Chapter 292: Identifying Strengths and Preparing for Battle
After parting ways with Zhao Chengguang, Yang Wendong immediately instructed his assistant to call in Liu Huayu, Qin Zhiye, and Zheng Zhijie.
"Come, have a seat," Yang Wendong said as he welcomed the three into the room. "There's something I need to discuss with you. I've just received word — Hongkong Land is preparing to launch its own supermarket chain, just like us."
The three men exchanged glances. Then Liu Huayu spoke first. "Some of my team members were poached recently. I asked around at the time, but no one would tell me which major company was launching a new supermarket.
I'm not sure if they signed NDAs, or maybe they themselves didn't even know who they were working for."
"No news of any high-level resignations from our side?" Yang Wendong asked.
The Headquarters Office oversaw personnel matters across all subsidiaries, but only for senior-level management. Mid-level and lower positions were handled by the subsidiaries themselves.
Liu Huayu replied, "Correct. The highest-ranking people who left were a deputy store manager in Causeway Bay and some heads from warehouse and procurement. Some store managers were approached, but they all turned down the offers."
"Not bad," Yang Wendong said, pleasantly surprised. "Logically speaking, if Hongkong Land is trying to poach talent, they should be offering good salaries. For our people to stay put — that says a lot about our management model."
Liu Huayu smiled and said, "It's also because Carrefour is now the number one supermarket in Hong Kong. Leaving wouldn't necessarily be a better move. Those who became store managers all have their eyes on long-term prospects.
And also, Mr. Yang Wendong, your reputation for treating employees well is well known in Hong Kong. I'm sure they thought long and hard before deciding to stay. After all, in British firms, it's nearly impossible for Chinese employees to rise to top management."
"Yes, that's one of the benefits of our generous welfare policies — attracting and retaining talent," Yang Wendong nodded.
Changxing Group's high welfare standards were driven by two factors: first, Yang Wendong's personal desire to give workers a better quality of life; and second, because as a company founded by a time traveler, once on the right track, it was bound to grow quickly. Strategy wouldn't be a problem — execution would be. And execution depended on every employee.
In such an environment, retaining talent with competitive salaries and benefits was crucial. Plus, since wages in Hong Kong weren't particularly high, this extra cost wasn't a huge burden — and the return in company stability and growth was far greater.
Liu Huayu added, "Yes, Hongkong Land may have money, but they can't endlessly raise salaries to poach people. Still, with their resources, they could easily recruit from overseas, just like we did early on."
Yang Wendong chuckled, "If they go overseas, they'll likely bring in white foreigners. Jardine Matheson would never let a Chinese executive control one of their subsidiaries. And if they recruit in the wrong region, it's useless."
Even now, and in the future mainland, foreign investors rarely entrusted their local operations to Chinese managers. Most of the time, foreigners ran the show.
And even if Jardine Matheson managed to recruit "experts," they probably wouldn't get anyone from Walmart. And even if they did, those Western supermarket models might not even work in Hong Kong.
Zheng Zhijie chimed in, "Mr. Yang Wendong, Mr. Liu Huayu — in terms of operational experience, Hongkong Land definitely can't match us. But their property portfolio is enormous — that's an innate advantage.
Changxing Real Estate has grown fast in the past two years, but in terms of real estate assets, we're still far behind them, especially on Hong Kong Island."
Yang Wendong nodded. "Yes, that's their biggest advantage. That's why I need your departments to coordinate and prepare to face this new competitor."
"We're ready, Mr. Yang Wendong," Liu Huayu responded.
Yang Wendong said, "First, publicity. We need to make sure people remember Carrefour first and foremost — this is our edge.
So, Qin Zhiye, your news coverage should focus more on Carrefour. Find interesting stories within the stores, so that when people read the paper, they remember us. Also, invest more in printed discount ads. Liu Huayu, support him on this."
"Understood," both men responded.
Yang Wendong continued, "Same goes for radio. And reach out to Rediffusion — get them to do more news coverage. Television is the most memorable medium."
"Got it," Qin Zhiye nodded. "It's just a shame Rediffusion's reach is so small — less than ten thousand subscribers. If we had a TV market like the U.S., where most households own one, our promotions would be much more effective."
"Still, ten thousand households means tens of thousands of viewers — and they're all high-income families. That's not bad," Yang Wendong said. "But yes, if more families had TVs, it would definitely help."
Hong Kong's wireless TV station was still three years from being established. Yang Wendong was already thinking of whether he could get involved and speed up the timeline.
With his current resources, he could absolutely position himself as a major stakeholder.
Qin Zhiye added, "Yes, but even the cheapest TV sets cost four to five hundred dollars. Plus, they consume a lot of electricity. Add the cost of a cable subscription, and most households simply can't afford it."
"And the fact that TVs are imported doesn't help," Yang Wendong nodded. "Alright, we'll leave that aside for now. Let's talk about real estate."
While black-and-white televisions might be relics to most people born in the 1990s, in this era, they were still high-tech products. In fact, many future electronics giants — like Samsung and various Japanese firms — got their start making black-and-white TVs.
In Hong Kong, the radio industry was only just beginning. Producing TVs locally was out of the question. All units were imported.
In time, as the electronics sector matured, Yang Wendong planned to get involved — especially since it would align perfectly with rising demand from the future wireless TV network.
Zheng Zhijie reported, "This past year, I've been acquiring various properties on Hong Kong Island suitable for supermarkets. But with the current real estate boom, most owners aren't willing to sell.
Even when I offer higher prices, they still refuse — thinking the market will rise further. I can't keep raising bids, so right now, I've only secured six suitable locations. All are ready for supermarket construction."
"Then change the strategy," Yang Wendong said. "Let's rent instead of buy. Sign long-term leases — ten to fifteen years. Focus on fast expansion. But avoid properties owned by Hongkong Land or other British firms. Otherwise, we may find ourselves cornered later."
"Understood," Zheng Zhijie said. "If Hongkong Land is entering the supermarket game, they'll naturally reserve their own properties. It's unlikely they'd rent to us."
Yang Wendong asked, "What about towns in Kowloon? Do we have any Carrefour locations there yet?"
"No," Liu Huayu answered. "Because our team is still small, and for logistics reasons, we've concentrated all operations on Hong Kong Island for now."
Yang Wendong considered for a moment. "Then let Changxing Real Estate go buy land in Kowloon's towns. Build our own stores there. Land is cheaper, so buy big. Plan for parking spaces too."
"Starting today, we'll also begin building a logistics network in the Kowloon Peninsula," Yang Wendong said. "The costs will definitely be higher than on Hong Kong Island, but it will also increase our total procurement volume."
Expanding Carrefour into Kowloon was a matter of time. If there hadn't been external pressure, they would've naturally moved there next year or the year after.
"Understood, I'll take care of it," Zheng Zhijie replied.
All properties needed by sister companies were handled by Changxing Real Estate. Once construction or leasing was completed, the properties would be handed over. Though costs would be settled, it was typically at cost or with only a minimal profit.
Yang Wendong continued, "The third point — we need to define what makes our supermarket unique."
"Unique?" Liu Huayu, Qin Zhiye, and Zheng Zhijie looked puzzled.
Yang Wendong explained, "Before, when there were no competitors, it was fine just running normally. But now that we have competition, we need our own advantages.
Let me give a simple example. Out of the hundreds or thousands of products in a supermarket, not every single one needs to be profitable. We can identify high-demand items and sell them at cost, or even at a small loss, to attract customers.
Once we have foot traffic, people won't just buy the discounted item, right? They'll buy other things too — and that's where we make our profit. The key is getting people through the door."
From a business standpoint, when there's no competition, there's no need to slash prices. As long as Carrefour was cheaper than other department stores and corner shops, that was enough.
But now, facing a potential strong rival, Yang Wendong had to apply some of the strategies from his past life in supermarket management.
"That's actually a great strategy," Liu Huayu nodded. "Back in Walmart, Sam Walton did something similar — use high-frequency, daily essentials with deep discounts to bring people in."
Yang Wendong nodded. "Exactly. So I'm planning to start with rice. Every Hongkonger needs rice regularly.
Changxing Shipping also handles China Resources' grain imports. We can tack on our own orders during return trips. That gives us a cost advantage even over China Resources. We'll have the lowest rice prices in all of Hong Kong."
Most of Hong Kong's staple grains were imported from the mainland. But with the mainland now importing grains itself, Hong Kong's supply was effectively sourced from overseas.
Since his ships returned with grain anyway, Yang Wendong could easily piggyback off China Resources' bulk orders. The result — unmatched import prices.
Liu Huayu's eyes lit up. "If we can keep rice prices the lowest in the city, we'll definitely attract a lot of regular customers to Carrefour."
Zheng Zhijie added with a smile, "Who would've thought — helping the mainland ship grain with Changxing Shipping is now helping Carrefour, too."
Qin Zhiye laughed. "Leave the marketing to me. I'll put a bold, eye-catching headline in Oriental Daily. Grain prices are rising in Hong Kong — it's become a real pain point for consumers."
"Exactly. Lowering prices where we can is always good," Yang Wendong said. "Water is already a headache. If food can be a bit cheaper, it helps."
This was a multi-layered win. Lower grain prices brought in customers, who then became long-term shoppers — everyone benefited.
And it was only possible because China Resources placed massive orders for snacks. Without those large-scale purchases, Yang Wendong couldn't have gotten such a good deal buying from the U.S. on his own.
Liu Huayu said, "Aside from rice, I'll go back and look into what other essentials we can apply this strategy to. Not everyone cares about slightly cheaper rice. We need a few different lead products."
"Usually food items," Yang Wendong said after thinking for a moment. "Besides rice and flour, common vegetables and fruits. Pick a few where we can control the costs.
Meat is imported — hard to touch. But we could try eggs. That's a high-volume item."
"Eggs?" Liu Huayu considered. "If we source them directly from local farms, it could work. Maybe we can even subsidize some farmers to scale up egg production."
"Sure. You handle it. Launch a few special items where no competitor can match our cost — that's our edge," Yang Wendong said.
A lot of Hong Kong's food didn't come from the mainland — much was imported from Southeast Asia, including meat.
The colonial government carefully balanced imports to avoid over-reliance on any one source.
That said, Hong Kong still had domestic agriculture — including egg farms.
Given the fragile nature of eggs and the high cost of transport, it often made more sense to produce them locally and import the easier-to-ship feed.
"Alright," Liu Huayu nodded. Then he added, "Mr. Yang Wendong, there's one more thing — something only we have."
"You mean the plastic bags?" Yang Wendong asked.
"Yes," Liu Huayu grinned. "I see you already thought of it. Plastic bags are incredibly important to supermarkets. Right now, across all of Asia, only we have them.
As long as we control this, all competitors will be constrained."
"I know. I'm already planning for it," Yang Wendong nodded. "But don't over-rely on it. It's only a short-term edge.
We're selling plastic bags like crazy. Sooner or later, others will jump in. Even if we control the raw materials through Formosa Plastics, other big companies will find a workaround. A year from now, they'll figure it out."
Plastic bags were undeniably a hit. But without patent protection — or even with it — it would be nearly impossible to maintain a monopoly. Once the raw materials were known, even small workshops could manufacture them.
That's why Changxing Industrial set low initial prices — to quickly capture market share and reduce profit margins for potential competitors.
But a complete monopoly? Impossible. They could only slow the competition, not stop it.
Liu Huayu nodded. "If we can hold out for a year or so, that's already a win."
"Then let's go with that plan," Yang Wendong said. "In this service industry, there'll always be competition. If not in Hong Kong, then abroad. In fact, competition helps us grow. It's a good thing."
Carrefour's ambition was never to monopolize Hong Kong like certain tycoons of the past who sought to squeeze every cent from a single city.
Going global was inevitable. At the very least, they would expand into the mainland once it opened up, and later into Southeast Asia.
So competition was something to be expected — and welcomed.
"Understood," Liu Huayu said. "Back when I was in the U.S., competition was everywhere. Walmart rose step by step."
Yang Wendong nodded. "Exactly. Better to gain experience in Hong Kong before facing the global market. Also, start sending people to Walmart again. Study their operations. See if there's anything we can learn."
"Got it," Liu Huayu replied.
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