Return to 1958 and build a century-old giant

Chapter 865 The New Industrial Park Project for 10,000 People

Wei Zetao was a smart man. He knew that his boss's order at this time must be targeted, so he asked with a smile, "Mr. Yang, are you planning to have the people from the mainland come to us?"

Yang Wendong smiled and nodded, saying, "Yes, the four special economic zones in the mainland can now accept wholly foreign-owned enterprises. The per capita cost in the area is much lower than in Malaysia."

Our Changxing Industrial also has many low-end manufacturing industries. After so many years in Hong Kong, labor costs have been rising and our competitiveness has been declining. So I am also preparing to move to the mainland.

However, in such matters, we shouldn't proactively seek out the mainland; rather, we should let the mainland come to us. This way, we'll have more control.

Because of his presence, Hong Kong's economy is much stronger than in the past, and the real estate market is booming. This has naturally led to a sharp increase in labor costs, and the average wage in society has exceeded HK$1000.

Although this figure is still much worse than that of Europe, the United States and Japan, the main competitors of many industries in Hong Kong are Southeast Asian countries. Some low-end industries simply cannot continue to operate. If it weren't for the fact that Cheung Hing Group has a complete industrial chain in Hong Kong and that Yang Wendong was waiting for the mainland's reform and opening up and the establishment of the Special Administrative Region, many industries would have been moved away long ago.
Now that the special economic zone has been established, he can't just go there and say he wants to invest tens of millions or even hundreds of millions of US dollars to create hundreds of thousands of jobs. Being too proactive would be counterproductive. In any case, in this era, his investment is of great help to the mainland, so he also needs to maximize his own interests.

Wei Zetao said, "Yes, we can't be too proactive. The mainland special economic zone has just been established. If we just move Hong Kong's industrial chain there like this, the consequences would be unimaginable if any problems arise."

“I understand your concerns, but there’s no need to worry about that for now,” Yang Wendong said with a smile. “The mainland has gradually been in contact with Western countries, and from the current perspective, its reputation is still quite good, and its economic development is gradually improving. Such an economy cannot be transformed at will.”
Furthermore, our relocation of the industrial chain was also done step by step; it's just that because our scale is so large, even a small step seems like a huge undertaking.

In reality, no economy will reform arbitrarily unless absolutely necessary; the reason why the mainland is reforming is because the previous economic model has run into problems.

The massive layoffs in state-owned enterprises in the 90s were actually rooted in problems that began in the 70s. However, the reform and opening up in the 80s brought a large influx of foreign capital, which boosted economic development and made local governments richer. As a result, they gradually provided subsidies in an attempt to achieve a soft landing and gradually reform a series of state-owned enterprises.

Ultimately, however, there was no other way. The Asian financial crisis, coupled with a series of political factors and the difficulty of reforming the state-owned enterprises themselves, resulted in a massive layoff and the closure or sale of a large number of state-owned enterprises at low prices.
Similar to the situation in Britain today, loss-making state-owned enterprises, even if sold at low prices, were still profitable at the time because they no longer needed subsidies and could even recoup some of their costs.

Wei Zetao said, "That's right. Given our production scale and the costs on the mainland, it's worth taking the gamble."

"Don't worry, I also had discussions with high-level officials on the mainland during my last trip to Yanjing, so you don't need to worry about that," Yang Wendong added.
In fact, the low labor costs in mainland China are very attractive to foreign investment, but too many foreign investors are afraid to enter, so they are dragging their feet.
On the contrary, Hong Kong capital invested heavily in the mainland in the 80s and made a fortune. The mainland also relied on Hong Kong foreign investment to earn foreign exchange for its future development. It can be said that it was a win-win situation.
Of course, it was because Yang Wendong knew history that he dared to act recklessly. Otherwise, a normal capitalist would really consider many things. For example, Li Ka-shing, even after he came to the mainland in his early days, only dared to donate schools instead of making large investments. Only Hu Yingxiang truly dared to move capital to the mainland.

Wei Zetao said, "Okay, I'll release the news now. What about Glory and Watsons?"

“Let’s take things one step at a time. Your industry is quite sensitive to labor, so you’re the first to try and find a way. Communicate with a few special economic zones and create a model of cooperation,” Yang Wendong said. “Once you succeed here, I’ll arrange for the other factories to relocate one by one.”

Wei Zetao nodded and said, "Okay, relatively speaking, the raw materials for my plastics industry are the simplest. I can just buy them directly from Formosa Plastics. The supply chains for the food and electronics industries are much more complicated."

Yang Wendong said, "Yes, the transfer of the industrial chain is also very troublesome. If you succeed, it will be easier for Honor and Watson to transfer their industrial chains in the future."

Hong Kong capital was hesitant in the early stages, but if a large company succeeded, they would dare to enter.

Wei Zetao then asked, "Mr. Yang, of the four special economic zones, which one do you think has the best prospects?"

Yang Wendong didn't answer, but instead asked, "Which one do you think is more suitable for us?"

Wei Zetao thought for a moment and said, "Of the four cities, Shenhai City is the closest to us in terms of distance, but it has almost no industrial system and may not even have enough electricity."

In terms of economy, Xiamen is much stronger than Shantou, and both have some traditional industries. However, Xiamen doesn't have the same geographical advantage as Shenzhen.

"The economy can be developed, and the four cities are actually not that different, but the distance cannot be changed," Yang Wendong said with a chuckle as he took a sip of tea.

Wei Zetao asked, "So, is Mr. Yang planning to invest in the deep sea?"

Yang Wendong said, "We have this plan. Our first target is Shenhai. However, if we spread the word, the four special zones will definitely come to us. So when you are negotiating, don't give up any of them. Only by having other bargaining chips can we maximize our interests in Shenhai City."

Choosing a location to invest in and build a factory is actually similar to choosing a supplier. Diversified options are most beneficial for us. The deep sea is my primary target, but I will also invest appropriately in other cities.

"Understood," Wei Zetao said with a smile;

Changxing Group is so large that it ranks among the top in Asia, with factories in many countries and regions in Southeast Asia. In the past, many countries have sent representatives to visit them after their multiple investments, and they have made good use of these opportunities to maximize their profits.

Yang Wendong continued, "In addition, in Hong Kong, we may need to face the issue of layoffs in the future, which is quite troublesome. We cannot wait until later to lay off all employees at once, as that would have too great an impact."
First, conduct an internal assessment to see who excels in technology and quality control. We'll keep those people. Also, those who are willing to develop their careers in the mainland can stay.

For the rest, we'll gradually reduce staff, primarily based on contracts. Those whose contracts expire and whose performance is deemed unsatisfactory will not have their contracts renewed, and we won't lay off staff. We'll give them ample time to gradually absorb the impact. Hong Kong's industrial era prospered earlier because of its existence, but it could also decline earlier because of its existence.
After all, labor costs may have been driven up in advance by the industrial giant Cheung Hing Group, and other factories in Hong Kong cannot afford these costs, so theoretically, there will be an early transfer of labor costs.
In fact, before the reform and opening up in mainland China, many factories had already moved to Taiwan and Southeast Asia, including very simple plastic factories, hardware and electromechanical factories, etc.
Many factory owners also found that real estate was more profitable, so they simply closed their factories and were done with it.
As the supply chain gradually becomes fragmented, Changxing Group cannot remain unaffected, and relocation is inevitable. However, it is impossible to take tens of thousands of Hong Kong people to the mainland, so the only option is to reduce staff.
Wei Zetao nodded and said, "This method is indeed feasible. We can gradually relocate and reduce staff, and since it's done by not renewing contracts when they expire, it doesn't really count as layoffs. However, over time, all employees will inevitably find out."

“If they know, they know. It’s hard to prevent them from finding out no matter what. The impact of massive layoffs is something we can’t afford. The Hong Kong government and even the mainland might intervene, but that won’t work.” Yang Wendong shook his head and said, “There will definitely be some pain. We should retain the technical and quality personnel and let them do a good job. In the future, we can send them to the mainland to become junior leaders.”

If there are tens of thousands or even hundreds of thousands of short-term layoffs, nearly 1% of the population will be directly unemployed, and many more indirect jobs will be lost. The Hong Kong government would be in a terrible situation. At that time, the mainland and the UK may be negotiating on the Hong Kong issue, or the negotiations may have already ended. No matter when such a problem occurs, it would not be good.

Wei Zetao said, "Okay, I understand."

Yang Wendong added, "In addition, we will set up an internal fund to see if any of our employees have any difficulties at home, and if so, we can provide appropriate assistance."
But it probably won't be necessary. Our company offers decent benefits, and those who have been here for several years won't be in dire straits unless they have a sick family member.

In terms of compensation, Cheung Hing Group's salary is higher than the average salary in Hong Kong, and there are various benefits; those who can work at Cheung Hing Group for several years can generally achieve an average income in Hong Kong society.
Furthermore, Yang Wendong deliberately encouraged employees to buy houses when housing prices were low, using market mechanisms to provide employee benefits;
This reduction in staff was done in accordance with the contract. Employment is a mutual choice, after all, employees can leave at any time, and it is normal business practice for the company not to renew contracts when they expire. His extra help was already a benefit.

“Okay, actually I estimate that many people inside are less interested in working after making money from their properties. I’ll try to talk to them first, since their motivation to work isn’t strong anymore,” Wei Zetao continued.

Yang Wendong nodded and said, "Okay. Also, inform Watsons and Glory that if anyone there does the same thing, they can leave even if they're not in an important position."

Watsons and Honor's layoff plans will be a little later than yours, but you can still be prepared.

For the three major manufacturing industries, the layoffs will be implemented gradually, with a smaller impact. Honor Electronics and Watsons have higher profit margins and a greater capacity to withstand labor costs, so they can postpone the layoffs.
However, before 82, housing prices were high, and many internal employees owned houses and probably didn't want to work anymore. So, we took advantage of this period to negotiate and let these people leave happily.

Otherwise, by 83/84, with the economic crisis, too many employees would have lost their jobs, which would have been quite dire, and the social impact would have been significant.

“Okay, I’ll inform them together,” Wei Zetao nodded and said.

The group's plan to gradually reduce staff in Hong Kong is a top secret. Only a few people know about it. Others, even the HR departments of the branch offices, only know that they will no longer hire people and that when employees' contracts expire, they will not be renewed directly as before, but will be subject to internal review.
Changxing Industrial's plan to build another large-scale industrial park for 10,000 people outside of Hong Kong was not kept secret. As a result, several Southeast Asian countries also received the news, and their investment promotion departments immediately got busy.

Hong Kong, Xinhua News Agency Headquarters:

"What? A 10,000-person industrial park, like the one in Kwun Tong District?" Xinhua News Agency President Zhang Guangdou asked in surprise, "Old Zeng, are you kidding?"

Zeng Jianhua quickly said, "How could I joke about something like this? I even called Wei Zetao, and he admitted that Changxing Industry has such a plan."

“Changxing Industrial, with their scale, building an industrial park for 10,000 people is not unusual.” Zhang Guangdou thought for a moment and asked, “So, what are you thinking, coming to tell me?”

Zeng Jianhua said, "I want you to send the message back to the mainland. Southeast Asia knows about this, but there's been no reaction from the mainland. I think it would be a pity to give up such a good opportunity."
President Zhang, you know that projects like this can create tens of thousands of jobs and generate tens of millions of US dollars in foreign exchange annually. China desperately needs projects like this.

Zhang Guangdou nodded and then asked, "So, is Changxing Industry going to become a wholly-owned subsidiary?"

“That’s right. It just so happens that the four special economic zones in the mainland were established, allowing wholly foreign-owned enterprises. Otherwise, we really wouldn’t have been able to do anything. Shekou simply couldn’t accommodate such a large factory,” Zeng Jianhua said with a smile.

Yang Wendong's investment in Shekou is substantial, accounting for a large portion of Shekou's total investment attraction efforts. However, this is far less than the total industrial capacity held by Yang Wendong.

In fact, relevant departments in the mainland had long heard about China Resources and wanted to bring Changxing Group's factory into the mainland. However, due to the mainland policy requiring joint ventures, the deal ultimately fell through, and only a beverage and commodity factory was brought in. I heard that when Yang Wendong went to Yanjing last time, there were some projects, but they were not super big.
This industrial park, now housing 10,000 people, is a truly massive project.

Zhang Guangdou said, "Okay, I will inform the mainland. I will also suggest that mainland cities pay more attention to business developments in Hong Kong and overseas. How can there be investment if we don't take the initiative?"

Zeng Jianhua said, "The Special Administrative Region is also short of foreign exchange right now, so it's unlikely that they can send people to be stationed overseas for a long time. However, it's possible for Hong Kong, since it's not far away."

"Okay, I'll make a call to a few special economic zones right now," Zhang Guangdou said. "Xinhua News Agency isn't in charge of domestic commerce; a reminder is enough. We can't interfere. But China Resources is a company, so why don't you give it a try?"

Xinhua News Agency has its own mission. Although it may have some interactions with top businessmen, it does not engage in commercial investment.
Zeng Jianhua shook his head and said, "Industry is not a strong point for China Resources, and Yang Wendong probably wouldn't agree to his core industries forming joint ventures with others."

"That's true, let's leave it at that for now." Zhang Guangdou had already opened a book, looking for a phone number. After a while, he said, "Found it."

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(End of this chapter)