Chapter 95: Loan Approved and New Factory Established
Yang Wendong didn't even hesitate. "Ms. Ning, I won't be using the Post-it patent as collateral. That's non-negotiable.
If your bank is truly concerned about the risk, we're willing to make reasonable concessions—on the loan amount or interest rate, for example."
One million Hong Kong dollars might not sound like much in the 21st century, but in the 1950s, it was astronomical. To give a simple comparison: in just a few years, Macau would open its gambling license bidding process, and the future Casino King, Stanley Ho, would spend around HK$3 million to win the license.
Even Liu Chong Hing Bank, known for its more lenient lending standards, still had internal controls. A loan of that size would understandably come with conditions. Yang, of course, hadn't expected to get the full million; he had simply started with a high number to give himself room to negotiate.
But the one thing he would never agree to was putting up the Post-it patent as collateral. Far too many eyes were already on it. 3M would surely pay a high price for it now, and other insightful businesspeople had started calling from overseas, probing to see if he was willing to sell.
If the patent were pledged and something went wrong with production or quality—especially while he was strapped for cash—he could lose everything.
Yang knew very well that in every era, there were people willing to do anything for money. Even if he never met such a person, the possibility alone meant he had to eliminate that risk.
Ning Wenjue frowned at his firm stance. "Mr. Yang, everything is open to discussion. If you're unwilling to use the full patent as collateral, how about pledging only the rights to specific regions?"
Yang smiled. "Ms. Ning, our patent is the cornerstone of this company. Since you yourself acknowledged that the patent has enough value to be used as collateral, then it follows that if we keep producing, it will generate revenue.
That value isn't theoretical—it's real, just like the risk you're trying to control."
Wei Zetao added, "That's right, Ms. Ning. You've worked in banking for over ten years, and you've been issuing loans to Hong Kong manufacturers all this time. Your understanding of the sector is probably better than ours.
Changxing currently has two products. One is the glue trap, which already had good sales last year. It's just that, being seasonal, the winter slowed things down.
But with spring around the corner—and with the new distributors we've developed—our glue trap sales could increase tenfold.
And as for the Post-it note? Anyone who's used it would want to use it again. Globally, there are millions—possibly tens of millions—of people who could become customers.
If Liu Chong Hing Bank still thinks the loan is too risky, we'll have no choice but to approach other banks. There are plenty in Hong Kong, and surely one of them will believe in Changxing."
"I agree," Yang added.
In fact, they had already submitted their documents to a few other banks—just basic paperwork, nothing complicated. If banks were allowed to pick their clients, then clients also had the right to pick their banks.
A one-million-dollar unsecured loan was a big ask. Many smaller banks probably didn't even have that kind of money available. But after seeing the research 3M had done on the U.S. Post-it market—and trying the product themselves—some banks had reached out, expressing interest in negotiating.
So regardless of the outcome at Liu Chong Hing today, Yang and Wei still planned to visit the other banks. There was no downside.
Upon hearing their responses, Ning quickly said, "Please, don't misunderstand. I'm just speaking from the bank's perspective—we have to control risk.
If either of you were in my position, I think you'd feel the same.
But how about this: if Mr. Yang is willing to personally guarantee the loan, then we can submit the application to our approval committee."
"All I have to do is sign?" Yang asked with a smile.
"Yes," Ning replied. "While I personally believe in your products, the bank still has to follow its procedures.
That said, I've also reviewed your background. In the past year, you've built a successful business from scratch. I believe you're not the kind of person to default on your obligations."
"Alright then. I'll sign the personal guarantee," Yang nodded.
A million-dollar loan in the 1950s was like borrowing hundreds of millions in today's terms. Without collateral, no bank would issue it lightly.
But given the promising future of Post-it notes, there was very little chance of failure. Even so, banks had to play it safe.
Ning smiled. "Great. Mr. Yang, Mr. Wei—this type of unsecured, large-sum loan is beyond my approval level. I'll need to escalate it to senior management.
In the meantime, the bank will also send someone to visit your factory and verify the information. Please prepare accordingly."
"No problem," Wei replied.
Hiring professionals like Wei had been a key step in preparing for this moment. Right now, the company's number one priority was securing the loan and expanding production.
Yang asked, "How long will the process take? I don't want to wait too long. Expanding production benefits all of us—including your bank."
"Don't worry, Mr. Yang," Ning replied. "I'll expedite everything as quickly as I can."
"Good," Yang said with a nod.
The three of them then engaged in some polite business banter.
Wei subtly hinted that if the loan went through and the interest rate could be slightly lowered, Ning herself would stand to benefit personally.
Yang had no objection. In any society, these were expenses worth making. Even if other banks were interested, dealing with them would involve similar "facilitation fees."
At the moment, the banks still held the upper hand in the market. Until the real estate industry went through a few more bull cycles, smaller banks wouldn't be the ones chasing after big clients.
As for manufacturing companies—unless they grew into corporate giants—they simply wouldn't get that kind of treatment. In all of Hong Kong's history, only a handful of industrial firms ever reached that level, and even they were no match for the property tycoons.
…
As they exited Liu Chong Hing Bank, Yang said, "I do hope we can work with them, but it's still a good idea to talk to the other banks. One of them might offer better terms."
"I agree," Wei said. "I've already contacted a few others. Let's visit them in the coming days and see what kind of loan amounts and terms they're willing to offer."
"Alright. And if we do get the loan, what about the new factory location?" Yang asked.
Wei replied, "Mr. Zhou is currently supervising Dongsheng's equipment production, but he's also scouting for suitable rental properties.
Tsim Sha Tsui isn't really a strong industrial area. If we want a good spot, Hong Kong Island might be better."
"It's too expensive over there. Not an option for now," Yang said after thinking for a moment. "Let's stick to this area."
Hong Kong's industrial growth over the past few years had outpaced available land. That meant industrial property prices and rental costs were rising rapidly.
Especially on Hong Kong Island, where residential and commercial real estate prices were already surging. Even if the two weren't directly connected, the overall rise in land prices had affected industrial zones too.
By comparison, the Kowloon Peninsula was still significantly cheaper.
Wei nodded. "Got it. I'll let Mr. Zhou know your decision.
Actually, he's already considered this. His idea is to rent a warehouse and make a few modifications—that would work as a factory too."
"Will the government even approve that kind of setup?" Yang Wendong asked.
Wei Zetao replied, "It won't be a problem. A lot of factories are doing the same thing now—but it's only suitable for small-scale operations with low electricity demands and minimal pollution, like assembly workshops.
Textile, injection molding, and machining facilities wouldn't qualify. Our Post-it production uses machines, sure, but it doesn't require much power and has no emissions. It won't be an issue."
"Alright, that works. The warehouse is big enough, anyway," Yang nodded.
Warehousing had become a profitable business in Hong Kong, but that was only true in general. Out of hundreds of warehouses, many had failed or had leftover space after scaling up.
The real reason was that warehousing had become a cash cow for a while, drawing in tons of capital. Eventually, that oversaturation led to what could be called "capacity surplus."
Wei chuckled. "It's lucky for us that our factory doesn't rely on a full industrial supply chain.
If we were in plastics or textiles, setting up shop too far from suppliers would definitely lead to losses."
Yang smiled and nodded. "True. But not having an industrial chain nearby also raises our costs.
Thankfully, we have patents and pricing power. Otherwise, it would've been a lot worse."
In his previous life, many regions in mainland China had industrial parks with multiple businesses producing similar products. Together, they'd attract suppliers and service companies, building a complete ecosystem and reducing costs.
Hong Kong's industrial growth had followed similar patterns over the years. Even if the colonial government maintained a laissez-faire stance, the market naturally organized itself into clusters.
That's why traditional industries like hardware, plastics, toys, and textiles tended to group together—particularly on Hong Kong Island. Skilled labor also congregated there, and workers were an important resource in themselves.
Kowloon had industry too, but most were small-scale, self-funded operations—like the now-defunct Hongxing Plastics Factory, which relied on low or even zero rent to keep going.
Wei thought for a moment and said, "We'll eventually have to fully switch to cardboard for glue traps. That means paper and glue will become our biggest material costs. But those two things are hard to produce locally."
"We'll think about that later. Once we have the money, who knows what's possible," Yang replied with a smile.
It was a long-term goal, sure, but why not set one? Even if they couldn't achieve it right away, it gave them direction.
Though water scarcity in Hong Kong would definitely be a problem.
…
Over the next week, everyone at Changxing Industrial was busy with their own tasks.
Zhao Liming was still managing production for the time being, since the new production manager, Zhou Xianglong, was out scouting locations for the new factory.
On the finance side, Su Yiyi was assisting Ms. Wang in reconciling accounts—including a full inventory review—to prepare for the upcoming bank audit.
Meanwhile, Yang Wendong and Wei Zetao continued making rounds at various banks, negotiating terms.
Like Liu Chong Hing, many of these banks were optimistic about the market potential of Post-it notes. But even so, they hesitated to approve a million-dollar loan without any collateral.
Though time was tight, Yang knew he couldn't show impatience. Alongside Wei, he met with each bank in turn, playing the long game.
Internally, though, the Changxing team was confident it was only a matter of time—and maybe a difference in loan amounts.
Especially after 3M sent over another check and an urgent order request. That bolstered confidence even more among the banks.
In addition to the loan, the question of where to set up the new factory also loomed large.
On January 18th, Yang, Wei, and Zhou Xianglong rode three rickshaws to a warehouse in the northern part of Tsim Sha Tsui.
"What was this owner thinking—building a warehouse all the way out here? It's at least seven or eight li from the shoreline," Yang said, stepping off the rickshaw and laughing.
Zhou replied, "Mr. Yang, it's not the owner's fault. A few years ago, the government had planned to build a road here to connect to the harbor.
Several Chinese warehouse owners invested in the area at the time. But then, for some unknown reason, the road project was scrapped.
The goods these warehouses were meant to store turned out to be too heavy, making this location unsuitable. Now, most of these warehouses sit idle."
"A road, huh?" Yang glanced at the ground beneath his feet. "Will that affect us?"
"Not really. There's still a road here—it's just not suitable for heavy trucks. But our products are light, so standard roads are fine."
"Alright, makes sense. Still, let's double-check it," Yang nodded. The three of them walked inside.
At that time, containerized shipping hadn't yet become standard. Small goods were packed in wooden crates, transported to the docks, and loaded onto ships by hand.
So road quality wasn't that big a deal.
Recently, 3M had been flying their shipments over to open the market faster. But in the long run, sea freight would be the only viable option. Post-it notes simply weren't valuable enough to justify air freight long term.
…
Inside the warehouse, a man and woman—both Chinese—were already waiting to greet them.
The five toured the property together.
"How big is this place?" Yang asked.
The woman replied, "24,000 square feet. About 40 meters by 60."
"Hmm, that's workable," Yang thought aloud.
He and Wei had already discussed the long-term potential of Post-its. Demand could explode to unpredictable levels.
This warehouse wouldn't be enough forever. But it would suffice for now. Later, they could lease another or even several more and operate multiple production lines.
After all, they couldn't afford to rent a massive industrial building all at once. Even if such a space existed, it would be beyond their budget.
Production scale had to increase step by step—especially since skilled workers couldn't be hired overnight.
Zhou said, "Mr. Yang, the power supply, running water, and sewage system are all ready. Once our machines are delivered, we just need an electrician to set up the wiring, and we're good to go."
"Not bad," Yang nodded. "What about a kitchen?"
"We can build one just outside. There's still some connected outdoor space."
"Good. Then draw up a layout plan—use this space efficiently and make room for as many machines as possible."
"I can have it ready tomorrow," Zhou promised.
"Then go ahead and finalize the lease. Make sure it's at least a five-year term," Yang instructed.
Since they'd be investing in modifying the warehouse, anything shorter than five years wouldn't make sense.
Even if they rented or built other facilities later, they would still continue using this one.
"I'll work out the lease terms with Mr. Wei," Zhou said.
"Alright," Yang nodded.
…
January 22nd came quickly.
Liu Chong Hing Bank finally gave their decision: they approved an HK$800,000 loan—substantially more than what other banks had offered.
After reviewing the terms with their lawyer, Yang made a few minor adjustments. The deal was signed.
With the money secured, the warehouse was leased without issue.
Just like that, Changxing Industrial's second factory was officially established.
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