Technology invades the modern world

Chapter 208 Hong Kong Pandas Aren't Pandas! (5k)

In an electronic components store at 646 Nathan Road, Hong Kong, Hu Xiaoqing, as usual, visits the store every Monday.

(Hu Xiaoqing at an electronics parts shop at 646 Nathan Road, 1949)

His habit has remained unchanged for over a decade.

This is the region where he made his fortune, and it's also the window through which Atlas Electronics showcases itself to the outside world.

The name Hu Xiaoqing is unfamiliar to most Chinese people, and even most Hong Kong locals have never heard of him.

But he has a well-known nickname: the father of Hong Kong's electronics industry.

He was born in 1924, grew up in Shanghai, and studied at Shanghai Jiao Tong University, majoring in management.

In 1948, he arrived in Hong Kong with $500 in his pocket and opened a small shop selling electronic parts at 646 Nathan Road.

Although he had not received formal training in electrical engineering, he had always been fascinated by it.

Business was tough at first, with only HK$100 a day, and he relied heavily on loans to make ends meet.

In 47, America invented the transistor, and in 1949, Rediffusion Radio (a private radio station) entered the radio market. Radios began to spread rapidly in Hong Kong and became the most popular form of entertainment for the masses.

Compared to televisions, radios are undoubtedly much more affordable.

Subsequently, Hu Xiaoqing obtained the distribution rights for German Blaupunkt radios in Hong Kong, and his business began to grow rapidly. Starting in 1958, he began assembling transistor radios in Hong Kong using neon transistors, with Sony as his backer.

Sony's founder, Akio Morita, personally came to Hong Kong to discuss cooperation with Hu Xiaoqing.

why?
Because Japan wanted to open up the Hong Kong market, England had high tariffs to protect its domestic electronics industry from being destroyed by cheap Japanese goods. Japan's idea was to go through Hong Kong, cross the border, and then sell to England and the entire Commonwealth.

Hu Xiaoqing's collaboration with Sony also marks Sony's first overseas factory in its history.

Although it was called a factory, it was completely different from the factories that people understand today; at best, it could only be considered a small workshop.

(This is roughly what the production line of the Shangwu Hot Coil Factory is displayed at the Hong Kong Migrant Workers Museum.)

According to Sony's historical website, the factory was an apartment with two production lines where 60 female workers assembled transistor radio kits brought in from Japan. The factory mainly assembled the TR-510 and TR-623.

During the collaboration, Hu Xiaoqing's factory assembled 6000 radios for Sony every month. However, the honeymoon period between Hu Xiaoqing and Sony was short-lived, lasting only two years. In 1960, two years later, Sony directly established a factory in Ireland and completely ceased its cooperation with Hu Xiaoqing.

The reason given was the Irish factory, but in reality it was the threat from Hong Kong.

Fortunately, Hu Xiaoqing and Sony were not on the same page; he was always making preparations for both scenarios, importing transistors from America and England and making radios himself.

Hu Xiaoqing began manufacturing radios under his own brand, Blue Bell.

(Blue Bell 7, produced in 1960)

(The internal structure of the Blue Bell 7 consists of seven transistors)

Even due to the impact from Hong Kong—yes, Hong Kong was able to achieve a lower price than Japan in the business of transistor radios—radio from Hong Kong impacted the Japanese market, forcing Japan to ban the export of its transistors to Hong Kong in 1962.

In May 1962, he founded Global Electronics and merged its business into Atlas. The Chinese name Atlas means "global".

According to a 1963 article about Atlas in the International Management magazine, he entrusted the management of the company to three managers of different nationalities: an Israeli named AM Cappon in charge of sales, an Englishman in charge of finance, and a Chinese engineer in charge of operations.

At that time, Universal Electronics had 400 workers and produced 80000 six-transistor radios per month, which took 90 days to ship to New York.

Section Chief Zhang once worked at Global Electronics for a short period of half a month.

In 1967, according to a trade gazette issued by the Hong Kong Industrial and Commercial Bureau, Atlas produced 250000 radios per month. The company was so successful that it listed on the newly established Far East Stock Exchange in 1969, becoming the first electronics company to be listed on the Hong Kong stock market.

Hu Xiaoqing thought today would be an ordinary day like any other. He picked up the "Hong Kong Trade Monthly" on the table. This was a magazine published by the Hong Kong government, which regularly reported on trade and industrial information, including electronic products.

"At the Leipzig Trade Fair in the spring of 1965, a small electronic calculator called 'Panda 01' was showcased, which shocked the global electronics industry with its advanced scientific calculation functions, compact design, and innovative LED display."

The front page headline of the Hong Kong government's magazine featured news about Chinese electronic products, demonstrating the impact Panda had on this era.

This trend, which spread from Leipzig to London, Paris, and New York, has finally reached Hong Kong.

Hu Xiaoqing read it extremely carefully, because while it was news to others, he wanted to find business opportunities in it.

China can build it, but can he?

How's the market for this stuff?

If they can't manufacture it, could they import it from elsewhere?

After China launched the Panda Radio at the Leipzig Trade Fair, Hu Xiaoqing also saw the report in the Hong Kong Trade Monthly. He keenly realized that China's design was much better than theirs.

While it's not exactly better in any way, it's certainly more refined than theirs.

So he made a decision almost immediately: to have the factory remake the mold and make it in the style of the panda. Even if the internal circuit design couldn't be the same, the appearance could at least be replicated.

The black and white plastic casing isn't too difficult to make.

By selling counterfeit Panda products, his Global Electronics made a fortune in Hong Kong and even Southeast Asia.

In this era, China's awareness of intellectual property rights was almost zero.

The lack of information flow meant that the Chinese side was unaware of Hu Xiaoqing's actions.

Even if China wanted to hold those responsible accountable, it would be difficult to do so between the two camps.

Later, radio factories all over Hong Kong followed Hu Xiaoqing's example and made knock-off versions of Panda radios.

Because he started earliest, he earned the most.

Now, after seeing the introduction to the functions of China's portable calculator, Hu Xiaoqing knew almost immediately that this thing had a nearly unlimited market.

Individuals, businesses, universities, and government agencies—no one can do without this thing.

This is a moving gold mine.

The question is, how did China manage to do that?
Neon can't be made, America can't be made, and the English can't make it either.

Even he, a radio factory owner in Hong Kong, couldn't manufacture it.

"How did China manage to cram such complex computing functions into such a small machine, while maintaining such precision and such good battery life?" As a professional, Hu Xiaoqing was completely baffled.

"boss."

Before Hu Xiaoqing could even greet the arriving guest, the man wearing a black round hat and a trench coat had already disappeared from his sight.

He left only a red invitation on the counter as a reminder that someone had indeed been there.

Red was a very sensitive color, and with a hesitant attitude, Hu Xiaoqing picked up the invitation from the table:

"Business cooperation is something we look forward to, and if it comes, we will not be disappointed."

5月1日上午9点30分香江尖沙咀弥敦道172号3楼”

May 1st, which is seven days from now.

The address on the invitation wasn't far from here, and considering the time and the red invitation, Hu Xiaoqing immediately remembered where he was.

This is a newspaper. Everyone knows it comes from mainland China. Its predecessor was called "Hundred Flowers in Full Bloom," and it changed its name six years later. The name begins with "New."

(Hereafter referred to as the Hundred Flowers Society)
"Why does the Hundred Flowers Society want to see me?" Hu Xiaoqing wondered.

Based on the contents of the magazine, he had a bold guess: Could it be that China wants to sell their electronic products to Hong Kong?

Regardless of the purpose, the mere existence of this possibility is enough to make me make the trip.

Nathan Road in Tsim Sha Tsui was the commercial heart of Hong Kong in this era, with bustling streets and rows of shops.

England knew what the Society of Flowers was and what its functions were, but they never interfered.

The Hong Kong government sat back and watched the two sides fight, with the Pak Fai Society on one side and the Chung Hwa Travel Agency on the other.

The English are happy to watch you fight.

However, starting today, the Hundred Flowers Society of China will have to take on other tasks.

Public opinion battles are important, but economic benefits are even more important.

Number 172 is an inconspicuous commercial building, but the Baihua Society meeting room on the third floor is a hidden gem.

Outside the window, the faint cries of street vendors could be heard, contrasting with the quietness inside.

This is a very cramped room. So cramped that only two people can sit down, and it's even difficult for the people inside to turn around.

"Mr. Hu, hello. Let me briefly introduce myself. My name is Zhou Nan. I recently started working at Baihua Society. I just came from Africa. I'm very glad that you could come as scheduled."

Zhou Nan was very young, looking no more than forty years old. He was wearing a dark gray suit and his hair was neatly combed.

Hu Xiaoqing thought to himself, "It's really strange that he was transferred here from Africa."

However, Hu Xiaoqing, dressed in a suit and tie, appeared very enthusiastic, exuding the warmth and shrewdness of a businessman in every gesture: "Hello, my name is Hu Xiaoqing. I am a businessman, and I am honored to be here. At the same time, I am also wondering what areas we can cooperate on."

Zhou Nan smiled and said, "Mr. Hu, let's be frank. I wonder if you are familiar with the Panda brand?"

Hu Xiaoqing finally understood why they were talking here.

A cramped room is more suitable for discussing this kind of topic.

Hu Xiaoqing nodded, knowing there was no need to play dead in this situation: "Mr. Zhou, of course, the Panda radio impressed me. It has unique features in its appearance and circuit board design, and perhaps it has its own advantages in other aspects as well, which fully reflects its specialness."

In addition, the Panda 01 electronic calculator, which was recently exhibited at the Leipzig Trade Fair, was particularly impressive.

Its compact design, LED display, and scientific computing capabilities are all very appealing.

Hu Xiaoqing appeared calm on the surface, but his heart was in turmoil. He knew this was a once-in-a-lifetime opportunity.

The mainland is such a huge market, such a tremendous force.

He manufactures 80,000 radios a month. If he cooperates with the mainland, that number could easily be multiplied by 100, and it wouldn't be impossible for him to swallow up the market of Japanese manufacturers.

Behind Hong Kong stands England.

When English and Japanese businesses compete at the same table, they can only trade freely.

“We hope to find a local radio factory in Hong Kong to cooperate with, and Mr. Hu is one of the candidates we have selected.”

Hu Xiaoqing immediately became alert. Who else could it be?
It's highly likely to be the Yuan family. The Yuan family is even later than him, but not by much. They also manufactured radios.

(The left picture shows a Kendy portable radio from the 60s; the right picture shows the Dayton Group founders and their family.)
Hu Xiaoqing thought about it again and realized it was unlikely, because he had a natural advantage over the Yuan family.

Yuan Jiawen's brother was a core member who joined the KMT, his sister married an American intelligence officer, and he himself served in the American army in 49.

"It's impossible for the mainland to cooperate with someone like that, isn't it?" Hu Xiaoqing pondered.

However, he wasn't sure either.

The fact that China wanted to do business with them was itself suspicious.

“We hope to sell Panda brand products through your sales channels. We export the circuit boards, and you assemble them. Just like you cooperated with Sony in the past, you can cooperate with us now,” Zhou Nan said.

Zhou Nan's proposed cooperation method did not surprise Hu Xiaoqing.

Hu Xiaoqing was surprised that China even proposed an assembly plant model.

"Didn't they say that Old G doesn't know how to do economics? Isn't his idea quite good?" Hu Xiaoqing thought to himself.

He smiled broadly and said, "Of course, I'm very willing to cooperate. Looking at the Panda 01 itself, in addition to basic arithmetic, it can also calculate square roots, logarithms, and trigonometric functions. The LED display has low power consumption and can display eight digits. This is absolutely a unique product on the market."

Its compact design and unparalleled portability make it a favorite among potential consumers.

Hu Xiaoqing subconsciously felt that if China wanted to cooperate with him, it would be to sell the Panda 01 electronic calculator.

This stuff is very profitable.

Not found in America, England, or Japan; it's a global exclusive.

Being globally exclusive also means having advanced technology, and advanced technology means limited production capacity.

If production capacity is limited, then the quantity imported from the mainland will also be limited, and the quantity will not be large, so he can handle it.

To use this channel, you have to sell high-profit goods.

However, Zhou Nan tapped her fingers lightly on the table and shook her head slowly but firmly: "No, what we want to cooperate on is not calculators, but radios."

calculator?
General Electric bought out the entire calculator business for $5000. You, a local Hong Kong businessman, want to take a bite out of this business? Can you afford it?

Hu Xiaoqing was lost in thought. The radio?

The radio market is a very brutal and highly competitive market.

Hong Kong, Japan, America, Germany, Osaka, and many other countries—almost every major country in the world has this industry.

Japan is undoubtedly the most competitive, with its advantage being high quality at low prices.

What's even more critical is that the competition in this market is too fierce and the profits are too transparent. Unless China can export in large quantities and dump goods through such large-scale exports, the profits are simply not much.

Large-scale exports mean risks.

This kind of risk is also beyond his ability to mitigate.

As soon as Zhou Nan finished speaking, Hu Xiaoqing's smile froze. He simply couldn't think of how to do this business.
"Mr. Zhou, I'm sorry, but the risk is too high. It's impossible for Chinese electronic products to be exported to Hong Kong through normal channels."

Even if it's just a radio circuit board, I can't think of how to export it in large quantities.

It's not that I don't want to do this business, it's that I can't.

Zhou Nan's words surprised Hu Xiaoqing again: "Don't worry, we'll take care of the goods. All you need to do is make it available for sale globally."

It should also be called a panda.

Hu Xiaoqing initially felt there was some hope, but later his expression turned troubled:

"Mr. Zhou, first of all, I'm not sure how you can handle this. I want to say that this matter is definitely not as simple as you think."

Those people from Chung Hwa Travel have been keeping an eye on you.

If your electronic products are to be exported here in large quantities, they will find out sooner or later. Once they do, they will complain to the Hong Kong government and easily ruin your plans.

This is ultimately not a long-term solution.

Another thing is the name "Panda," which is very eye-catching and almost serves as a reminder to the outside world that we are selling mainland Chinese goods.

You approached several companies at the same time this time, and everyone can guess who is cooperating with you and who isn't.

For example, after I started selling Panda radios, people who had talked to Baihuashe could easily guess that I had partnered with you.

This business could have normally lasted six months, but calling it "Panda" might only allow it to last half a month.

Hu Xiaoqing's words came from the bottom of his heart.

After clapping, Zhou Nan said, "Mr. Hu, you don't need to worry about these things."

Besides, weren't you having a great time selling our panda radios? Now that we have real pandas to sell you, you're starting to worry."

Hu Xiaoqing took a deep breath, feeling his hands trembling slightly. He said, "We are imitators because Chinese products can't be sold, so we compete with neon manufacturers by selling pandas."

If Chinese goods could be sold here, we definitely wouldn't...

Before he could finish speaking, Zhou Nan waved his hand and said, "We don't mean to blame you. It's just that if you can sell radios shaped like pandas, then you can sell genuine panda products."

Besides, you're selling Hong Kong pandas, not mainland pandas.

It was assembled in Hong Kong, so why isn't it a Hong Kong Panda?!

Zhou Nan's last sentence was resolute.

Hu Xiaoqing understood. After visiting Hong Kong, China was determined to sell its superior products to the world.

However, what he didn't understand was the source of China's confidence.

What makes China think it can handle Hong Kong customs?

Or, to put it another way, if you don't follow the right path, how can you guarantee that the Hong Kong government won't investigate?

“What you’re worried about won’t happen, that’s all I can say,” Zhou Nan continued. “Mr. Hu, there’s no reason why we wouldn’t have considered the risks you can think of.”

Go back and think it over carefully.

"Right now it's radios, but in the future, electronic calculators are also negotiable. Besides, given the electronics manufacturing capabilities we've demonstrated, Hong Kong Panda will only produce more and better electronic products in the future."

(End of this chapter)