Chapter 385: Wealth Summary of 1963 (Part 2)
Zheng Zhijie smiled and continued, "Yes, there's already a noticeable trend—residential property near Carrefour supermarkets is selling for noticeably higher prices. Some real estate companies have even started using our Carrefour locations as a marketing feature. You could say our supermarkets have become a real selling point for the property developers.
Some of them even came to us, hoping we'd open stores near their projects. But many of the proposed locations were too remote, so I declined. We've only signed cooperation deals with two developers so far, and three others are still in discussions."
"They're clever," Yang Wendong nodded approvingly. "This kind of cooperation is mutually beneficial. That said, remember—they're the ones asking us for a favor. So don't hesitate to ask for a bit more in return."
Yang Wendong had thought about developing full commercial complexes before but never acted on it. The main reason was scale—a large commercial complex had to be genuinely large to work. Small ones just didn't survive unless surrounded by a very dense population. A proper commercial center needed consistent foot traffic from not just the neighborhood, but a radius of several kilometers—ideally ten.
That meant traffic infrastructure was critical. Even though he owned minibuses, it wasn't enough to support a massive mall. More importantly, Hong Kong's current economy simply couldn't support such large-scale retail space.
By the time he did have the capital to build a mall, property prices were already too high. Pouring money into overpriced land was inefficient—he'd rather invest in shipping or wait to buy up real estate during a downturn.
That's why he had focused instead on developing residential property around Carrefour supermarkets. That model worked—but if he leaned too heavily on it, it could slow down Carrefour's natural expansion. It was only worth doing if he could acquire a large piece of land to justify it.
In these scenarios, the supermarket had the upper hand—because it brought in foot traffic and increased convenience, which in turn boosted property values.
"I understand. I've actually been probing their bottom lines throughout the negotiations," Zheng Zhijie said with a smirk.
Yang Wendong asked, "What about our own real estate development projects?"
Zheng Zhijie replied, "Last year, we launched 21 small-scale residential projects and six office building developments, totaling 3.88 million square feet of property sold. Total revenue came in at HKD 193 million."
"Not bad at all," Yang Wendong said. "That's about the same scale as Changxing Shipping now."
Zheng Zhijie nodded. "Yes, though that's largely thanks to multiple rounds of capital reinvestment and our ability to borrow from local banks. Compared to shipping, the banks here are far more willing to fund real estate projects, so our capital turnover is quite fast."
"Of course. Banks love real estate," Yang Wendong said, then looked around at the rest of the room. "Let me make a small side note, everyone. I think you've all noticed—I'm not very optimistic about the Hong Kong real estate market right now. You can see that from Changxing Real Estate's recent investment behavior. I won't say more than that."
Changxing Group had already begun reducing its exposure to real estate in Hong Kong—a fact not lost on others in the industry. While they were still completing current residential developments, their pace of acquiring new property had slowed significantly compared to the last two years.
When a real estate company stops building its land bank and focuses only on quick-turnover projects, that's a clear sign they're anticipating a downturn. And once they start selling off previously acquired assets, it's practically a declaration that a crisis is imminent.
In his past life, anyone who had studied Wang Jianlin of Wanda Group would know that the man had impeccable instincts. While others went crazy for property investment, he gradually exited the residential and hotel sectors and even sold off several Wanda Plazas—at rock-bottom prices, no less. But he got out ahead of the crash and continued to live freely, with even his son still enjoying life.
Wei Zetao, Zheng Yuhua, Liu Huayu and others exchanged knowing glances. They understood the implication. It was as good as a directive—Yang Wendong was subtly advising them to sell off their personal real estate holdings. Of course, he didn't spell it out. That kind of implicit communication was part of professional etiquette.
"We understand what Mr. Yang is saying," Zheng Zhijie responded smoothly. "One more thing—last year, we built 15 properties specifically for Carrefour. As agreed, these were transferred to Carrefour after construction."
"In that case, Carrefour technically owes you," Yang Wendong said with a laugh. "They'll pay you back when they can."
Within a conglomerate, subsidiaries were managed independently. They could support each other, but financial transactions had to be properly accounted for. Unless Yang Wendong himself issued a directive, this was a business matter—not a charitable donation.
Only in the case of full ownership would it be considered an internal asset transfer.
"Got it. Understood," said Liu Huayu from Carrefour. "We'll definitely repay the amount. But I really do appreciate the help from Changxing Real Estate."
"No need for thanks, we're all family," Zheng Zhijie laughed. "Besides, the better Carrefour performs, the more foot traffic we get for our other properties. It's a win-win. Even if we weren't part of the same group, this would still be a good partnership."
"Exactly," Yang Wendong nodded. "Sibling companies should support each other—but there should always be mutual benefit."
He turned toward Liu Huayu. "Old Liu, that about wraps it up for real estate. Let's hear your report next."
"Yes, Mr. Yang." Liu Huayu stood and began. "Everyone, Carrefour's sole business is our supermarket chain. We currently operate 31 stores across Hong Kong, with 7 more under construction.
These 31 stores generated HKD 89 million in total revenue last year."
Since only gross revenue could be shared—not profit—Carrefour's financial report was straightforward.
"Very good," Yang Wendong nodded. "We'll easily break the HKD 100 million mark next year."
Hong Kong's rapid growth in recent decades was even more dramatic than the post-reform boom in mainland China. In the 1960s alone, the city averaged an annual GDP growth rate of about 14%. And that included the 1966–1967 economic crisis. Remove those years, and the average would be even higher.
In an era of explosive economic growth, retail was bound to surge as well.
"Absolutely," Liu Huayu said with a smile. "Even with just these 31 stores, we're confident we'll break HKD 100 million. With the new stores coming online, and more planned next year, we estimate total revenue could reach HKD 120 million."
"Mhm." Yang Wendong nodded again. "But keep in mind—Hong Kong is still just a single city. While its market potential isn't maxed out yet, future growth will slow as we approach saturation.
So if we want stronger and faster growth, we need to lay the groundwork in Taiwan over the next one or two years. By 1965 or 1967, Carrefour should be aggressively expanding there and aiming to dominate that market.
Taiwan's economy isn't as strong as Hong Kong's, but its population is more than triple. A successful supermarket network there would be just as valuable."
He had timed everything precisely. For the next two years, his capital would remain focused on Hong Kong. But once the financial crisis hit in 1966, local retail would take a hit—making it the perfect moment to shift focus to Taiwan.
He could even transfer personnel from Hong Kong to build the organizational framework in Taiwan. As for Hong Kong? For the next two years, they would focus on land acquisition and bide their time.
Liu Huayu replied, "Understood. This year I'm planning to open three to five new Carrefour supermarkets in Taiwan, covering various regions. Each area will have at least one flagship location."
"Good. Keep me updated on the progress," Yang Wendong said with a nod.
For projects that involved large investments, Yang Wendong personally approved them. Smaller ones were handled autonomously by the subsidiary and then reported in monthly updates. Mid-scale projects, like Carrefour's expansion, were reviewed after the basic plan was finalized. Only then would Yang Wendong give the green light.
Carrefour, as an important arm of the Group, fell into this mid-level investment category. With so many store locations, Yang Wendong couldn't possibly micromanage each one.
"Understood," Liu Huayu replied with a smile.
Yang Wendong then turned to Wang Zhiqun. "Old Wang, you're up next."
"Alright," Wang Zhiqun said with a grin. "Everyone, Rongyao Electronics is one of the newer subsidiaries in the Group, so our numbers aren't as impressive as some of the others.
Right now, Rongyao's business covers a range of consumer electronics, including transistor manufacturing, televisions, electric fans, microwave ovens, water heaters, rice cookers, electric hair dryers, and mosquito swatters.
Except for mosquito swatters, water kettles, and rice cookers—which we're marketing overseas—most of our product lines were only launched in the second half of last year and are primarily sold in Hong Kong.
Our total revenue last year was HKD 55.67 million."
"Mhm. Which product sold best?" Yang Wendong asked.
"The mosquito swatter," Wang Zhiqun replied. "It's a seasonal item but very popular in Europe and the U.S. We sold 1.3 million units last year. As for revenue, the rice cooker took the lead—thanks to our entry into the Japanese market. Our models are slightly cheaper than local Japanese brands, so they've been well received. That product alone brought in HKD 16 million."
"Very good. Those are solid numbers," Yang Wendong said with a nod. "Consumer electronics are always difficult because the biggest hurdle is building a distribution network. And most of these products only launched last year. I'm sure this year will be even better.
Your main task now is to use your best-performing products to expand your distribution channels. Once the channels are in place, push the rest of your product line through them."
It was still early in the electronics era. Personal computers, calculators, and digital watches hadn't emerged yet. Even as a time traveler, Yang Wendong couldn't do much in terms of major breakthroughs. He could only launch a few niche products to build momentum.
But he could use those products to crack into distribution channels. Most retail chains shared common infrastructure—if a store sold one kind of appliance, it could usually sell others too.
Otherwise, even if Rongyao built a great television, why would Western distributors carry it? Building relationships from scratch would be painfully slow.
"Understood, Mr. Yang," Wang Zhiqun said. "We've already begun aggressively developing our presence in Western markets. Black-and-white TVs are our entry point in Southeast Asia."
"Alright." Yang Wendong nodded. "Rongyao Electronics may not yet match our other businesses in scale, but I truly believe the electronics industry will one day become one of the world's largest. Your potential, in the long run, is even greater than Changxing Industries'."
"I'll give it everything I've got," Wang Zhiqun said with a smile.
As an electronics professional, he shared that belief. As the electronics sector matured, millions of households would need to replace their entire lineup of appliances. The market would be massive.
For now, though, Rongyao was still small. They had no proprietary technology, and their distribution was still in its infancy. Breaking into the industry would be tough, but that was normal. Electronics took massive amounts of time, capital, and sustained effort.
"Good," Yang Wendong nodded again. Then he turned to Zhou Haoran. "Old Zhou, your turn."
"Yes, Mr. Yang," Zhou Haoran began. "At Watsons, our core businesses are herbal tea, instant noodles, and other beverages and food items. Last year, our total revenue was HKD 23 million. Other segments—like our pharmacy chain and ginger water products—added another HKD 11 million.
Most of that came from bottled water sales, which are very high-margin.
Our biggest success last year was securing a partnership with Pepsi to manufacture Pepsi-Cola under contract. If that cooperation goes well, we could be in line for a massive order this year."
"Mhm. Given that your beverage business is currently limited to Hong Kong and Taiwan, those numbers are impressive," Yang Wendong said. "It's difficult to expand food and drink sales overseas due to shipping costs and safety regulations. So this year, your priority is finalizing that Pepsi contract.
Once that's secured, use the volume to grow your supply chain. In time, we'll learn from Swire and build our own beverage brand."
Even after containerization made global logistics more efficient, international beverage trade remained rare. That's because drinks had low per-unit value but were heavy and bulky. Between transport and tariffs, they just weren't cost-effective to export.
Plus, as a consumable product, drinks faced high regulatory barriers and skepticism from foreign consumers.
So working with Pepsi was the logical move. On the one hand, it gave them the capital and volume they needed. On the other, it would help future expansion efforts. If Watsons could handle Pepsi's production, it would ease other companies' concerns about their capabilities.
"Yes, so far our cooperation with Pepsi has been going well," Zhou Haoran said. "Their orders will increase this year. But to meet demand, we'll need to buy a new canning line."
"That's fine," Yang Wendong said. "Make the investment. Prepare a detailed proposal that includes projected ROI and payback period. As long as it looks good, I'll sign off. If you're short on cash, borrow from the bank."
"Got it. I'll have the proposal ready after the New Year," Zhou Haoran replied with a grin.
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