A century-old wealthy family that rose from Shanghai

Cheung Kong Industrial Group generated a net profit of HK$39 billion in the past year.

If it's a listed company, the release of its annual report will likely cause a huge uproar and attract the attention of countless people, even those in countries like the UK and the US.

In terms of profit distribution, the traditional textile group, Sin Fung Textile Group, continued to grow thanks to the development of its brands, with profits reaching HK$5.5 million last year (1986).

This level of profit was something no textile company could have achieved in the past; perhaps not even half of them could have done it.

Because the profit margin of Hsin Feng Textile Group has increased significantly due to the presence of brands and technology. Among its brands, "Lacoste" and "Uniqlo" have spread throughout Asia, each with more than 100 stores. The technological aspect comes from advanced fabrics, with fleece, thanks to its patents, still contributing the most. Moreover, a second-generation fleece product has been developed and is very popular in the market.

Huatai Group generated over HK$800 million in profit last year, with over HK$200 million coming from comics and related products, nearly HK$500 million from OEM manufacturing for Mattel Group, and its own brands generating over HK$100 million in profit (due to a small market).

Manufacturing for the global toy giant Mattel didn't actually offer much benefit in terms of profit margins. Mattel's real favoritism lay in exclusively supplying orders to Huatai Group. Even if Huatai Group were to be transferred to a third-party manufacturer, they would only trust Huatai Group's quality management system. The deeper reason, of course, was the manipulation by the Chen family.

Rongchang Group generated HK$7 million in profit last year. Currently, profits from Hong Kong's smelting industry are very low, only tens of millions, because it can't compete with Japan (which offers government subsidies). On the contrary, the yacht industry, machinery and electrical equipment, and hardware tools are developing very well and represent the future of Rongchang Group. In particular, being the first to apply lithium batteries to power tools has given Rongchang Hardware enormous international recognition and a reputation as a leading technology company.

Finally, the biggest source of profit is Midea Group, which earned a total profit of over 18 billion yuan. The most profitable products are: video games, portable music players, and smartwatches.

Hong Kong remains the world's largest exporter of portable music players, surpassing Japan and the United States. Although price is still an advantage, it is at least a product with high technological content.

An article in the Sing Tao Daily a few years ago sparked public debate in Hong Kong.

The article points out that, like other Hong Kong factories, Cheung Kong Industrial Group has also invested in a large number of factories in mainland China to control costs using cheaper labor.

This news is 'true', but somewhat exaggerated, which quickly aroused concern in Hong Kong public opinion:

"The Cheung Kong Industrial Group is the representative, and the only representative, of Hong Kong's technology and industrial sectors. It symbolizes the history of Hong Kong's industry since the 1930s and is a leading enterprise that has led the development of Hong Kong's industry and technology. If it were to relocate its industries to the mainland or places with cheaper labor, countless people in Hong Kong would lose their jobs!"

One commentator wrote this in the newspaper.

At the same time, citizens began to discuss and express their concerns.

"Yes, at its peak, Cheung Kong Holdings had over 100,000 employees in Hong Kong, which represented over 100,000 families. If they lost their jobs, it would be a huge problem!"

"That being said, it doesn't stop people from relocating their factories to cheaper areas, after all, the labor costs are many times higher, and factories all over Hong Kong are doing it."

"Sigh, there's nothing we can do. It's all because the labor force in the mainland is too cheap!"

Public opinion has taken hold and this has caused a stir.

Chen Wenkai of the Yangtze River Industrial Group stepped forward to be interviewed by reporters.

He has always been very low-key and is the least frequently seen in the media among the "Five Tigers" of the first wife's family. The frequency of their media appearances is as follows: Chen Wenjie, Chen Mengyi, Chen Wensheng, Chen Wenming, and Chen Wenkai.

Among them, Chen Wenjie appears in the media more frequently because he is the eldest son, but he speaks more calmly; Chen Mengyi manages the media group and often appears in the media because of her work, and her style is more bold and sharp; the other three brothers are actually low-key, but as the chairman and general manager of a large group, they sometimes have to speak out.

Despite being one of the most low-profile individuals, Chen Wenkai proactively stepped forward to give an interview amidst this massive public outcry.

"The Cheung Kong Industrial Group still employs approximately 12 people in Hong Kong, so the rumors circulating outside are not true!"

"Of course, the relocation of some low-value-added industries to the inland areas by the Yangtze River Industrial Group is also due to considerations regarding the survival of these industries."

"Cheung Kong Industrial Group is undergoing a 'corporate transformation,' evolving from a pure industrial group into a complex of high-tech enterprises and industrial groups. This involves many aspects, but what is certain is that it will continue to provide Hong Kong with more technologically advanced jobs."

"Technology is an indispensable force for Hong Kong's future economy. I hope that more talent and resources from the whole society will join this industry. Hong Kong needs not only foreign trade, real estate, and finance, but also technology and culture."

Once the interview was published, it immediately became the talk of the town and even attracted the attention of overseas media.

Hong Kong's development of technology is no longer just empty talk, but a real process that has been underway for decades.

Oriental Daily News: "'Science and Technology Revitalize Hong Kong' is a very ambitious goal. This usually low-profile leader of Hong Kong's largest company has finally expressed his aspirations. This is not just empty talk. Cheung Kong Industries is a great company; even in the United States, it remains a top-tier enterprise."

The Hong Kong Commercial Daily: "Technology Revitalizes Hong Kong"—this may be the first ambitious plan proposed in Hong Kong by a private individual. This plan did not originate from the British Hong Kong government, because they simply couldn't afford to worry about such matters.

Hong Kong Economic Journal: "The slogan 'Technology Revitalizes Hong Kong' might sound like empty talk from anyone else, but when it's said by Chan Man-kai, Chairman and General Manager of Cheung Kong Industrial Group, it's not just a slogan, but a real opportunity. The British Hong Kong government should consult with them; this is a major opportunity for Hong Kong's future economy."

Ming Pao: I recall that six months ago, at the opening ceremony of the Hong Kong University of Science and Technology, Sir John Chan, as a key promoter and donor, said that the Hong Kong University of Science and Technology was another cradle for cultivating science and technology talents, following the Hong Kong Polytechnic University, and an essential path for Hong Kong's socio-economic transformation. Now it seems that although the idea of ​​"revitalizing Hong Kong through science and technology" was proposed by Mr. Chan Man-kai, Sir John Chan had already been doing just that, and he had a very excellent successor.

Suddenly, "revitalizing Hong Kong through science and technology" became a hot topic of discussion throughout society!

One day after the Spring Festival.

On the superyacht "Tranquility", Chen Guangliang met with his son Chen Wenkai and discussed the topics of "revitalizing the port through science and technology" and "the future development of Changgong Group".

Although Chen Wenkai is his son, and the son of the first wife, Chen Guangliang is now enjoying life, so Chen Wenkai doesn't see his father very often.

The conversation between the two took place in a 'meeting room'; it wasn't a vacation together, it was a meeting.

Chen Guangliang flipped through the information on 'Xinfeng Textile Group', which was the 'origin' of Changgong Group, which created a huge fortune back then.

"Uniqlo's future positioning is the concept of 'fast retail clothing,' and of course, entering the mainland is a key. However, the initial business environment in the mainland may not be suitable for the concept of 'fast retail clothing,' so its initial development in the mainland will definitely be positioned as a casual brand."

Chen Wenkai asked, "Father always talks about the mainland market, but we're clearly still some distance away from it." Chen Guangliang replied, "That's right, there's still some distance, but we always need to plan ahead."

Chen Wenkai nodded and said, "Okay. We have already started on the matter of establishing a 'supply chain region' in the mainland. We will build a complete industrial chain of 'printing, dyeing, textiles and textiles' in Zhenhai District within five years."

Simply put, it's the same model as the Spanish fast-fashion brand ZARA from my previous life: a small town with an integrated industry chain from dyeing and textile production. Of course, initially built by the company, third-party factories can join as the scale expands, but they must build their factories nearby.

This model is what Uniqlo is doing now and will be the main supply chain in the 1990s; however, after the turn of the millennium, Hsinfeng Textile's supply chain will need to be more diversified, adding the 'OEM model' of the previous Uniqlo, but it will need to control the quality management system.

Ultimately, the mainland's garment industry is still in its infancy and will take a long time to become a 'world garment production base'. Hong Kong's relocation of this industry to the mainland is a huge boost, bringing not only machinery and equipment but also rich management and production experience. Of course, this is a win-win situation.

Chen Guangliang continued, "What do you think of Fila's development in recent years? Have you done any specific research?"

In 1983, Chen Guangliang's family office acquired 90% of FILA's shares, and the following year signed Michael Jordan.

Chen Wenkai said excitedly, "After the family acquired FILA, there were two brilliant moves: First, signing Michael Jordan, an outstanding NBA player, and developing the AJ series specifically for him, which is very popular in the United States; second, entering the mass market. FILA was originally an extremely high-end brand in the United States, but now the FILA basketball series has entered the American mass market."

FILA originally sponsored tennis, which was a sport traditionally associated with the aristocracy.

Later, they started sponsoring basketball, and the market for their products expanded tenfold. Now, their annual revenue exceeds $1 million. Nike, on the other hand, will likely have a much greater impact in the future.

Chen Guangliang nodded and said, "Hong Kong is an important base for sports shoe production. I think Xinfeng Textile Group should also establish its own sports brand, 'Xtep,' to focus on the mainland market and sponsor sports in mainland China."

Today, FILA Asia is operated by Hsin Feng Textile, and the company has accumulated considerable experience in this area.

Chen Wenkai immediately said, "Okay, we can first target the low-to-mid-end market in Hong Kong, which will be a good way to separate it from the FILA brand."

Hsin Feng Textile Group also has another important business, namely Hehe Zippers, but this company is far behind Japan's YKK Zippers.

The Chen family's holdings in YKK zippers have now been partially transferred to the family office and partially sold to the fourth branch of the family. YKK zippers is now a listed company.

For Rongchang Group, Chen Guangliang outlined three key areas: yacht manufacturing, machinery and motors, and hardware tools.

In its previous life in Hong Kong, the motor industry gave birth to the world's largest micro-motor company – Johnson Electric.

Today, Rongchang Group is not only a global leader in micro motors, but also a top performer in small and medium-sized motors; the former is mainly used in toys, while the latter is used in some household appliances and tools, and has even entered the field of auto parts.

In the hardware tools sector, Hong Kong was home to a Fortune Global 500 company with an annual turnover of 100 billion.

However, in this era, Rongchang Hardware has clearly already developed, especially in the current power tool sector, where Rongchang Hardware has developed very rapidly.

The strategy for Huatai Group is undoubtedly to develop products around its IP. This is a company with a "family heirloom" that will be easy money in the future, so there is no need for Chen Guangliang to say anything more.

Of course, PC gaming was a significant milestone when the 1990s arrived.

Next, Chen Guangliang said, "You need to accumulate talent in PC games. Once the 1990s arrive, you should immediately establish this department. Its market is no less than that of console games."

Chen Wenkai's spirits lifted. His father's vision was always so far ahead. He said without hesitation, "Okay, I will set up a research project team in this area as soon as possible to prepare for what's to come."

Chen Guangliang nodded, then took out the materials he had prepared in advance and said, "Electronic Arts is carrying out a second revolution in portable console games, namely the Game Boy. And this game, Pokémon, is a very important IP. Of course, it is currently just a concept, and you need to set up a project team to develop it. But this game is obviously very difficult and may take a long time, so it must reach a level that arouses satisfaction before it can be officially released."

I understand what my father means.

Even though Chen Wenkai is a seasoned businessman, he still felt emotional when he took on the role of Pokémon, after all, it's a big IP, which means the game is not simple.

As for games based on the Game Boy, although the Game Boy has not yet been released, it doesn't matter. Given the relationship between the two companies, he can get some inside information and make arrangements for Game Boy game software in advance.

After handing over this game, Chan Kwong-leung's future creative output was limited to PC games, including titles like Resident Evil, Age of Empires, and Minecraft. These were enough to ensure Hong Kong's continued dominance in the gaming industry throughout the 1990s. Of course, while cultivating its talent pool and industry, Hong Kong naturally saw the emergence of more high-quality games.

Finally, Chen Guangliang focused on Chen Wenkai's determination to enter the field of 'electronic technology', which covered all aspects.

For example, Chen Guangliang said, "Songs can be put into CDs and become portable CD players."

Chen Wenkai nodded. After inventing the Walkman, his father had EA (Electronic Arts) follow suit with the CD Walkman, mainly because Hong Kong lacked the technological reserves and industry chain in this area. Therefore, EA is not just a simple game company, but also a comprehensive enterprise integrating real estate and music.

Chen Guangliang added, "Then movies can certainly be put into CDs, and thus evolve into video player devices."

Chen Wenkai, somewhat invigorated, said, "This idea is truly astounding. Hmm, to solve this problem, we'll probably need a video decoding chip, given the level of Hong Kong's semiconductor industry."

Chen Guangliang said, "So we need to let Wenhai see if we can invest in a video decoder project in the United States. If successful, we can develop a video player called VCD, which connects to the TV and can put a movie into a CD, and then decode it and connect it to the TV."

VCDs are a great innovation in electronic products. It's a pity that the mainland didn't apply for patents in this area in the previous life, otherwise it could have slightly dampened the arrogance of the Japanese electronics industry.

In this lifetime, let Hong Kong complete the planning.

"Okay, I'll arrange the layout as soon as possible."

Currently, Midea Electronics has established a joint venture called "Little Genius" in mainland China to produce counterfeit FC game consoles. The semiconductors are imported from Taiwan, while the rest are produced in-house.

Of course, 'Little Genius' is just a bridgehead for entering the mainland market. Midea Electronics plans to establish an independent company in mainland China to further develop its electronics industry. (End of Chapter)