "win a game"; some even invited their friends to have a "battle" in front of the arcade machine, and the empty seats next to the bar were instantly filled.

The next morning, the phone rang incessantly in Midea's gaming division. An urgent voice came through the receiver: "Your ping-pong arcade machines are broken! Send someone to fix them right away, the customers are waiting to play!"

On the other end of the phone was the anxious voice of the manager of "Starry Night Bar," and soon after, a similar "malfunction report" came from the New York branch.

Lin Botao's heart sank, and he immediately took two technicians to Wan Chai. Pushing open the door of "Starry Night Bar," he immediately saw the arcade machine surrounded by a huge crowd, with the manager sweating profusely as he explained to the customers.

"Don't worry, let me take a look!"

Lin Botao squeezed in and opened the side panel of the arcade machine—the next second, he and the manager were stunned: there was no malfunction at all; the coin storage box inside the machine was already full of coins, even overflowing to the side of the circuit board, causing the machine to fail to start normally.

"This... how many coins did this machine play?" The manager was dumbfounded, then quickly realized what was happening and grabbed Lin Botao's arm. "Mr. Lin, this machine is so popular! We need to order ten of them, the sooner the better!"

At the same time, other bars in Hong Kong and the US branch reported the same thing: all the "malfunctions" were due to the coin storage boxes being filled with coins. Bar and nightclub managers placed additional orders, and even though each arcade machine cost as much as HK$5000 (US$1200 in the US), it did not dampen their enthusiasm for cooperation.

At the Midea Electric Appliances building, Lin Botao excitedly reported to Chen Wenkai, holding an order report: "We've received orders for 100 units in Hong Kong, and over 120 units in the US! Many entertainment venues have even offered to share revenue with us and give them priority in supplying our products!"

Chen Wenkai smiled as he looked at the ever-increasing numbers on the report.

He knew that the success of the arcade was no accident—his father, Chen Guangliang, had accurately predicted when the project was first launched that with the acceleration of urbanization, young people needed “fragmented and low-cost” entertainment, and the “coin-operated and playable” model of the arcade perfectly met this demand.

More importantly, the birth of arcade games allowed Midea Electric Appliances to officially enter the "electronic entertainment" track from "home appliance manufacturer," complementing the IP matrix of Yoko Shiba's Electronic Arts and Huatai Toys, thus perfecting the Chen family's layout in the entertainment industry.

"Tell the production department to expand production at all costs and increase monthly capacity to 300 units."

"it is good"

At this time in Hong Kong, Diaclone and MSI Superman toys were still selling like hotcakes, and arcade games were sparking a new wave of consumer enthusiasm, creating a "double boom" situation for the two core businesses under the Cheung Kong Industrial Group.

In his villa in Deep Water Bay, Chen Guangliang looked at the report delivered by Chen Wenkai, a hint of satisfaction flashing in his eyes—from Rongchang Heavy Industry in heavy industry, to Midea Electric Appliances in the electronics industry, and then to IP and arcade games in the entertainment field, his "technology + industrial chain + globalization" empire was gradually revealing its vast outline in Hong Kong in 1970. (End of this chapter)