Chapter 389: First Foray into the Petrochemical Industry
"Alright. There's still a lot of farmland in Kwai Chung. As long as the Hong Kong government approves, it can eventually be converted into industrial land," Wei Zetao said. He paused, then asked, "Mr. Yang, although there are many spinning mills in Hong Kong now, they're mainly doing basic processing. The core raw materials are all imported."
"Spinning uses cotton and synthetic fiber, right?" Yang Wendong asked.
Though not an expert in the textile industry, having lived through the internet era in his past life, Yang Wendong had at least a foundational understanding of most common industries.
"Yes, it's mainly cotton and synthetic fiber. Though for high-end garments, materials like wool and down feathers are also used," Wei Zetao replied. "Neither of the two main materials are produced in Hong Kong. Cotton mostly comes from the mainland. In fact, next to daily food supplies, cotton is the second-largest import item from the mainland to Hong Kong.
As for synthetic fibers, they're mostly imported from Japan. Only a few countries in the world have the capability for large-scale synthetic fiber production, and Japan offers the most cost-effective option right now."
"Those two are tricky. Cotton is an agricultural product—we can't touch that," Yang Wendong said after a brief pause. "So are you suggesting we get Formosa Plastics to manufacture synthetic fibers?"
Yang Wendong had no plans to venture into agriculture. He had neither the means to guarantee the safety of investing in overseas farming nor the desire. He wasn't backed by American capital, after all. Even if safety wasn't an issue, investing in land at this stage of the global economic cycle was inefficient. The 1960s and '70s were full of golden opportunities. Locking capital in agriculture was the last thing on his mind. Only when he had more money than he could spend would he consider investing in land as a store of value.
Wei Zetao nodded. "Exactly. Wang Yongqing is planning to double his plastic production capacity. We could use this opportunity to suggest he build a synthetic fiber production line as well.
If he does, entering the spinning industry later will be much easier—whether we build factories in Taiwan or Hong Kong. And even if we don't invest in this directly, Formosa Plastics wouldn't lose money producing synthetic fibers. Hong Kong's current demand alone could support a medium-sized synthetic fiber factory."
"Are they technically capable of doing it?" Yang Wendong asked.
"That I'm not sure of," Wei Zetao admitted. "We'd have to discuss it with Wang Yongqing. But since it's all derived from petrochemicals, it shouldn't be a problem.
Besides, Wang Yongqing is extremely ambitious. He's no longer satisfied with just the Hong Kong and Taiwan markets. He's already pushing aggressively into Southeast Asia. If we offer to support him financially and guarantee future orders, he'll almost certainly be interested."
"Alright. Go talk to him and see what he says," Yang Wendong agreed with a nod.
…
In the following days, life and work returned to their usual pace. Nothing major happened.
Changxing Group had become a massive vessel—one that, under full steam, could continue to move forward smoothly even without constant steering. Most operational decisions were now handled by professional managers.
All Yang Wendong had to do was chart the direction and refuel at the right time.
Even if one day he were to step back completely, the Group would still surge ahead, unstoppable. The entire crew—officers, captains, and sailors—had become a tightly bound community of shared interests.
…
A week later, Wei Zetao and Zheng Zhijie returned to Yang Wendong's office.
Zheng Zhijie unfolded a map and said, "Mr. Yang, I've selected three potential plots in Kwai Chung. Take a look—they're all on the outskirts of the town."
Yang Wendong studied the map and replied, "These plots aren't very large—just tens of thousands of square feet. Are you planning to build high-rise industrial buildings?"
Land prices in Hong Kong were steep, and that naturally affected the cost of manufacturing. But the concept of high-rise industrial buildings allowed companies to share land costs and remain competitive—even with overseas manufacturers.
Changxing Industries had already done this with its industrial park: heavy equipment on the ground floor, and lighter assembly operations upstairs. That way, costs could be significantly reduced.
The exception was Rongyao Electronics' TV and transistor production lines.
But there was a drawback. Most of Hong Kong's industry remained light manufacturing. Moving into more advanced sectors was difficult due to land limitations. High-end production lines couldn't be placed on upper floors.
Zheng Zhijie nodded. "Yes. It's not that I prefer this method, but when I discussed it with the Hong Kong government, they made it clear: unless we can provide special justification—like Rongyao Electronics' situation—we're required to build vertical structures rather than sprawling single-story workshops."
The government wasn't stupid. Land use was heavily scrutinized.
Selling land was a core revenue stream for the government. Land approvals were based on real business needs and location logic.
Most of the time, if a company wasn't too greedy, a reasonable request would be granted. But obvious land-hoarding or vague plans would be met with resistance.
"Mhm. No rush," Yang Wendong replied casually.
Back in the early days, he had tried to use industrial development as a pretext to stockpile land. But now that Changxing Group was massive and property prices were still high, he no longer needed to bother. Unless it was absolutely necessary, whether or not to buy land wasn't critical anymore.
By 1967, even properties in Central would be up for sale…
When that time came, opportunities would be everywhere.
"Understood," Zheng Zhijie said. "So, Mr. Yang, which of the three sites do you prefer?"
Yang Wendong turned to Wei Zetao. "Old Wei, what do you think?"
Wei Zetao pointed to a red-circled spot. "I think this one is best. It's about 68,800 square feet. We can build a 10-story industrial complex there—plenty of room for warehousing, too.
Even if our garment business scales rapidly in the future, we won't be tight on space. Plus, it's the closest to the Kwai Chung shoreline. That means we can use sea freight. The only downside is that it's farthest from town."
"You worried about hiring workers?" Yang Wendong asked.
"Not really," Wei Zetao replied with a smile. "Textile factories don't require highly skilled labor. We can just build dormitories on site.
I'm just concerned that it might not align with the Group's long-term strategy."
"That's not a problem," Yang Wendong said with a grin. "When we pick factory locations, we prioritize operational needs. Real estate appreciation is secondary.
If the location works for production, that's enough. Otherwise, we might as well build in Central—which obviously makes no sense."
Of course, real estate gains were important. But at this stage, the Group's core focus was still manufacturing. His mention of Central was just a rhetorical example—it was never actually an option.
"Alright, then let's go with this one. I'll negotiate with the government and see if we can improve the transportation infrastructure around the site," Wei Zetao said.
"Alright, confirm the location once more," Yang Wendong said. "I'll also need to speak with Yiyi—after all, she's currently in charge of the apparel division."
While most of Changxing Group's core industries had been established by Yang Wendong in its early stages, as the group gradually evolved into a financial conglomerate, it naturally began to expand into other sectors. This was the path all large conglomerates followed. Once a company reached a certain size, its subsidiaries would begin developing new industries on their own initiative.
Textiles were one such sector, now led by Su Yiyi. If this division scaled up enough in the future, it would become one of the core pillars of the conglomerate.
And it wasn't just the textile industry—any division with a capable and willing leader would be supported by headquarters. Once those industries reached scale, they could support each other and form an interconnected industrial web, eventually functioning like the future mega-keiretsu groups of Japan.
"Understood," Wei Zetao continued. "I also traveled to Taiwan recently to speak with Wang Yongqing about the synthetic fiber issue. He didn't agree on the spot, but he said he'd have his team do a feasibility study, both technically and from a market perspective."
"There should be no issue on the market side. Global demand for textiles is booming. Whether it's technically viable, that's up to him," Yang Wendong said with a nod.
As Asia's economy began to take off, the first sectors to boom were always food, clothing, housing, and transport. Housing and transport were too expensive and relied on government policy. But food and clothing were relatively easy to scale, making them the first breakout industries. Even mainland China, during its post-reform years, first saw success in these two sectors.
"Right," Wei Zetao agreed, then added, "But I get the feeling Wang Yongqing isn't that interested. While the market's clearly there, this might not fit into his current plans."
"Wang Yongqing probably has his own roadmap," Yang Wendong said thoughtfully. "If it doesn't work out, we'll just invest in another petrochemical company in Taiwan. There's no shortage of those."
There were always profitable ventures in the world. No single company could pursue them all. Strong leaders generally had a clear vision and preferred to stick to their plans.
Wang Yongqing's abilities were beyond doubt. Even as a major shareholder, Yang Wendong couldn't expect him to shift course just to accommodate an external investor—after all, Formosa Plastics wasn't a Changxing subsidiary.
"Exactly. If it weren't for Hong Kong's limitations, I'd want to invest in this myself," Wei Zetao said with a grin.
Yang Wendong thought for a moment. "Well… maybe not impossible. Once Hong Kong has a stable water supply, we might actually have that opportunity."
In his previous life, Hong Kong had no petrochemical industry to speak of. But Singapore—roughly the same size—had one. In theory, Hong Kong could do it too.
Singapore had its own advantages, of course, which Hong Kong lacked. Still, the possibility existed. If all else failed, Yang Wendong could always invest in Singapore itself. After all, it would officially become independent next year.
At that point, the country would be in its infancy. The Lee family would be eager to attract international capital. Yang Wendong could easily jump in early, reap huge returns, and simultaneously begin pulling capital out of Hong Kong ahead of the coming real estate crisis. Everything would align perfectly.
Wei Zetao added, "Based on my assessment of Formosa Plastics' operations, they'd need not just water, but also electricity and labor. And of course, they'd have to be near the coast—for wastewater discharge and shipping logistics."
"Of course. That's how all heavy industry works," Yang Wendong nodded. "Labor's easy—we can recruit from Taiwan and train internally. As for electricity, we can negotiate with CLP. They won't say no."
"If that's the case, we could absolutely produce plastics in Hong Kong. As long as water supply stabilizes, we'll have a shot. Even if it's not quite enough right now, we could start small," Wei Zetao said.
"You want to start immediately?" Yang Wendong realized what he was hinting at.
"Yes," Wei Zetao said with a nod. "But my idea is to start with a pilot—something small-scale, almost experimental, just to see whether petrochemical production can work in Hong Kong.
Right now, we're making assumptions based on what we think we know. But unless we actually try it, we'll never truly understand the problems."
"That's fair," Yang Wendong said after a moment of consideration. "A small test run—sure. Even if we don't make money, or even lose a bit, it won't affect our bottom line.
But if it succeeds, or if we gain valuable experience, that will be worth much more.
And even if we ultimately conclude that petrochemical production won't work here, at least we'll have ruled it out completely. We can then focus solely on financial investments to control that sector, or invest overseas."
"'Reading about it is no substitute for doing it yourself.'"
This ancient proverb still held true in the modern world. Even with a seemingly simple business like sticky notes, there were many challenges during production that no one could have predicted beforehand. Anyone who had ever managed a factory would understand.
Now that the Group was flush with capital, conducting a real-world test was a prudent approach. All major corporations did this—testing first, then expanding if the results were promising.
"Just one thing," Wei Zetao said. "I spoke to some industry experts. Even for a small operation, we'd need to invest at least several hundred thousand U.S. dollars.
That's just to build a small production line and some of the basic infrastructure needed for naphtha imports. When Formosa Plastics first started, Wang Yongqing invested about $500,000."
"A few hundred thousand dollars isn't much," Yang Wendong said. "But how do we import naphtha? Hong Kong doesn't currently bring that in."
Each year, Hong Kong imported plenty of petroleum products. A city of its size had to have diesel, gasoline, jet fuel, and heavy marine oil to operate.
But those were all for consumption. What Yang Wendong needed—naphtha—was the key feedstock for producing plastic.
Though technically still a petroleum derivative, naphtha was entirely different from gasoline or diesel. The processing methods varied widely, and depending on the process, one type of naphtha could yield different plastics.
"We'll have to import it from Taiwan," Wei Zetao said. "Formosa Plastics imports it every year. We can buy a portion from them.
The problem is, no commercial shipping company would take on such a small volume. So we'll have to rely on Changxing Shipping."
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