Chapter 259: Planning for the Cultural Industry
The day after the Carrefour store opened in Causeway Bay, the Central location also launched its grand opening.
Three more properties were still under renovation, and once everything was complete, they too would open one after another.
With the increase in retail locations and overall sales, Carrefour would gradually gain greater leverage in the procurement supply chain, enabling them to lower end-consumer prices. This was the core reason why chain supermarkets could eventually replace traditional department stores and retail shops.
Otherwise, no matter how good the service experience, it was hard to compete against low prices—unless one chose the high-end route. But in the supermarket industry—or in any industry, really—it was the needs of the general population that made up the largest market.
The smooth opening of three Carrefour stores had put Yang Wendong in a particularly good mood. Barring any major surprises, Carrefour's growth trajectory now looked solid.
Once the property market crisis hit in 1966, he could acquire enough real estate to elevate Carrefour into one of Hong Kong's retail giants.
Unless a powerful conglomerate like Jardine Matheson or Swire stepped in with full force, Carrefour would likely face little serious competition.
As the founder, Yang Wendong had done all he could to support Carrefour in its early stages. As long as future funding and resources were reasonably requested, internal approvals would be swift and generous.
From here on, it was up to Liu Huayu and his team to prove their capabilities.
Soon, it was February 1st—just five days before the Lunar New Year.
That day, Yang Wendong visited the Changxing Industrial Park in Kwun Tong.
"Mr. Yang Wendong," Wei Zetao greeted him at the entrance of the administrative building as usual.
Yang Wendong chuckled, "I come here often enough, no need for you to meet me every time—it might interfere with your work."
"It's nothing. I treat it as a little exercise," Wei Zetao replied with a laugh.
Yang Wendong nodded and said, "Alright then, let's walk through the park. I want to check on how everything's progressing."
"Sure. I'll show the way," Wei Zetao said.
The two of them, along with several department heads from Changxing Industrial, began walking through the park.
As they went, Wei Zetao introduced each building's production purpose, as well as some of the companies leasing space and their general operations.
"Looks like Hong Kong's toy industry is doing quite well," Yang Wendong remarked with a smile.
Wei Zetao nodded. "Yes, even back in the early days of Hong Kong's plastics industry, most companies focused on producing small toys.
Though the plastic flowers and the few branded products we at Changxing Group are known for have gotten some attention, in terms of scale, we're still outnumbered by the hundreds and thousands of toy factories out there."
"But I assume their profit margins are razor thin?" Yang Wendong asked.
He still remembered that when he had just transmigrated, one of the first properties he acquired after seeing early success with the glue trap was a small plastic toy factory. He had spoken with the owner, who said that although they produced many varieties, they were all contract manufacturing orders, with barely any profit.
Wei Zetao replied, "Yes, most are OEM factories with very low margins. However, now that they've moved into our park and can directly purchase plastic pellets imported from Taiwan, their costs have gone down, so they've seen a slight improvement in profits."
"Still not enough," Yang Wendong said. "In the past, Hong Kong's factories were stuck between two layers of foreign trading firms—raw material on one side and export channels on the other.
Now that we've secured the upstream raw materials, we can release a bit of profit back to them. But the export channel is still a problem."
Even in business, where maximizing profits was the goal, Yang Wendong always preferred mutual benefit. Just because he had the upper hand didn't mean he would ruthlessly squeeze his partners.
The early plastic factories that made OEM products for Changxing Industrial were given profits that were carefully calculated—low, but fair.
The same principle applied to plastic pellet distribution. He wasn't about to act like the old foreign trading firms who tried to bleed local manufacturers dry. Long-term, that approach wasn't sustainable, especially when these factories could later relocate to Taiwan or Southeast Asia.
Wei Zetao immediately understood what Yang Wendong meant and asked, "Mr. Yang Wendong, are you planning to build your own toy export channel?"
"I can't handle global distribution yet, but I can take care of Hong Kong's export business," Yang Wendong said with a grin. "Our Rubik's Cubes already have customers overseas, right?
Most of them are overseas toy chains or local toy importers in various countries. Since we've already established those connections, expanding our offerings shouldn't be too hard."
Rubik's Cube was never intended to be a massive profit center. Compared to Post-its, luggage, or even adhesive hooks, it simply didn't have the same commercial value.
However, it had one unique trait: it was symbolic of high-IQ toys.
It also had self-propagating characteristics, albeit slow ones.
Over the past few years, Yang Wendong occasionally checked on the Rubik's Cube's performance. Sales weren't huge, but many toy importers around the world included it in their catalogs simply because there were no real substitutes.
That had gradually allowed Changxing Industrial to build connections with numerous global toy distributors—perhaps the most valuable asset in the toy industry.
"Yes, we've developed a lot of those channels in Europe and the U.S.," Wei Zetao confirmed. "Mr. Yang Wendong, are you planning to have Changxing Trading get involved in toy exports too?"
Changxing Trading had originally been set up to manage the plastic material trade between Formosa Plastics and Hong Kong. Its main client had always been Changxing Industrial, and the company operated under its umbrella with Wei Zetao at the helm.
It was a small operation—not large enough to report directly to the big boss—but the fact that it carried the "Changxing" name meant it was taken seriously.
Yang Wendong nodded. "Yes. Now that we've established the channels, it would be a waste not to use them. Whether it's our own toys or those from other companies, we should take full advantage."
Once you had access to customers, you had access to value. Bringing in third-party toys could also be profitable.
Of course, distribution channels weren't toys to be casually tampered with. They were a resource too, and required curation. Not every Hong Kong-made toy was fit for international sale.
"Understood. I'll reach out to our clients and local factories to explore their production capabilities and see what fits," Wei Zetao nodded.
"Good," Yang Wendong said. "And what about our own toy line? What ideas do you have?"
Wei Zetao replied, "Now that our plastic industrial park has ample factory space and we've trained enough skilled workers over the past few years, production capacity isn't a problem no matter what kind of toy we want to make."
"But with toys, if we're not doing OEM, then we'd just be competing with other Hong Kong manufacturers—making all sorts of small toys," Wei Zetao said.
Most toy factories in Hong Kong were indeed focused on OEM production, though a few developed their own designs and held patents.
Take water guns, for instance. The demand was huge and the variations endless. If there was no patent protection, anyone could make them. Even if a patent existed, the competition was still intense, and margins were razor-thin.
"If I'm going to help Hong Kong factories with exports, then of course I won't compete with them," Yang Wendong said with a smile. "Behind every toy is actually a piece of cultural industry. Think about Barbie dolls or Mickey Mouse merchandise—selling billions annually. That's culture."
"Exactly. Without culture, you can't make good toys," Wei Zetao nodded. "Many Western toy companies don't even have their own factories. They just handle branding and cultural promotion. As long as kids—and even adults—like their cartoon characters, they'll make money."
"Well said. That's why to truly succeed in the toy business, we have to develop cultural content too," Yang Wendong replied. "Otherwise, all we'll get are low-end OEM profits or the bottom of the domestic market. If that's the case, we might as well focus on other industries."
"But cultural industry is an economic byproduct," Wei Zetao reminded him. "Only regions or countries with strong economies tend to produce cultural exports.
Take Hong Kong, for example—our TV penetration rate is still under 1%. It's hard to develop cultural products without a solid media foundation."
"I know. But it's not entirely impossible," Yang Wendong said after a pause. "Here's what I want you to do first: investigate how many people in Hong Kong can draw—especially those who are really good. Gather their portfolios and backgrounds. If they already have existing works, even better."
"You want to start with comics?" Wei Zetao thought for a moment. "That's actually a pretty good idea."
"Yes. We can't start with TV programs just yet, so comics are our best bet," Yang Wendong nodded.
As for television, he might eventually try to push ahead of schedule with the establishment of a station like TVB. But it wouldn't happen quickly. Even if they got a license today, it would take a long time before they could actually go on air.
Comics, on the other hand, were much easier to get off the ground. As long as you had talent and good stories, you could create works of art.
Although Yang Wendong didn't remember the full plots of any comics or animations from his past life, he did retain the basic outlines of a few iconic ones. With illustrators and writers on board, even if he couldn't recreate past classics, he could likely make something just one level below.
"Alright. I'll arrange for someone to look into it," Wei Zetao agreed.
"Good." Yang Wendong continued, "You should also get in touch with Qin Zhiye. Work together on this.
He has media resources, which is closely tied to culture. He'll probably be quicker at finding the right people. And moving forward, the cultural industry's development will be more relevant to his team than yours. Your side is likely to focus on toy manufacturing."
"Understood," Wei Zetao smiled. "We can handle product development just fine, but cultural content isn't our strong suit."
"Exactly. Let's start there. The Lunar New Year is coming up, so let's have Oriental Daily publish a notice and invite talent to approach us directly," Yang Wendong added.
"Alright," Wei Zetao replied.
As they continued walking and chatting, they soon came across a queue.
"What's happening here?" Yang Wendong asked.
"This is the line for the New Year goods distribution," Wei Zetao answered.
"New Year goods?" Yang Wendong asked again. "What are we giving out?"
Last year, Changxing Industrial had once again posted record profits and had completed construction on the current 10,000-person industrial park. So before the Lunar New Year, the company issued an extra month's salary to all employees.
In addition, each worker received a bundle of essential goods to ensure their families could enjoy the New Year—and hopefully return to work even more motivated.
Yang Wendong naturally knew about this, though it had been months since he signed off on the plan and he'd forgotten the specifics.
Wei Zetao explained, "Each employee gets 20 pounds of rice, 10 pounds of flour, and 2 pounds of preserved meat—or alternatively, salted fish or chicken. These items all store well. Anything perishable, we avoided."
"That's more than enough," Yang Wendong nodded.
At this time, even middle-class families in Hong Kong couldn't afford refrigerators. So naturally, food storage was a challenge, making spoilage a frequent concern.
Wei Zetao continued, "One more thing, Mr. Yang Wendong. We finalized the budget last November and started purchasing recently. But in just the past two months, food prices in Hong Kong have risen by about 15% to 20%. So our overall budget has gone up."
"That much of a price jump?" Yang Wendong was surprised.
In areas with high Engel coefficients, even small increases in food prices didn't matter much to the rich. But for average people, food often consumed most of the family income. That's why inflation was such a concern for governments.
Wei Zetao explained, "Mostly due to rising food prices in the mainland. You're aware of the situation these past few years. And it's not just food—many goods imported from the mainland have gotten more expensive."
"Right. Lao Zheng also mentioned that building materials from the mainland have gotten a lot more expensive. But with how much real estate prices have gone up, the impact of pricier materials isn't that big," Yang Wendong nodded.
Even if the mainland economy was struggling and goods were scarce, a lot of what Hong Kong consumed still came from there—because of proximity.
And Hong Kong was one of the mainland's primary gateways for earning foreign exchange. The relationship was symbiotic.
Still, Hong Kong's economy, while not weak, suffered from extreme wealth disparity. So price hikes hit average people especially hard. That's why so many nations prioritized inflation control.
Wei Zetao added, "Yes. We purchase our goods directly from China Resources and don't get much of a discount. But even so, our prices are far lower than the wet markets or your own supermarket chain.
So Manager Wang proposed a new idea: we could distribute a bit more food. But this would be on a cost-recovery basis. Employees would pay the wholesale price. We wouldn't profit from it—we'd just pass on the savings."
"Sounds good. Give it a try," Yang Wendong agreed.
With prices rising all across Hong Kong, there was little he could do to stop it. But since he had tens of thousands of employees, buying in bulk could bring real savings. Everyone would benefit.
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