Chapter 313: Wealth Report for 1962
The next day, January 16, Changxing Real Estate submitted its application to the Hong Kong government to participate in the upcoming land auction and paid a deposit of HK$1 million.
With the confirmation in hand, Yang Wendong was finally at ease. He then made his way to the 16th floor of Changxing Group, home to the group's finance department.
"Sister Wang." Upon seeing the group's CFO, Wang Fengzhi, Yang Wendong greeted her with a smile.
No matter how big the business, any savvy boss knew to show respect to the head of finance. Anyone who had run a business understood this. Even if there were no shady dealings involved, the head of finance was always at the very heart of a company.
Seeing her boss walk in, Wang Fengzhi immediately stood and smiled. "Mr. Yang, what brings you here in person?"
"The holiday's coming up. I just wanted to stop by and check on the group's overall financials for the past year," Yang Wendong replied with a relaxed smile.
The Lunar New Year was coming early this year—January 24. And as part of Changxing Group's employee benefits, most departments would be going on break a few days early—except for some workers at the factories who volunteered to work in exchange for double or triple pay.
Factory production couldn't stop entirely, of course, but even those staying behind were given flexibility to take time off later.
Wang Fengzhi smiled. "The annual report has been compiled since late December, and it's ready now. I was just about to come to you."
"Perfect timing then. I'll review it now, and once that's done, everyone can relax and focus on preparing for the holiday. For the last couple of days before break, just let people unwind and start planning for the next year—no need to keep them too busy."
Yang Wendong had once been a regular worker himself. He understood the "watchman mentality" all too well—especially after being exposed to TikTok in his past life. Employees mentally clocked out days before the actual break.
"Thank you, Mr. Yang," Wang Fengzhi said gratefully. She then handed him several documents. "These are the final figures. Here's a breakdown of the core businesses under Changxing Group:
Changxing Industries, Changxing Real Estate, Changxing Shipping, Changxing Media, Carrefour, Rongyao Electronics, Changxing Culture, Watsons, and your group-level financial investments."
"Leave out the investments—they're long-term holdings and not relevant for day-to-day analysis. Just note the returns," Yang Wendong said as he flipped through the files.
Changxing Group had investments in companies across Hong Kong and Asia, such as China Motor Bus and Formosa Plastics in Taiwan. These were long-term assets.
There were also undisclosed overseas investments—like Walmart—which didn't need to be made public.
At this stage, Yang Wendong's ventures in finance were just dipping their toes in the water. The scale was still small, but in time, he would spin them off into a dedicated subsidiary.
"Got it," Wang Fengzhi said. "First up is Changxing Industries' performance for last year. Total revenue was HK$440 million.
The core products—Post-it notes, rolling suitcases, and adhesive hooks—accounted for 85% of revenue. The remaining 15% came from spin mops and glue traps."
Yang Wendong asked, "Spin mops didn't sell well—is that due to shipping issues?"
"Yes," Wang Fengzhi replied. "They're bulky, oddly shaped, and relatively inexpensive. Shipping costs are high. Plus, there's a lot of piracy. So we've begun licensing production locally in various regions.
Revenue isn't huge, but profit margins are decent. Last year, we earned HK$5.2 million in net profit from that line."
"That's decent, I suppose. But with so much counterfeiting, even officially licensed products can't command high prices," Yang Wendong said, glancing at a table listing licensing fees from different countries. The numbers weren't particularly impressive.
Wang Fengzhi nodded. "Exactly. Even local distributors can't do much about the piracy. If that weren't the case, our profits could be multiple times higher."
Yang Wendong laughed. "If piracy didn't exist, our profits would be ten times higher."
If the world operated on ideal legal enforcement, a time traveler like him would easily become the richest person on Earth—probably outpacing the second to tenth richest combined.
But in reality, the wealth you could extract from a patent was limited. Even in the West, monopolies weren't tolerated for long—unless the tech was exceptionally advanced or, like internet companies, created user dependencies.
Companies like Microsoft, Google, Apple—these thrived not just because of innovation, but because Uncle Sam backed them. Without government protection, they would've been dismantled by antitrust lawsuits in multiple countries.
Wang Fengzhi continued, "The glue trap line—including mousetraps, flypaper, and cockroach traps—faces similar piracy problems. Our only edge is that we manufacture our own glue, which lowers costs. That gives us a pricing advantage abroad.
Luckily, glue traps are cheap to ship, and we've secured tariff exemptions in many Commonwealth countries and the U.S. Sales hit HK$30 million, with net profit around HK$4 million."
"Hmm. Glue traps were our first product. They're not a top seller anymore, but they created the most jobs," Yang Wendong nodded. "I'll talk to Old Wei later—we should work on cost control and maybe even expand the team a bit."
Glue traps weren't among Changxing's top-tier products by sales. But they were labor-intensive—unlike Post-it notes and suitcases, which were made mostly by machines.
Even though some equipment was used for glue traps, most of the work was still manual.
Given Hong Kong's labor costs—even those projected ten years down the line—simple, low-tech products were actually more cost-effective when made by hand.
Products like this that created jobs while still earning a little money were a net positive in Yang Wendong's eyes.
Wang Fengzhi thought for a moment. "The main cost components for glue traps are real estate, labor, glue, and paper. We own the property, and labor is still cheap. No problem there.
As for materials, glue is in-house and cheaper than imports. That just leaves paper."
"I've been thinking about paper for a while. It's also the biggest cost in Post-it production," Yang Wendong said. "But papermaking causes heavy pollution and consumes a lot of water. In Hong Kong's current state, it's not feasible."
With his core products doing well, Yang Wendong had long wanted to integrate his supply chain to lower costs—much like BYD had done in his past life.
Right now, the main raw materials for Changxing Group's top products were plastic, glue, and paper.
Plastics were part of the petrochemical chain. Since he couldn't produce them himself, Yang Wendong had invested indirectly in Wang Yung-ching, the future king of plastics.
Glue, he manufactured himself.
Paper, though—that remained an issue.
But paper production—never mind the technical know-how, which could be bought—posed serious challenges in pollution and water consumption.
Wang Fengzhi nodded and said, "With the drought in Hong Kong, there's no telling when it'll end. Building a water-intensive factory here is definitely out of the question. But Mr. Yang, we could consider investing in a paper mill in Taiwan."
"Taiwan?" Yang Wendong raised an eyebrow. It was an idea he had vaguely considered before.
Wang Fengzhi continued, "Yes. According to procurement records from Changxing Industries, a large portion of our paper stock comes from a Taiwanese mill—Yung Feng Paper. Taiwan already has an established papermaking industry. They're not short on water, and as long as we meet environmental regulations, pollution isn't a dealbreaker. After all, no industry is truly pollution-free."
"Alright. I'll have someone look into it after the New Year," Yang Wendong nodded.
Although Post-it notes hadn't yet peaked in terms of market potential, their growth rate had clearly slowed from the early explosive years. As growth plateaued, optimization became critical. The best way forward was vertical integration—controlling more of the upstream supply chain.
"I'm just making a suggestion," Wang Fengzhi added. "Last year, Post-it notes generated total revenue of HK$130 million, with HK$38 million in net profit."
"HK$130 million?" Yang Wendong flipped back to double-check the report. The total units sold: 1.41 billion sheets.
At this point, the global population was around 3 billion. Excluding Eastern Europe, Africa, parts of Asia, and South America, the number of people with any real purchasing power was maybe 1.5 to 1.8 billion.
Among these, white-collar or office workers might make up 30% in developed regions and as low as 5% in others. While exact figures were elusive, it was reasonable to estimate a global base of 300 to 400 million people who could realistically use Post-its.
By that math, 3–4 sheets per person annually was already a solid figure.
Of course, this was just an average. Many people still hadn't even used one before. And piracy was always a factor.
Wang Fengzhi confirmed, "Yes. The profit margin dropped a bit due to heavy marketing in Europe and the U.S. We spent about HK$10 million in promotional and operational costs—shared with our local distributors."
"That's normal. You can't expect to keep fat profit margins forever. Sometimes you have to trade margin for market share," Yang Wendong nodded.
Even with a patent, there's no guarantee of maintaining high profits—otherwise piracy would explode. In some industries, if your margins are too high, governments themselves might force you to give up part of your earnings.
Only cutting-edge technology or government-protected monopolies could ignore such pressure—think of Microsoft, Google, or Apple. Even then, their dominance was partially backed by Uncle Sam. Without U.S. political support, those companies would've been torn down by anti-trust lawsuits in other countries long ago.
Wang Fengzhi continued, "Currently, rolling suitcases have overtaken Post-its in terms of revenue. Last year, we sold 8.6 million units. Our average factory export price was HK$19 per unit, generating HK$164 million in revenue. But the net profit was only HK$26 million, lower than Post-its."
"That's to be expected," Yang Wendong said. "We've already cut suitcase production costs down. Plastic we mostly produce ourselves. Short of diving into petroleum refining, there's no room for further cuts."
Wang Fengzhi nodded. "Exactly. Also, shipping costs are a factor. Our main competitors are Western brands. Their labor costs are higher, but they save on logistics."
Yang Wendong thought for a moment. "Shipping might improve once container terminals become widespread in Hong Kong."
Everyone in Changxing Group who needed to know about containerization was already aware of its importance. The issue wasn't ignorance—it was the entrenched interests and the enormous infrastructure investment needed to make it work.
Wang Fengzhi added, "Next is adhesive hooks. Last year's revenue was HK$59 million, but net profit was only HK$8.92 million. Same problem as glue traps—too many knockoffs. They're small and easy to replicate, so competition is intense.
We've held on using patents and a wide overseas network, but pricing power is weak. We're stuck with margins in the low teens."
Yang Wendong glanced at the figures. "Even so, for such a small product to reach this scale, and still pull double-digit margins—especially with rampant piracy—that's already quite impressive."
Profit margins of big companies couldn't be compared directly with small businesses.
In his past life, some micro-businesses earned 30% margins annually. But global giants like Apple only hit around 30%. Toyota, one of the most successful automakers, hovered around 10%. Getting to 15% was already excellent.
Generally, the bigger a company becomes, the harder it is to maintain high margins—software and internet companies being the exceptions.
Post-it notes retained high margins because they were sold to businesses, who were more inclined to respect patent protections. Rolling suitcases had decent margins too because they were larger, harder to copy.
But adhesive hooks, spin mops, glue traps—those were too easy to counterfeit.
Wang Fengzhi added, "Then we have Rubik's cubes and other toys, plus kitchenware and household products launched by Changxing Industries. Leveraging our in-house distribution, last year they earned HK$18.6 million, with HK$2.3 million in profit."
"Not bad," Yang Wendong said with satisfaction.
Over the past two years, Changxing Industries had released several kitchenware items—simple things like plastic chopsticks, spoons, food containers. They weren't revolutionary, but they were everyday essentials.
Thanks to the group's strong distribution channels, even these humble products made steady profits.
That was good enough—for now. Breakout products weren't easy to come by. Realistically, a company had to pump out dozens of ordinary goods to have a shot at hitting one jackpot. And often, even the company didn't realize which item would hit until it did.
Only a time traveler had the luxury of knowing which future products would go viral in advance.
Wang Fengzhi concluded, "Based on all this data, Changxing Industries recorded a total net profit of HK$85.13 million for 1962.
However, that figure doesn't account for loan repayments or the funds you transferred from Changxing Industries."
Yang Wendong nodded. "I know. Going forward, the group will implement strict financial separation between all subsidiaries. Whether it's collateral or internal transfers, they'll be classified as loans.
Eventually, those other companies will repay—or assume the debt themselves. Interest will also be properly calculated. Once the companies that received help from Changxing Industries are running smoothly, everything will be sorted."
The rapid growth of Changxing Real Estate and Changxing Shipping had been fueled by the massive profits of Changxing Industries. Without that cash flow, banks like HSBC and Hang Seng wouldn't have approved such generous loans.
But in the long term, once those subsidiaries were financially independent, they would each be responsible for their own debts and operations.
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