In Hong Kong, we build a global business empire

Chapter 688 Taking the Rich as Fools

Lin Haoran did not leave the Deep Water Bay villa area until he had lunch with his parents at home.

Back in Central, Lin Haoran went straight to the Connaught Building.

In Ma Shimin's office, Lin Haoran even saw He Shanheng.

"Uncle He, Hengsheng Bank was just acquired not long ago. Don't you have a lot of work to do?" Lin Haoran asked curiously.

"Haoran, have you forgotten about Hengsheng Group? I came here today to oversee the setup of Hengsheng Group's office. I just finished lunch with Mr. Ma in the cafeteria and came over to chat with him. After all, there will be many opportunities for cooperation between the two sides in the future," He Shanheng replied with a smile.

Lin Haoran then realized what was happening.

A few days ago, He Shanheng mentioned to him that it would only take a few days to establish Hengsheng Group. All that was needed was to properly integrate the resources of Hengsheng Bank, Bank of East Asia, and Daoheng Bank. Basically, it could be started at any time.

Afterwards, he specifically instructed Ma Shimin to vacate an entire floor of the Kang Le Building for Hengsheng Group to use as its headquarters office.

Now that Hengsheng Bank has successfully integrated into this "big family," it is indeed time to establish Hengsheng Group.

"Did you encounter any difficulties?" Lin Haoran asked with a smile.

"No, not at all. I took over Hengsheng Bank very smoothly, and I've been managing East Asia Bank for over a month. I already know the situation very well. As for Daoheng Bank, it's even easier."

"By the way, Haoran, I've already submitted the application for the privatization of Hengsheng Bank to the Securities Regulatory Commission on behalf of Hengsheng Group. Once it's approved, we can formally submit the delisting offer to the Hong Kong Stock Exchange," He Shanheng said.

Lin Haoran nodded slightly. At present, they actually control 90% of the shares of Hengsheng Bank.

This means that the threshold for a mandatory takeover of the remaining shares has been reached.

Now that the conditions have been met, there is no need to keep Hengsheng Bank as a listed bank.

After Hengsheng Group was established, Lin Haoran planned to talk to He Shanheng about investing in Japan.

"By the way, has there been any new progress on Standard Chartered Bank's promise to secure a Hong Kong banknote-issuing right for us?" Lin Haoran asked after a moment's thought.

“Mr. Brown talked to me about this yesterday. Standard Chartered headquarters has persuaded the British government, but according to Mr. Brown, they paid a high price to get through to the British government.”

"This matter needs to be studied and approved in Hong Kong now. We can't rush it. After all, the right to issue currency is too important. The agreement we signed with Standard Chartered Bank is to get it done for us within three months. There's still a long time before the deadline, so there's really no need to rush," He Shanheng reported truthfully.

Lin Haoran nodded slightly. Indeed, the right to issue currency is not something that can be easily approved.

After chatting with He Shanheng for a while, he went downstairs.

The soon-to-be-established headquarters office of Hengsheng Group does not need to be renovated. He Shanheng's idea is that after cleaning and arranging the office spaces for each department, they can move in.

Lin Haoran naturally had no objection to this.

After He Shanheng left, only Lin Haoran and Ma Shimin remained in the office.

"Boss, there's something I need to report to you." Ma Shimin picked up a document from his desk and handed it to Lin Haoran.

"Mobile phone commercial launch plan?" Lin Haoran looked at the document title and couldn't help but exclaim in surprise.

Ma Shimin had previously discussed with him the commercial launch of mobile phones in August, but he had completely forgotten about this important matter.

Although he had long been accustomed to the convenience brought by mobile phones, he had been focusing more on East Asia Bank lately.

"That's right, boss! The mobile cellular signal network jointly invested by Hong Kong Telephone Company and Motorola has basically completed coverage of the core areas of northern Hong Kong Island and the core areas of Kowloon Peninsula by the end of July."

The coverage has been achieved in many core areas, business districts, and even affluent villa areas, including bustling areas such as Central, Wan Chai, Causeway Bay, and North Point, as well as urban areas in Kowloon Peninsula such as Hung Hom, Tsim Sha Tsui, Mong Kok, Sham Shui Po, Kwun Tong, and Kowloon Tong.

We have been conducting intensive testing recently, and the results have far exceeded our expectations. Although the signal performance was poor in densely built-up areas and basements, with frequent signal drops, this was within our expectations. The performance in other areas was quite good.

After discussions with Motorola, the official launch date for our Hong Kong mobile phone service has been set for August 15th.

At that time, Mr. Robert Galvin, President of Motorola, will be in Hong Kong to witness this historic moment with us.

"Our Hong Kong will become the world's first city to commercialize mobile phones, ushering in the first year of global mobile phone commercialization!" Ma Shimin said, unable to hide his excitement.

As the president of Hongkong Land Group, Simon Murray has been using mobile phones for a long time, so he is even more able to appreciate the convenience they bring him.

This mobile phone is so convenient for business use.

If this deal goes through, barring any unforeseen circumstances, the stock price of Hong Kong Telephone Company will definitely soar.

Although Hongkong Land Group has completed its privatization process, its subsidiary, Hong Kong Telephone Company, is a legitimate listed company.

Initially, Lin Haoran had the idea of ​​privatizing Hong Kong Telephone Company as well, but the Securities and Futures Commission firmly disagreed.

After several twists and turns, the Securities and Futures Commission finally approved that they could hold a maximum of 75% of the shares of Hong Kong Telephone Company, while the remaining 25% of the shares should still be kept in the hands of shareholders.

This means that Hong Kong Telephone Company cannot be privatized.

However, Lin Haoran knew that being able to absolutely control a monopolistic company meant he couldn't be too greedy, and he was already quite satisfied with this.

Looking at the proposal in his hand, Lin Haoran nodded slightly. He was also one of the early testers of mobile phones, and he had gained a lot of insights over the past few months.

The convenience brought by mobile phones is simply incomparable to that of the past.

Now, he no longer needs to be tied to a particular telephone; he can make and receive calls anytime, anywhere, greatly increasing his freedom.

Moreover, the signal stability is quite good. Whether in the office, at home on Shi Xun Road, or even in a moving car, signal interruptions are rare.

Of course, this may also be related to the location of his office, which is in a relatively open and high-rise building.

However, the first batch of mobile phone users were certainly all wealthy and powerful, and their office environment would naturally not be bad.

"Have you decided on the pricing for network access fees, communication fees, and handset purchase fees?" Lin Haoran asked.

"It hasn't been finalized yet. Pricing is a real challenge. We invested hundreds of millions of Hong Kong dollars in building the mobile cellular network, and it will be extremely difficult to break even."

There's also the issue of OEM manufacturing for the Motorola DynaTAC 8000X mobile phone. We originally planned to obtain the product technology license and then manufacture it ourselves, but Motorola absolutely refused to budge and just wouldn't grant the license.

After several rounds of negotiations, they realized that manufacturing in the United States would be prohibitively expensive. Fortunately, Hong Kong has a complete range of component factories for technology products. Even leading semiconductor companies like Intel have opened packaging plants in Hong Kong. Therefore, placing the contract manufacturing line in Hong Kong would significantly reduce costs.

So in the end, they decided to establish a joint venture factory with us. We provided the site and initial investment, while they provided the technology, and the key components were airlifted from the United States.

In terms of equity, we hold 51% and they hold 49%. By this calculation, we have invested too much money in the mobile phone business. However, the Hong Kong market is not large at present. If the pricing is too high, the number of users may be less than expected.
"If the price is too low, we won't be able to recoup the huge initial investment in the short term, and there's no hope of making a profit," Ma Shimin said, his brow furrowed and his face full of distress.

Upon hearing this, Lin Haoran nodded slightly.

Actually, he had unintentionally read some articles about pricing in his previous life.

If Hong Kong Telephone Company had not suddenly joined forces with Motorola, following the original trajectory, Hutchison Telecom, a subsidiary of Hutchison Whampoa, would have been the first to launch mobile phone services in Hong Kong in 1983.

At that time, Hutchison Whampoa realized that the development of the wired telephone business was difficult, while the mobile phone business was a rare opportunity. So it seized the opportunity and established Hutchison Telecommunications, starting with the mobile phone business, and successfully broke the monopoly of Hong Kong Telephone Company in the communications field.

At that time, the initial public sale price of mobile phones was generally high, usually between HK$2 and HK$3, while the network access fee was about HK$6000.

Due to extremely strong market demand and insufficient supply, the price of this mobile phone on the black market has been inflated to around HK$5 per unit!
In addition, a basic service fee of HK$150 is required every month, and the call rate is as high as HK$1 per minute. Moreover, both making and receiving calls are charged.

It can be said that both wired and wireless telephone services are stable businesses that can bring long-term high profits.

Therefore, although Hong Kong Telephone Company invested a lot of money in the early stage, it was not difficult to recover its costs.

"Is the first batch a limited edition?" Lin Haoran asked after thinking for a moment.

"There will definitely be a limit. Due to the limitations of base station technology and quantity, the more people use our mobile network, the worse the signal will be. Therefore, it is necessary to limit it. According to the estimates of Motorola's engineering team, the number of users should not exceed three thousand at present."

Therefore, we decided to limit the first batch of users to three thousand. However, three thousand is not a small number. We were worried that if the price was set too high, we would not be able to attract even three thousand customers.

"Boss, do you have any suggestions for pricing?" Ma Shimin asked.

The commercial launch of mobile phones was a first in the world, with no precedents to follow, making pricing a truly daunting challenge for Hong Kong Telephone Company.

“My idea is to set the price as high as possible. For example, a telephone could be priced at HK$50,000, with a network access fee of HK$10,000, a basic monthly service fee of HK$500, and a call rate of HK$2 per minute. Of course, the price won't be fixed and can be adjusted later, but it shouldn't be set too low overall!” Lin Haoran said with a smile after thinking for a moment.

"Oh? Boss, the price you've offered is significantly higher than what we've been discussing lately. If we price it this way, won't we be turning away a lot of potential customers?" Ma Shimin frowned slightly and said. "Turning them away is the right thing to do. Too many customers in the first batch isn't a good thing for us. Our mobile signal network probably can't support so many customers. Since we're going to create a high-end, monopolistic communication service, we need to set high barriers to entry from the beginning to attract those truly capable and demanding top-tier customers."

“But this price is just too high. Even if there are many wealthy people in Hong Kong, they may not all be able to afford it.” Ma Shimin was still somewhat worried, and his brows furrowed even more.

A single device costs HK$50,000, and not only that, there's a HK$10,000 network access fee, plus the subsequent costs are not low either. This is simply taking advantage of the rich!
"Mr. Ma, if you look at it from another perspective, we have made a huge initial investment. If we want to quickly recoup our costs and achieve high profits, we can only start with high-net-worth clients. Moreover, high prices are themselves a symbol of quality and status."

Those top billionaires have always been willing to pay for unique, scarce and high-quality services. The mobile phones we launched were the first to be commercially available in Hong Kong and even globally. They are scarce resources in themselves and cannot be replicated by others in a short period of time. They are a kind of monopolistic business.

In addition, the stable signal and high-quality service we provide are more than worth the price. For those business owners, the value of their calls is not low.

Moreover, given Hong Kong's current wealthy population, is it really impossible to reach an initial customer base of three thousand? Lin Haoran patiently analyzed.

Hong Kong now has hundreds of families with assets worth hundreds of millions, not to mention the many more high-net-worth individuals with assets worth tens of millions or millions.

Therefore, Lin Haoran estimated that three thousand customers might not be enough. In that case, why set the price too low? They could increase the customer base later when the technology of Kita is more mature and has a wider coverage.

Ma Shimin suddenly realized that what they were really making money from was monopoly.

"Boss, I suddenly have an idea. Do you remember when we discussed that once the time was right, we would acquire the joint venture between us and Motorola, and completely take control of the Hong Kong mobile phone business?" Ma Shimin said with a smile.

Lin Haoran nodded.

He did discuss this topic with Simon Ma.

After all, mobile telecommunications is definitely a very profitable industry in the future.

Today, as the first to take the plunge, they have taken a solid first step in this emerging field of mobile telecommunications.

The subsequent full acquisition plan is undoubtedly a difficult problem.

That is, how to get Motorola to give up its shares.

"Mr. Ma, do you perhaps have a good idea?" Lin Haoran asked curiously.

"I do have a preliminary idea. If we set the price according to what you said, I think Motorola will definitely agree, since they also hope to make more money."

However, the coverage area of ​​our cell towers is still too small. Basically, once you leave the city and go to the suburbs or new towns, mobile phones become useless. This is definitely a major disadvantage for us in the short term.

Therefore, it may be difficult for us to break even for several years to come, as the profits will be used to build new cell towers and expand coverage.

"But Motorola, as a company that seeks a balance between short-term profits and long-term strategy, may not be willing to engage in such a protracted investment battle with us. After all, they have their own global business layout and profit goals," Ma Shimin said.

Lin Haoran nodded. Indeed, as a pioneer in the mobile phone industry, Motorola certainly wanted to expand globally, and Hong Kong was just one of their testing grounds.

"So, Mr. Ma, what do you mean?" Lin Haoran narrowed his eyes slightly, waiting for Ma Shimin to continue.

Ma Shimin took a deep breath, sorted out his thoughts, and said, "Boss, I think we can make something of this."

When we work with Motorola next, we can gradually reveal to them that, due to customer complaints, we intend to take a very aggressive approach to expanding signal coverage.

Specifically, we plan to reinvest all the funds we earn over the next three to five years to not only extend signal coverage to the outskirts of Hong Kong, but also to collaborate with surrounding less developed areas, such as Tuen Mun, Lantau Island, and the New Territories, to create a seamless mobile communication network covering the entire city of Hong Kong.

Lin Haoran nodded slightly, signaling him to continue.

"If Motorola saw our ambitious plan, they would definitely worry that such a large investment would lead them into a war of attrition, and the return on investment might take longer than they expect."

"Faced with a project that might not make money, they certainly won't want to waste too much time with us. When the time comes, we can subtly reveal our intention to acquire their shares, and I think they will definitely be willing to sell," Ma Shimin said with a smile.

When Hong Kong Telephone Company and Motorola formed a joint venture, Hong Kong was Hong Kong Telephone Company's "territory," while Motorola was just an outsider. Therefore, Hong Kong Telephone Company held more of the decision-making power.

When Lin Haoran persuaded Motorola to participate in the joint venture, he emphasized that Hong Kong had a large wealthy population and that investing in Hong Kong would definitely yield substantial profits. This was also an important factor that attracted Motorola.

Furthermore, with the number of users constantly increasing, it is indeed unacceptable for the mobile signal range to remain limited to the city center, and customer complaints are to be expected.

By then, even if Motorola wanted to oppose the decision, it would likely have to weigh its influence within the joint venture and the potential public pressure it would face.

Covering sparsely populated suburbs does seem uneconomical at first glance.

Therefore, if Motorola is unwilling to support this decision, then transferring their shares to Hong Kong Telephone Company at a reasonable price would be the best option.

This isn't a case of discarding a useful tool after it's been used; after all, Motorola would have made a considerable profit by selling its shares.

However, it was only a matter of time before Hong Kong Telephone Company, a local Hong Kong enterprise, extended its signal coverage to suburbs and new towns.

Hong Kong Telephone Company's decision allowed it to force Motorola to withdraw, inherit related technologies, and lay the groundwork for future development—a win-win-win situation.

The downside of this move is that it may be difficult to recoup the costs in the short term, which is a bit too short-sighted.

But for Lin Haoran, this was not a big deal.

After all, the profits can be used for investment, and there is no need for Hong Kong Telephone Company to invest any more funds.

Investing hundreds of millions of Hong Kong dollars to gain a monopoly in the Hong Kong wireless telephone market seems like a worthwhile deal.

Other mobile companies that want to enter the Hong Kong market will need to rely on the signal towers of Hong Kong Telephone Company, which will undoubtedly give Hong Kong Telephone Company an absolute dominant position in the future mobile communications market.

“Okay, let’s do it your way!” Lin Haoran nodded, agreeing with Ma Shimin’s idea.

He was the one who first brought up the idea of ​​forcing Motorola out of the company.

The mobile telecommunications industry will be extremely profitable for decades to come, so he naturally doesn't want Motorola to interfere in Hong Kong.

Lin Haoran chatted with Ma Shimin in the office until after 3 p.m. when he received a call from Guo Henian.

"Haoran, I've already had Mr. Chen Lang calculate your and Xiaohan's birth dates and times. According to your birth charts, September 3rd, which is the sixth day of the eighth lunar month, is a very auspicious day, perfect for your engagement. I've already called your father, and he said it's a good day. What do you think?" Guo Henian said with a smile.

Early September?

I'm a little anxious.

However, after thinking for a moment, Lin Haoran replied, "Okay, Uncle Guo, I'll follow your arrangements!"

"Then it's decided. I know you've been very busy lately, so you don't need to worry too much about this. Our Guo family and your parents will take care of everything," Guo Henian said with a hearty laugh.

"Then I'll have to trouble you, Uncle Guo."

Not long after hanging up, Lin Haoran received another call.

The call was actually from Guo Xiaohan.

"Brother Haoran, can I come to your villa after get off work?" Guo Xiaohan's voice was a little shy on the phone.

Lin Haoran smiled slightly and said gently, "You are my fiancée, is there even a need to ask? I'll go home early and wait for you."

It seems that Guo Xiaohan's longing for Lin Haoran intensified after learning the specific engagement date.

I never expected this girl to be so proactive.

A smile couldn't help but appear on Lin Haoran's face.

At the same time, a sense of shame quietly crept into his heart.

Just last night, he was having an enthusiastic conversation with his father, Lin Wan-an, about acquiring Shaw Brothers Studio, secretly planning to enjoy the "special perks" of those future female stars.

Of course, it's just a feeling of shame. What I should do in the future is to follow my heart and let things take their natural course, right?
Lin Haoran put away his phone, a ripple of emotion stirring within him.

Since meeting Guo Xiaohan, it has been mostly Guo Xiaohan who has taken the initiative, while he has always been the one passively accepting this love.

Now that the engagement date has been set, he is increasingly satisfied with his wife, Guo Xiaohan.

This, perhaps, is a wondrous arrangement of fate.

(End of this chapter)