Chapter 426: The Beginning of Controlling Hong Kong's Manufacturing Industry
December 25, Christmas Day:
Many of the British-owned companies in Hong Kong had already begun their holiday break, but the Chinese-owned enterprises, including the Changxing Group, were clearly not following suit. Western holidays weren't observed.
In fact, for most Chinese businesses in Hong Kong, even Sundays weren't official rest days—at most, employees got time off for the Lunar New Year.
This all stemmed from the fundamental labor supply-demand imbalance. In the 1950s, workers were abundant while companies were few, so everyone was begging for work. There were no choices. "996" work culture? That would've been a blessing. Most businesses back then operated under a brutal "7724" schedule—7 a.m. to midnight, seven days a week. Some factory owners even locked the gates and forbade workers from leaving. And even under those conditions, many still struggled to find steady employment and had to plead with capitalists for a chance to work.
But now, as Hong Kong's industrial base had grown, things had improved. On one hand, the British Hong Kong government had begun introducing regulations to moderately restrict capitalist overreach, especially with the threat of the Soviet Union still looming. On the other hand, the increasing number of factories had made workers a more scarce and valuable resource. This was the benefit of industrialization: only with a thriving industrial sector could the lives of workers improve. It was a pattern consistent in every society.
Having lived in Hong Kong for nearly seven years and witnessing these changes firsthand, Yang Wendong couldn't help but marvel at the rapid transformation. Hong Kong had developed at an astonishing pace in recent years—much like Shenzhen in mainland China after reform and opening, seizing every advantageous condition available.
Knock knock knock.
The sound of knocking pulled Yang Wendong out of his thoughts. Looking up, he saw Zhou Haoran from Watsons entering. Yang Wendong smiled and said, "Come in."
Zhou Haoran stepped inside and greeted him with a grin. "Mr. Yang."
"Have a seat," Yang Wendong gestured, then asked, "Has the second phase of our sugar refinery been completed?"
In all of Changxing Group's manufacturing sectors, the core strategy had always been expansion up and down the supply chain. Downstream sales were handled by Yang Wendong himself, the head capitalist, while the upstream supply chain development was managed independently by the subsidiaries.
After taking on significant orders through their Pepsi bottling operations, Watsons had begun to venture into sugar refining—partly due to Pepsi's request, as the company hoped to reduce raw material costs further.
"Yes," Zhou Haoran replied. "Trial production began just a few days ago, and everything's running smoothly. We're gradually ramping up capacity. Once this new facility is in full swing, our annual sugar production capacity will hit 30,000 tons."
"Good. That's a solid number. Enough to meet Pepsi's needs," Yang Wendong nodded.
Thirty thousand tons per year might not sound like much, especially compared to grains or other mass commodities. But sugar was a different story. In his previous life, even mainland China's total sugar refining capacity was just over ten million tons annually. So for a single factory to produce 30,000 tons a year was already considered upper-mid scale—especially in a place like Hong Kong, where raw sugar had to be entirely imported.
Zhou Haoran continued, "As of now, it's definitely enough. But Pepsi's operations in Southeast Asia have been developing well. Our costs are lower than Japan's, and we're much closer geographically, so we've received a lot of production orders.
Also, China Resources is now purchasing sugar from us through third-party channels. Their demand is even higher. If even one-tenth of it comes to us, this factory alone won't be able to handle it."
"This is definitely a good opportunity to expand in the sugar industry," Yang Wendong agreed. "But as demand increases, go ahead and expand—but remember, don't rely too heavily on just two clients. A large factory that depends solely on key clients is in a very dangerous position. If they pull out, the whole thing collapses."
For years, the Changxing Group had played the role of a major client for many factories in Hong Kong. To a certain extent, it controlled the fate of these businesses. If it cut off orders, some might survive but severely weakened, while others would simply go bankrupt.
But even as a time traveler, Yang Wendong knew it was impossible to fully control everything. Some of his own industries relied on others. It was a precarious position, and one he was actively trying to avoid.
The sugar refinery was a good example. Although Watsons itself needed sugar, its consumption was limited. Most of its production relied on orders from Pepsi. Trying to win mainland orders was simply a strategy to avoid overreliance. But even relying on two big clients was risky. The ideal model was a few major clients and a broad base of smaller ones.
Business diversification had many dimensions—suppliers, clients, factories, operations. Diversity meant lower risk.
"I understand," Zhou Haoran said. "I've already reached out to distributors in Japan, the Middle East, India, South Korea, and the UK. We're preparing to explore their markets as soon as possible."
"India?" Yang Wendong thought for a moment and said, "You can do business with India, but make sure you get full payment upfront—or you're likely to get scammed."
The mindset of "Big Brother Three" (a nickname for India) wasn't something that only emerged in the 21st century. Even in the pre-internet era, scams were easy to run and hard to verify. Without experience, it was far too easy to get duped. And when it happened, all you could do was warn the people around you—outsiders wouldn't hear about it, which led to countless suckers.
"Full payment upfront?" Zhou Haoran was stunned. "Wouldn't that be a tough sell?"
Yang Wendong shook his head. "Don't overthink it. India is notorious in trade for being unreliable. Maybe the guy you found is honest, but I'm not gambling on it.
If he refuses, forget it. We won't do business with India. If he agrees, we start with full payment, and after repeated successful transactions, we can gradually offer terms similar to other countries."
"Understood," Zhou Haoran replied. He could tell his boss had made up his mind and didn't want to push it.
Yang Wendong then asked, "If Pepsi is placing a lot of orders, do we have enough production capacity for cans?"
"We'll still need to expand the production line," Zhou Haoran said. "Dongsheng has already developed some of the equipment. That means, apart from a few key components, we can manufacture most of it here in Hong Kong.
This will save both money and time."
"Dongsheng really is proving capable," Yang Wendong praised.
In the original timeline, Dongsheng wasn't particularly famous during the '70s or '80s. But now, with Yang Wendong's presence—plus capital and a steady stream of orders—the company had rapidly developed and was becoming a specialist in manufacturing industrial equipment.
This type of enterprise—like Dongsheng Manufacturing—was the backbone of any region's industrial sector. Without domestic capability to produce essential machinery and equipment, many industries could never take off. Textile factories, plastic injection plants, mold workshops—all of them depended on local manufacturers who could supply the tools they needed to remain competitive.
Zhou Haoran smiled and said, "Yes, and it's not just my beverage factory. Many of the machines used by Changxing Industries and the simple production lines at Rongyao Electronics are made by Dongsheng.
In fact, a lot of small factories across Hong Kong rely on Dongsheng for their equipment. The company has grown significantly."
"Good. If I remember correctly, we still hold 35% of their shares," Yang Wendong said. "What's their current annual turnover?"
"I'm not sure of the exact figure," Zhou Haoran replied, "but it should be around twenty to thirty million HKD. That makes them a sizable business by Hong Kong standards."
"Mm, let them grow steadily," Yang Wendong nodded. "Next time you speak to Lin Sheng, tell him this: custom-made machinery is profitable, but hard to scale.
If he wants to make serious money and expand the company, he needs to pick a technical direction and go all in. For example, beverage production lines—if they can be made well and cost-effectively, they could be exported to Europe, the U.S., or Japan. The same goes for textile and plastic injection machinery."
Custom, or non-standard, equipment carried high profit margins—but precisely because orders were few. This wasn't a bad business model per se, but it had limited scalability. Any large equipment manufacturer that wanted to grow had to find a clear direction—be it beverage lines, CNC machining lines, or specialized production systems.
"Understood. I'll discuss it with Mr. Lin," Zhou Haoran said.
Yang Wendong continued, "Also, tell him I encourage the development of metalworking equipment—lathes, mills, grinders, polishers, that kind of thing."
"Machining equipment?" Zhou Haoran seemed puzzled. "Mr. Yang, there is a market for that in Hong Kong, but it's relatively niche."
"That's fine," Yang Wendong replied. "Just let him know—if he can produce those machines and the quality is decent, I'll mobilize Changxing Group's resources to help him break into overseas markets."
At the heart of manufacturing were these very machines. In the future, when he expanded into home appliances, even if the appliances themselves didn't directly use machining tools, all their components would ultimately be made with them.
Right now, Hong Kong's industrial scale was still small, and existing domestic equipment could meet current needs. But as Rongyao Electronics grew, that would soon change.
And not just Hong Kong—the mainland would also require vast quantities of such equipment in the future. These were capital goods, and the central government was usually willing to spend foreign reserves on them.
As long as the equipment wasn't too high-precision, it wouldn't be restricted by COCOM (the Coordinating Committee for Multilateral Export Controls). Besides, the international market for this kind of machinery was huge. In his previous life, Taiwan in the 1990s had built a powerhouse in this exact sector.
"Got it. Mr. Lin will be thrilled to hear this," Zhou Haoran said. "Mr. Yang, since you're so optimistic about Dongsheng, why don't we just buy them out completely?"
"It's not about the money," Yang Wendong shook his head. "I've had someone check—Lin Sheng isn't interested in selling. And even if I bought the company, he'd just go and start another one. He's not the type to work for someone else."
"More importantly, a company like Dongsheng depends heavily on its core founders. If you buy it and they leave, who's going to manage it? Custom machinery and technical industries aren't something we're good at managing."
Dongsheng Manufacturing had already become one of the foundational pillars of both the Changxing Group and Hong Kong's broader manufacturing ecosystem. If it continued growing smoothly, it would provide massive support—not just to Yang Wendong's enterprises, but to the region's industrial development as a whole.
But Changxing Group, and particularly Rongyao Electronics, specialized in consumer products, not industrial equipment. This was more akin to a country's heavy industry sector—vital, but not something just anyone could handle.
That's why Yang Wendong had always opted to invest in Dongsheng rather than acquire it outright. If he tried to manage it himself, he'd likely do worse than the original team.
"That makes sense," Zhou Haoran nodded. "In that case, we could have Changxing Trading help expand Dongsheng's overseas market—indirectly giving us more control."
"Mm. But this kind of trade is different from what we've done before. Have Zhang Zefei look into it carefully," Yang Wendong added. "To control a company, you don't necessarily have to buy it. If you control both ends of their business—suppliers and customers—you control the company."
This was exactly how Changxing Group had taken control of many of Hong Kong's plastic manufacturers.
Upstream, these businesses relied on Changxing Trading to import plastic pellets. Midstream, many rented space in the Changxing Industrial Parks. Downstream, some produced goods for Changxing Industries or sold through Changxing's distribution channels.
This entire closed-loop ecosystem was under Changxing's control. But unlike the British-owned conglomerates of the past that drained the local economy, Changxing Group's integrated business model—while taking a large share of profits—also helped expand the pie for everyone involved. They even found overseas clients for local manufacturers.
So for many small businesses, having their lifelines in Changxing's hands wasn't a bad thing. As long as they focused on quality and steady operations, they earned more profit, faced less uncertainty, and didn't have to worry about order volumes. It was the kind of business model many small entrepreneurs could only dream of.
In the future, when Yang Wendong made headway in other industries like paper, textiles, and electronics, he could replicate the same system as he did with plastics.
After all, no conglomerate could acquire everything. Management capacity had limits. The more employees, the higher the risk of internal corruption, chaos, or inefficiency. In his previous life, many large corporations shifted toward asset-light models and outsourcing as they matured—this was why.
But the current model allowed for mutual benefit between large and small enterprises. Yang Wendong only had to control the two ends of the supply chain, take a small equity stake, and he could pocket most of the value created across the entire industry. It made for lighter management while offering higher returns. And the small businesses themselves profited more too. This was a model built to last.
In the future, this same strategy could be used in Taiwan and Singapore as well.
Of course, replicating it elsewhere would be much harder—especially in mainland China—but the core principles were the same. Even if full control couldn't be achieved, partial implementation would still yield big benefits.
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