Chapter 332: The Beginning of the Agent Price War
Paper—it's something that will be hard to replace even over the next century. Even in the digital age, the demand for A4 paper hasn't dropped much, and items like toilet paper and napkins are basic necessities that will always be in demand.
Back when sticky notes first started production a few years ago, Yang Wendong had already considered entering the paper industry. However, due to constraints in capital, manpower, and environmental policies, he was unable to act on it. Now, the time was finally right.
Wei Zetao smiled and said, "Alright, I'll first reach out to some local and overseas distribution channels and begin building relationships with potential customer groups."
"Mm, at its core, it's still a matter of price," Yang Wendong added. "We need to find ways to control costs. In this regard, we should really learn from our overseas counterparts."
"Understood," Wei Zetao said. "The management team for the paper mill in Taiwan is also made up of ethnic Chinese professionals we recruited from Japan. They're experienced in this field. And whether it's labor or environmental costs, Taiwan is far cheaper than Japan. As for logistics, we have Changxing Shipping, which will greatly streamline both the import of raw materials and the export of finished products."
"Good," Yang Wendong nodded. "Once the factory is up and running, I'll make a trip to Taiwan myself to have a look."
Wei Zetao smiled, "Alright, I'll notify you of the specific time later."
"Mm."
Time quickly passed, and soon it was the end of March.
On the 26th, Yang Wendong visited a Maxim's bakery on Harcourt Road in Admiralty. The two brothers of the Wu family, upon hearing of his arrival, personally came out to accompany him.
"Yang Sheng, what brings you here personally? Whatever pastries you want, just let us know—we'll have them delivered to you directly," Wu Zhande said with a warm smile.
Though the cooperation agreement between Changxing Group and Maxim's Foods hadn't been fully finalized yet, the general direction had already been set. Only a few details remained to be ironed out.
In the future, Yang Wendong would not only be a shareholder in the company but also a strategic partner. He would be a major pillar behind Maxim's Foods and had even promised not to interfere in management unless the company suffered severe losses. Under such terms, it was only natural that the Wu brothers treated him with great respect.
Yang Wendong smiled and replied, "I wasn't sure what I wanted. I figured I'd come see for myself before deciding."
This was also one of the reasons supermarkets and brick-and-mortar retailers still held an advantage decades later, even with the rise of online shopping—some things just needed to be seen in person.
And when it came to baked goods, the internet was even less of a threat. The shorter the shelf life, the more competitive the product.
"Haha, alright then. Let me give you a rundown of the different flavors we have," Wu Zhande said with a laugh.
He then began introducing the various types and features of their pastries to Yang Wendong, Zheng Zhijie, and others in the group. Everyone tried a few samples.
Eventually, Yang Wendong pointed out a few selections and instructed his assistant, "Send these pastries to my home."
"Yes, Yang Sheng," the assistant responded immediately. He quickly arranged for the pastries to be packed and sent to Yang Wendong's residence.
After browsing the pastries, Yang Wendong, Zheng Zhijie, and the Wu brothers headed to a nearby café.
"This café—is it yours as well?" Yang Wendong asked as he noticed the familiar 'Maxim's' signage above the shopfront.
"Yes," Wu Zhande explained. "Yang Sheng, in Hong Kong, the main consumers of premium food products are still the British expats. A lot of them, after buying pastries, would say they wished there was a place nearby where they could enjoy a coffee while eating. That's why I opened this café close by."
"Coffee really is a good business," Yang Wendong said with a smile. "I suggest you prioritize expansion in this direction."
Wu Zhande asked curiously, "Why? In Hong Kong, it's really just the British who drink coffee, right? While they have high spending power, their numbers are far fewer compared to the local Chinese population."
"That's true—for Hong Kong," Yang Wendong replied. "But if you ever have the capacity to expand overseas, coffee chains have way more potential than pastry shops."
Coming from a past life where he'd experienced the full sweep of global business trends, Yang Wendong knew what he was talking about. International coffee chains were everywhere, with Starbucks even becoming a Fortune Global 500 company. While there were chain bakeries too, they couldn't compare in size or brand recognition.
"Expanding overseas?" Wu Zhande chuckled. "I'd be satisfied just holding my ground in Hong Kong."
Yang Wendong laughed. "That's how you feel now. But if you do succeed in dominating Hong Kong's pastry and café scene, you'll naturally start thinking about expansion. People can never truly predict their own future. But once the possibility exists, they'll always want to improve. You and I are the same in that way."
Throughout history, many business giants never envisioned becoming industry tycoons when they first started. Take internet companies from his previous life—Tencent, for example, was just a minor player in 2002.
But then the business took off, caught the wave of the times, and soared. Once on that trajectory, there's no stopping.
Wu Zhande nodded, "That's true. When I first started Maxim's Catering, I only wanted to make one good shop. Then the business took off, and I thought about opening more locations. Then it was pastries, and then coffee—it really is hard to stop."
"Haha, same here," Yang Wendong said. "Hong Kong is such a small market. If you really want to grow, you must expand outward. My own businesses are the same. Industrial ventures aside—even Carrefour, our supermarket chain, will eventually go international."
"Yang Sheng's ambitions are indeed admirable," Wu Zhande said after a short pause. "So, you believe it's easier to build an overseas coffee chain than a pastry one? Personally, I thought that if we did expand abroad, we should start in Southeast Asia or Japan. In those places, pastries might outsell coffee."
"In those places, you're probably right," Yang Wendong said. "But the core issue is that pastries are very hard to standardize, and their freshness doesn't last long. This makes scaling up a logistical nightmare. Plus, you have to deal with the different flavor preferences in every region. Coffee, on the other hand, is much easier to standardize."
Wu Zhande thought for a moment and said, "That makes sense. Even among Chinese restaurants in Hong Kong, you find this issue. A lot of chain stores have different tastes because the chefs aren't the same."
"Exactly," Yang Wendong nodded. "That's more or less what I meant."
"I understand the logic," Wu Zhande said. "But pastries are what I'm good at. As for coffee, I've only just started that line of business. I'll need to study it more going forward."
"I'm just giving you a suggestion," Yang Wendong said. "If Maxim's Foods continues to expand, you could allocate more resources toward coffee—even in Southeast Asia. As their economies grow, coffee consumption is bound to rise."
Wu Zhande remained thoughtful, clearly taking the advice seriously.
In the coming decades, Western culture would continue to dominate the globe. As a result, regions just beginning their economic development would adopt many elements from Europe and America, even in areas unrelated to economics—like the habit of drinking coffee.
There would be plenty of people who didn't need to drink coffee at all, yet insisted on it.
"Alright, thank you for the reminder," Wu Zhande said with a smile. "Yang Sheng, I didn't expect you—someone not even in the food and beverage industry—to know so much about these things. That's impressive."
"Just some theoretical knowledge," Yang Wendong replied casually. Then he added, "Wu Sheng, regarding the matter we discussed previously—have you made your decision?"
Wu Zhande responded, "Yang Sheng, I can agree to transfer the 30% equity you proposed, but I do have one request."
"Go ahead," said Yang Wendong.
Wu Zhande continued, "In addition to the equity investment, I hope Yang Sheng can also extend a separate loan to me."
"You need that much funding? Are you planning a major expansion?" Yang Wendong asked, eyebrows slightly raised.
"Yes, I've been thinking about it," Wu Zhande replied. "First, Jardine Matheson is putting a lot of pressure on me. For a large company like that, it could just be a word from an executive, and they'll suddenly inject several million—or even tens of millions—of dollars to compete with me. Without sufficient cash reserves, I'll inevitably lose."
"Also, I'm preparing to enter Carrefour's internal operations and supply pastries. Although the space required isn't that large, you have over 40 Carrefour stores under your group. That many locations will still need significant funding, as well as the recruitment of new staff. It'll take a lot of capital and effort."
Yang Wendong thought for a moment and said, "I can't lend you money directly, but I can arrange for Hang Seng Bank or Bank of East Asia to provide the loan. With me backing you, you'll be satisfied with both the credit limit and the interest rate."
Changxing Group certainly wasn't lacking in funds, but it was always better to avoid moving internal capital unnecessarily.
"That works too," Wu Zhande replied. This was a fairly common practice in commercial partnerships.
Yang Wendong added, "Not just now—if Maxim's Foods needs funding in the future, as long as it's a reasonable request, securing loans from banks won't be an issue. There will be favorable terms available too."
"I understand," Wu Zhande said with a smile.
Once major capital enters a company, the risk level in the eyes of the banks drops considerably. When risk is low, loan amounts go up, and interest rates come down. This is one of the key benefits of joining a major financial group. Across the world, countless companies form alliances and coalitions precisely because of these advantages.
"Good," Yang Wendong nodded. "I won't give you any formal written guarantees, but I can promise you this verbally—so long as your side doesn't run into major management issues or act against the interests of my companies, I won't casually sell these shares. And if I ever do, you'll have the right of first refusal."
Although under his investment, Maxim's Foods—which had historically been number one in the industry—was very likely to maintain its position, there could always be exceptions. Yang Wendong wasn't going to speak in absolutes.
People's intentions were hard to control. Unforeseen circumstances could always arise. This wasn't like investing in Walmart, where he had no influence whatsoever. In Hong Kong, the future business landscape was still entirely unknown.
"Thank you, Yang Sheng," Wu Zhande said once more. "Then I'll get our internal documents in order and send the relevant data to your group. After that, we'll finalize the transaction price and loan arrangements."
"Alright. I'll have someone from Changxing Real Estate contact you soon," Yang Wendong nodded. "Going forward, coordinate primarily with Zheng Zhijie. Changxing Properties also owns quite a few rental properties. You two could establish a long-term leasing partnership."
Although real estate in Hong Kong was generally in high demand and not hard to rent out, stable, long-term tenants were always the most profitable—just like Bao Yugang's ships, which made more money through long-term leases.
"Understood," Wu Zhande replied.
Yang Wendong continued, "Also, regarding the threat from Jardine Matheson, my advice is to go hard. If your stores are located next to theirs, then hit them with a brutal price war. According to my research, your service is better. So as long as you stick to cost pricing, or even take a slight loss, they'll end up losing a lot more."
"But in terms of financial strength, I still can't match Jardine Matheson. Even with your investment, I'm still way behind them, right?" Wu Zhande asked with some hesitation.
Yang Wendong nodded, "That's true. But companies like Jardine Matheson have too many business divisions. Even they may not know exactly what their core business is anymore. If one division starts hemorrhaging money, they could pull the plug on it at any moment. That's how large corporations typically operate."
Many people assumed that big corporations were always smart, but the reality was far from it. History is filled with large companies making blatant, costly mistakes. Many grew so bloated and chaotic that they lost sight of their core business entirely.
That was precisely why Yang Wendong strictly limited the scope of business for each subsidiary under his control. Each one was only allowed to develop in one direction. They could freely invest across the supply chain and even into end-consumer retail within that vertical, but venturing into completely unrelated sectors was forbidden. Even if they had stockpiled land as part of their industrial needs, they would not be permitted to turn into property developers later. This was to prevent operational confusion and internal disarray.
Wu Zhande nodded and said, "What you're saying makes sense. Jardine Matheson is huge, but they really are all over the place."
"Among the British-funded conglomerates, Swire Group is probably the only one that has managed to stay relatively stable," Yang Wendong said with a smile. "The rest are just as chaotic. But they have deep roots, so for now, they're still holding up."
The decline of British capital in the 1980s wasn't due to the rise of Chinese capital. Rather, it was because of their own internal issues. In comparison, Swire was smarter, steadier, and early to pivot toward Chinese partnerships.
Wu Zhande thought for a moment and then said, "Alright. I'll conduct another round of market research and formulate a concrete expansion plan."
"Good," Yang Wendong nodded. "And I'll also give you a verbal promise—if Jardine Matheson is truly set on competing with you for market share, I'll fully support you."
Using agents to launch price wars against competitors—that was a tactic large corporations loved to use. In his past life, Tencent and Alibaba had done just that. Tencent, in particular, raised a whole pack of wolves to chase down the tiger.
Now that Jardine Matheson was determined to compete with him in the retail industry, Yang Wendong knew even he, as a transmigrator with foresight, couldn't achieve an overwhelming advantage in a short time. So why not attack from other fronts and drain some of Jardine Matheson's resources?
Of course, this was just the beginning. There would be many outstanding industries and visionary founders among the Chinese capitalists in the years to come. They would naturally try to seize the markets currently dominated by British capital—that was the instinct of business development. It was just that, restricted by a lack of funding or background, they might not succeed immediately.
That was where Yang Wendong came in. He could invest in these up-and-coming players, aligning with his own long-term interests. After all, not even a transmigrator could invest in an infinite number of industries. Even diversification had to be focused on a few core sectors.
At the same time, he could form alliances with various Chinese capital forces to devour British capital from all sides. In the original timeline, British companies still held some sway in Hong Kong well into the 21st century. That alone proved that Chinese capital hadn't done well enough. If Yang Wendong gave it a push now, he could achieve multiple objectives in one stroke.
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