Chapter 93: One Year of Entrepreneurship, Assets by the Start of '59
On January 4th, inside a small restaurant near the Changxing Industrial factory, Yang Wendong, Su Yiyi, Wei Zetao, and several other team members sat together for a casual gathering.
Even Hong Xuefei, who was in charge of the "Rubik's Cube" project and considered one of the earliest and most vital employees, had been invited to join.
"Everyone, don't feel too restrained," Yang Wendong said with a smile. "We're still a small business, no need for too many formalities right now. Let's treat this as an introductory meeting. And please, help yourselves to the fruit on the table."
The server poured tea for everyone and, with a small gesture from Yang, exited the room.
Wei Zetao smiled. "Thank you, Mr. Yang."
"We're all part of the same family now—no need to be so polite," Yang said with a grin. "When it comes to managing the company, I'll be counting on all of you. With Old Wei leading the charge, I believe we can grow Changxing Industrial into something much bigger. And if we succeed, everyone here will be richly rewarded."
Wei followed up, "We rise together. All of us gave up stable jobs at larger firms because we believed in Changxing's future—and in Mr. Yang's vision.
Of course, outsiders and even our own families may not understand or support our decision. That's why we need to achieve results as quickly as possible, to prove that we made the right choice."
"Well said. Let's toast with tea in place of wine," Yang smiled and lifted his cup.
Wei's speech clearly lifted everyone's spirits.
Indeed, transitioning from a big company to a small one came with social pressure, uncertainty, and concern from friends and family. Everyone here was eager to prove themselves and their decision.
Wei raised his cup again. "Let's toast to Mr. Yang. May you soon become one of Hong Kong's leading figures in manufacturing."
"Haha, thank you!" Yang replied cheerfully.
At the time, manufacturing was the primary path for Chinese entrepreneurs in Hong Kong—one of the few areas the British business elite largely ignored.
After the meal, the team returned to the factory and officially began work.
The office space they used had just been built. Even before interviewing Wei Zetao, Yang had cleared a corner of the warehouse to construct a new office.
Fortunately, winter had reduced demand for glue traps, freeing up some workshop space. But come spring, even this area wouldn't be nearly enough.
On Wei's first day, he didn't dive into management immediately. Instead, he joined the others in carefully reviewing the company's existing documentation and reports.
The next morning, he visited Yang's office.
"How was the review yesterday?" Yang asked, handing him a bottle of cola.
Wei responded, "The accounting's a bit messy, but nothing too serious. With some effort, Ms. Wang should be able to clean it up. Changxing's product lines are still simple, and the client base isn't too large.
But production is where things get a little concerning. The daily production stats don't match the warehouse inventory—we're off by about 8%. And on the raw materials side, the inventory and withdrawal records don't match up either."
"I figured," Yang nodded. "You know we started off more like a guerrilla team than a real company. Things were always a bit improvised."
He was being modest. If it weren't for their strong patents and a high-demand market, the factory would've gone under from poor management a long time ago—especially if they had been working off razor-thin margins like most factories.
Wei nodded. "That's pretty normal for a small business. I talked to Zhao earlier—apparently you conducted several company-wide inventories, which helped catch and correct a lot of the discrepancies. If you hadn't, it would've been far worse."
Yang chuckled. "That was the most I could do at the time."
Wei continued, "Now that Mr. Zhou is overseeing production, I believe he can clear things up with a bit of time. Also, the glue extrusion machines you had Dongsheng build—those are going to be a big help.
With built-in counters, it'll be much easier to track production and control costs. From what I've seen, glue is by far the largest cost in making glue traps."
Yang nodded. "That wasn't even my idea. Dongsheng saw our process and came up with it themselves.
I figure they already had similar equipment and just made a few tweaks for our setup."
Wei said, "That makes sense. These types of extrusion machines for glue and other liquids are fairly common in Hong Kong factories.
Toy factories, small furniture workshops—they all use glue, and they all have some method of controlling how much is used. Without it, imported glue costs would spiral out of control."
Yang nodded again. "Honestly, I wouldn't have thought of that myself. If you guys had joined earlier, maybe someone would've suggested it."
Wei smiled. "Maybe. But relying on suppliers to propose optimized solutions is part of improving factory efficiency. That's something we should do more often."
"You're right," Yang agreed. "In the future, feel free to make full use of our vendors. They're the real experts in their fields."
Wei paused, then said, "That leaves us with the production capacity issue. Most of the company's funds have gone into equipment. If we want to rent a new factory, we'll need to take out a loan."
Yang nodded. "I know. Christmas and New Year's are wrapping up in the U.S. Based on my agreement with 3M, they'll start issuing payments soon for the orders we shipped."
Wei asked, "Will they deduct the advance loan first?"
Yang shook his head. "No. That loan isn't due until a year from now—principal and interest together. When I negotiated it, I made sure we'd have enough liquidity to get through the startup phase."
"Good," Wei said. "With 3M's size, I expect the payment to come in on time. Once we have that cash flow, plus the official contract with 3M, we'll be in a good position to approach Liu Chong Hing Bank—even with their lax lending standards, some documentation is still required."
"Exactly. Let's wait until after the 7th," Yang said. "That gives us time to tidy up our books a bit.
Even though Liu Chong Hing is more relaxed than other banks, they still have baseline requirements, especially for first-time borrowers."
"No problem. I'll work with Ms. Wang to get everything in order," Wei promised.
…
After New Year's, the entire Changxing Industrial factory focused on just one thing: producing as much as possible.
Post-it notes were a given—every unit they could make was being snapped up by the U.S.
Meanwhile, glue traps were entering their off-season in Europe and Japan, but Southeast Asia was still warm. Using his contacts, Wei Zetao reached out to several trade companies that did business with Southeast Asia and the Southern Hemisphere.
Samples were quickly sent out to several regions. If the results were good, a new wave of large orders would soon follow—and they could finally clear out some of the stockpile Yang had prepared in advance.
…
On January 7th, Su Yiyi walked into the office with a big smile.
Yang Wendong looked up and laughed. "You look cheerful. Did you learn a lot working with Ms. Wang?"
Ms. Wang was now the head of finance for the company. Su Yiyi was assisting her, serving as the cashier and handling day-to-day financial matters.
Any small company must have at least two people handling the money—otherwise, problems are bound to happen. This was a hard lesson written in the blood of countless businesses over the years.
"I'm learning," Su Yiyi said obediently, "but Ms. Wang knows so much, and I still have so much to learn." Then she added happily, "But that's not what I'm excited about. 3M's payment just arrived."
"Really? That's fast!" Yang Wendong was overjoyed. He had been waiting for that payment.
Su Yiyi nodded. "Liu Chong Hing Bank just called. 3M sent over a check for $1,500 USD, and it's already been deposited. They also asked if we want to convert the funds.
If we do, they'll send the check to HSBC for currency exchange. If not, it'll just stay in our U.S. dollar account."
"Convert it. Our transactions are still mostly in Hong Kong dollars," Yang said with a nod.
Although only three British banks in Hong Kong had the legal right to handle foreign currency exchanges, smaller Chinese banks could process large transactions directly through those three, sparing many local Chinese from having to visit the big banks themselves—and saving HSBC and others some hassle.
"Got it. I'll call Liu Chong Hing back in a bit," Su Yiyi replied.
Yang added, "Also let Old Wei know that the funds from 3M arrived—we can start preparing to visit the bank tomorrow."
Receiving the check from 3M wasn't just about the money. It was about proving to the bank that their partnership with 3M was real. After all, banks weren't obligated to verify the authenticity of contracts.
But checks issued by U.S. banks or other foreign institutions were hard to fake. Banks could even call the issuing bank to confirm the transaction.
Of course, fraud was still possible. Rumor had it that in the 1980s, Hong Kong's third-largest Chinese-owned bank, Hoi Sang Bank, collapsed due to exactly that kind of scam...
"When I came in, I already told him," Su Yiyi said with a smile. "He said he's got the documents ready—he's just been waiting on this."
Yang nodded. "Good. Once the bank loan comes through, a lot of our problems will be solved."
Su Yiyi then handed over a document. "Brother Dong, over the past two days, we've cleaned up most of the accounting. We also did a full inventory in the warehouse. Here's an updated summary of our financial and asset situation."
"Oh? Let me have a look." Yang smiled as he took it. With new professionals joining the team and the year 1958 behind them, he needed a clear picture of the company's assets.
Of course, Changxing Industrial was 100% his. These were, in essence, his personal assets.
Su Yiyi blushed. "My handwriting's still a little messy. And I probably made some mistakes… Why don't I just walk you through it?"
"There are definitely a few typos," Yang chuckled.
Since their financial situation had improved six months earlier, Yang had been brushing up on his English, while Su Yiyi, Zhao Liming, and Lin Haoyu had focused on learning Traditional Chinese.
Naturally, Yang made faster progress—he already had a strong literary foundation from his past life, and English wasn't new to him, just forgotten. After six months of review, he could now carry out basic conversations with foreigners.
But for people who had been illiterate, being able to write even some basic characters in half a year was already impressive.
Su Yiyi's cheeks reddened. "Brother Dong, our only property is this factory. You bought it for $6,000 HKD, and Ms. Wang now estimates its value at $8,000."
"$8,000? It's gone up that much?" Yang was a little surprised. He couldn't convert it to cash, of course, but it still felt nice to see the property appreciate.
There was something almost instinctual in how Chinese people valued land and real estate. Why else were Hong Kong and even modern mainlanders so obsessed with buying property?
Su Yiyi continued, "Yes. Ms. Wang said land prices in Hong Kong have risen quite a bit over the past six months. Independent lots like ours are especially valuable now."
"Then we bought at just the right time," Yang said. The real estate market in Hong Kong had started to rebound in 1958, and his purchase had coincided with the market's lowest point.
"As for liabilities," Su Yiyi went on, "the company owes 3M $30,000.
As for non-fixed assets, Ms. Wang estimated the value of our equipment over a five-year period. Altogether, it's about $25,000 HKD. But that's just an estimate—realistically, it would be hard to sell them for much."
"I know," Yang nodded. A standard injection molding machine might fetch a bit on the market, but custom-made equipment like theirs could only be sold as scrap.
Still, their real value lay in what they could produce. With these machines, they could manufacture an endless stream of Post-it notes. That potential wealth just couldn't be reflected in an asset sheet.
Su Yiyi went on, "What's left is our cash on hand. After deducting the remaining payment to Dongsheng for the equipment, we've got about $36,000 HKD in liquidity. That includes the $1,500 USD from 3M that just cleared.
We also have goods in transit to the U.S., which will soon be converted into revenue. The specific figures are…"
"Yeah, we've definitely spent a lot lately," Yang said after reviewing the numbers.
The high spending was due mostly to the equipment he'd imported from Japan and the winter slowdown in glue trap sales, which had led to a stockpile.
Fortunately, he'd made $40,000–50,000 HKD in profits during the summer, enough to keep things afloat for a while.
These investments were just short-term hits to profitability. In a few months, the returns would be substantial.
Su Yiyi added, "Lastly, there's our inventory. We have around $7,000 HKD worth of raw materials—cardboard, glue, paper, etc.
As for finished goods, we don't have many Post-its—they're shipped out as soon as they're produced. But we've got about 160,000 glue traps in stock."
"Just waiting for warmer weather to clear those out. Once we sell them, our cash flow will improve significantly," Yang said.
Seasonal businesses always required capital reserves during slow months. Otherwise, when demand picked up, they wouldn't be able to keep up.
You couldn't just "hibernate" machines or workers in the off-season. Even in winter, you had to keep producing.
And when the busy season returned, you'd recoup all that investment. How much inventory you held was a reflection of your financial strength.
Su Yiyi grinned. "That's true. But if you're really planning a major expansion, Brother Dong, the cash we get from the glue traps won't be nearly enough."
"Right. It all depends on the bank tomorrow," Yang nodded.
He'd now spent a full year in this era. He had his own business, his own property. It wasn't much yet—but it was real. And with steady growth, it could become something extraordinary.
Of course, the asset report had left out the most valuable parts of all: the patents for the Post-it note, the glue trap, and the flypaper.
There was no easy way to quantify their worth.
But in Yang Wendong's mind, the Post-it patent alone was worth at least $100 million USD.
Of course, if he told anyone that—especially in this era, even someone at 3M—they'd probably think he was crazy.
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