Return to 1958 and build a century-old giant

Chapter 869 Spin-off of Hong Kong Electric
“I’ve already invested in several retail giants in the US, so you don’t need to invest here.” Yang Wendong shook his head and said, “Don’t consider South America for now either. As for Australia, although it’s a developed country, the market isn’t big, it’s just a few cities. You can invest there if you want, but it’s up to you.”

Although he knew that the US market was huge, it would be a bit reckless for him to invest when Walmart was rapidly rising. In the future, Walmart would have an almost absolute monopoly in the US, much stronger than any supermarket in Europe. Although there are a few large local supermarkets in Europe, their monopoly power is far inferior to Walmart's.
That's why he's willing to try in Europe, because there's still a chance, but in the United States, the hope is slim.

Furthermore, investing in the United States requires building a large-scale logistics system, and the supermarket itself is not very confident in its ability to succeed. If losses occur, they will be enormous.

Now that I am a major shareholder of Walmart and have secured large procurement orders from Walmart through trade, it would be unprofitable for me to compete with Walmart in the United States. I would rather use that money to continue acquiring Walmart stock or other chain supermarkets.

As for South America, things are okay now, but the future economy is a complete mess.

Liu Huayu replied, "Okay, I understand."

Like the automotive industry, the supermarket retail industry is heavily reliant on the domestic market, but it also needs to strive for overseas markets.

These two industries certainly can't match the earning power of electronics, finance and real estate, but their influence is strong enough. The retail industry, if it grows big, can create jobs for hundreds of thousands or even millions of people, and terminal orders can create jobs for millions more.
And its biggest advantage is that it can be adjusted at any time;

Once a large factory is established in a city, it is basically impossible to change its location. In the past, some places took advantage of foreign companies in the area to exploit this. However, supermarket orders can be transferred in a matter of minutes. In this way, a single purchaser can influence multiple cities at any time, which makes them more influential.

This is also something that Yang Wendong values ​​highly;
However, the mainland market is only just beginning to develop its economy, and it is currently just a plan. It will still take some time before the day we envision arrives.

November arrived quickly, and Changxing Industrial officially signed an agreement with Shenzhen City, reaching an investment plan with a total scale of US$30 million. This is the largest non-central government-introduced foreign investment project in the history of mainland China.

Hong Kong Electric, on the other hand, is investing US$2500 million to build a 30-kilowatt thermal power plant. This is partly to ensure a stable power supply for the Changxing Industrial factory and its surrounding industrial chain, and partly to supply the Shenhai Special Economic Zone.

The total investment of US$5500 million is a great start for Deepsea since it became a special economic zone.
As for the real estate business, it's not large-scale, so there's been no excessive publicity. This was at Yang Wendong's instruction; for this kind of business, just focus on making money and there's no need for promotion.

As for the other three special economic zones, they have not yet reached an agreement with Changxing Group. They need to wait until the deep-sea projects are completed and they have gained some experience before considering building power plants or the next batch of factory projects there.

Because of this incident, Changxing Group appeared on the CCTV News program for the first time, and Yang Wendong's name became known to countless middle and senior-level people in mainland China.

CCTV also sent an interview request, but the time ahead was still a bit sensitive. The UK and Taiwan knew about his investments in the mainland, but they couldn't say anything. Yang Wendong looked at the questions that were asked and found some that were difficult to answer.
To avoid unnecessary damage to his business, he naturally refused.

However, to save face for CCTV, he replied that he would visit CCTV during his trip to Yanjing so that they could discuss some cooperation.
The hype surrounding Changxing Group's large-scale investment in the deep sea has gradually subsided, but an unexpected problem has arisen.

Looking at the Ming Pao newspaper in his hand, Yang Wendong glanced at Zheng Zhijie and Jackson in front of him and asked, "Do many shareholders and investors think this way?"

Jackson replied, "Yes, some shareholders believe that we will inevitably lose money if we invest in the mainland, and they also say that we are using the electricity bills paid by Hong Kong people to invest in high-risk projects, which does not meet Hong Kong's requirements for the stability of public sectors."

"These people are really short-sighted," Yang Wendong said speechlessly.

It seems that in the past, after Li Ka-shing acquired Hong Kong Electric, he intended to build Hong Kong Electric into his own energy industry. Therefore, when he subsequently acquired Husky Energy, a Canadian oil group, it was done in the name of Hong Kong Electric.

However, this business move was opposed by many Hong Kong Electric shareholders, who believed that Li Ka-shing's investment was too risky.

Later, Li Ka-shing was forced to split up Hong Kong Electric. Hong Kong Electric then focused solely on operating power plants in Hong Kong, while another company went on to operate overseas energy projects. As it turned out, Li Ka-shing's investment was correct, as Husky Energy later made the Li family a fortune.

Jackson said, "The main issue is that the Hong Kong government does have stability requirements for public sectors. If some shareholders use this as a pretext to cause trouble, or even take it to court, we really don't have the right to complain."

"Then what do you think we should do?" Yang Wendong asked in return.

In the past, Li Ka-shing could have split up Hong Kong Electric, and Yang Wen-tung could naturally do the same, but he still wanted to hear his subordinates' opinions.

Jackson said, “There are two options. One is that we take over the shares held by these dissenting shareholders, but that would cause the share price to rise, and your interests would be somewhat harmed.”
The second method is to spin off HK Electric, allowing its overseas business to operate independently, whether you hold it as a separate entity or list it on the stock exchange.

Zheng Zhijie said: "The first method won't work because Mr. Yang already holds 49.9% of HK Electric's shares. Adding more would trigger a mandatory takeover offer. However, HK Electric is a public company and must be listed."

This has never happened before, but I think the Hong Kong government will definitely intervene and won't allow us to do this.

Yang Wendong laughed and said, "That's not a problem. We know quite a few Chinese entrepreneurs who can help with the acquisition."

“That’s good.” Zheng Zhijie thought for a moment and said, “The second method can also be considered. While splitting up HK Electric, we can separate only HK Electric’s Hong Kong power generation business and separate the real estate business separately. That would be good. Then we can also consider privatization.”

“Privatization is not being considered for the time being, and now is not the right time,” Yang Wendong shook his head and said. “Besides, if we privatize so soon after the split, we’ll lose money if housing prices fall, and we might be criticized by shareholders if they rise. It’s completely unnecessary.” Zheng Zhijie said, “Then for now, privatization is not necessary.”

As the head of the group's real estate business, he naturally knew that his boss, Yang Wendong, was not optimistic about the future of Hong Kong's real estate market.

Hong Kong land prices are still high at present, so privatization at this time would indeed result in losses and a bad reputation;
But if we just wait until the market falls like it did in 73, and then privatize, our side can make a profit. And if the split takes a long time, then shareholders will generally have nothing to say.

Yang Wendong said, "Alright, let's do it this way. We'll split it into three companies. The first company will still be called Hong Kong Electric, and it will be responsible for Hong Kong's power generation business."
The second one is called Changxing Energy, which will be responsible for overseas power plants or other energy businesses. It will not need to take over the assets of Hong Kong Electric. The power plant in Shenhai City will be funded by Changxing Energy.
The third company will acquire HK Electric's former real estate business and remain listed. As for the name, Mr. Zheng, you can choose a suitable one yourself.

He originally didn't intend to spin off HK Electric. The profit margin of this traditional business is far lower than that of electronic finance and real estate. In addition, the investment is large. So he thought of using public funds to invest and then returning some profits to them.

After all, as one of Hong Kong's top conglomerates, some of its businesses are meant to help other people in Hong Kong get rich.

But there are always some short-sighted people, and there's nothing that can be done about it. Even if you take it with you, they won't want it; they don't care about it at all.

Jackson replied, "Okay, Mr. Yang, I'll make the arrangements right away. Changxing Energy will be yours, as for the management?"

"Let's start by transferring 50% of the staff from Hong Kong Electric and headquarters respectively. You can discuss the specifics with headquarters," Yang Wendong replied.

This is a perfect opportunity for me to fill a large number of Chinese jobs in the power plant industry.
It is important to know that Hong Kong Electric's business is quite important, involving security, the economy, and even the normal operation of the Hong Kong government. Therefore, although Yang Wendong's people were sent in after the acquisition of Hong Kong Electric, they never had the opportunity to operate independently.

If Hong Kong Electric were still under the control of the British management, they would still be responsible for the power plant in Deepsea City. But now, at least they can insert half of the Chinese population.
Although he doesn't mind if his subordinates are British, he does mind if only a group of British people are in charge of a business. Even if they are Chinese, he cannot accept it if a Chinese person or group controls a company's business.
Eliminating the irreplaceability of employees is something any company needs to do; similarly, employees are also striving to increase their own irreplaceability. This is a competitive relationship, and only through selection can a balance be achieved between the company and the individual.

Jackson had no reason to refuse at that moment, so he could only agree, "Okay, Mr. Yang."

Zheng Zhijie added, "Mr. Yang, this is such a big matter, and it involves a public enterprise of the Hong Kong government. Shouldn't we notify the Hong Kong government first before making an announcement?"

“That’s right. Alright then, I’ll go talk to MacLehose.” Yang Wendong nodded and said, “We have invested in the mainland many times before, and there have been rumors in Hong Kong that we are preparing to relocate Hong Kong’s industries. The Hong Kong government has also tested me a few times. I’ll take this opportunity to clarify things with the Governor.”

In fact, it's not just Cheung Hing Group; many other Hong Kong companies are also relocating, especially in low-end industries. Wages in Hong Kong are already quite high, and they started relocating a long time ago, but they're heading towards Southeast Asia or Taiwan, rather than the mainland.
The next day, Yang Wendong arrived at the Governor's House;

As the head of Hong Kong's largest conglomerate, it would be easy for Yang Wendong to meet with the Governor of Hong Kong; he made a phone call yesterday and arranged to meet today. Although the Governor of Hong Kong is very busy, there are usually not many urgent situations where he needs to refuse Yang Wendong.

"Hello, Mr. MacLehose," Yang Wendong said politely.

MacLehose shook hands and smiled, "Mr. Yang, we've known each other for almost ten years, haven't we? How do you stay as young as you were ten years ago? You have to tell me that."

"Haha, maybe it's because my genes are good," Yang Wendong said with a laugh;

He takes good care of himself; you can hardly see any signs of aging. With exercise and skincare, he basically doesn't need skincare products, and his skin is still very good.

Asians are naturally superior in this respect, which is why many people on the internet in the past said that Europeans and Americans have a shorter flowering period;
Of course, it could also be related to their frequent consumption of ice water and excessive oily food; everything comes at a price.

“I’m truly envious.” MacLehose didn’t press further. After some pleasantries, Yang Wendong got straight to the point: “Governor, there’s something I need to tell you in advance about Hong Kong Electric.”

After listening attentively, MacLehose said, "I understand what's going on. Mr. Yang, I have great confidence in your investment capabilities. If I were a shareholder, I would definitely agree with you using HK Electric to invest overseas. Some of these troublemakers are just being ungrateful."

As the Governor of Hong Kong, he was a figure of considerable influence and was somewhat aware of events in Europe and America. He couldn't say he was fully aware of Yang Wendong's success in overseas investments, but he knew a little about it.
Those who truly understand the value of having the opportunity to invest alongside Yang Wendong will cherish it.
However, some people are short-sighted and can only see a little snow in front of them;

Yang Wendong said, "Thank you for the praise, Mr. Governor, but these shareholders are not wrong. As a public enterprise, if Hong Kong Electric suffers losses in its overseas investments, it will inevitably affect Hong Kong's power generation business. Therefore, it is better to spin it off."

From a legal perspective, this is not a problem. Laws are made for everyone, not just for a powerful individual. Hong Kong infrastructure companies are similar to semi-state-owned enterprises, so their overseas investments naturally need to be subject to careful restrictions.

“That’s up to you. As a commercial enterprise, Hong Kong Electric is free to split up,” MacLehose said without asking any further questions. “After the split, Hong Kong Electric can focus on generating electricity within Hong Kong. From the perspective of the Governor’s Office, that’s a good choice. At least in theory, Hong Kong Electric won’t lose money.”

It's just the shareholders' and investors' choice; you have to respect it and not cause any trouble.

Yang Wendong said, "Your Excellency, rest assured on this point. I will respect the shareholders' choices. After the valuation of different companies is completed, shareholders can choose any stock of either company based on their HK Electric shares, or cash. I will prepare everything for them."

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(End of this chapter)