Chapter 388: Initial Layout of the Apparel Industry
The Spring Festival passed quickly, and in the blink of an eye, the final day had arrived.
Facing the return to work, Yang Wendong wasn't particularly bothered. These few days without thinking about business had left him feeling refreshed and relaxed.
That afternoon, he made his way up to the rooftop balcony, lounging on a deck chair under the sun. Winter in Hong Kong wasn't too cold, and with UV-blocking glass enclosing the rooftop, the sunlight warmed the air just enough to create a perfectly comfortable environment.
"Brother Dong." Su Yiyi's voice called from behind.
Yang Wendong put down the newspaper in his hands, sat up, and smiled. "Yiyi, you came up to sunbathe too?"
"Yes," Su Yiyi replied. "It feels good to get a little sunlight. But I also wanted to talk to you about something."
"What is it?" Yang Wendong asked.
"It's about Yiyan's Home. I'd like to make a significant investment this year and expand its scale," Su Yiyi said.
"This year?" Yang Wendong thought for a moment and replied, "Sure. But don't buy any properties—rent instead. And don't lock yourself into fixed rents. Use floating rates tied to market prices."
"You're worried property prices will collapse?" Su Yiyi asked with a grin.
Within the Yang family, this wasn't a secret. Yang Wendong had already mentioned last year that property prices were reaching unsustainable levels and could crash.
Of course, many others shared that belief. Anyone with a bit of economic knowledge could sense something was wrong. The challenge wasn't in predicting a downturn, but in predicting when it would happen. Timing was everything.
Guessing correctly and preparing in advance meant huge profits. But guess wrong—even if your general idea is right—and you could suffer devastating losses.
"Exactly," Yang Wendong nodded. "Property prices are at a peak now. They might rise a bit more this year, but the trend is inevitable. Hong Kong's residents can't afford these prices anymore. The only reason the market's holding is because of large foreign capital inflows. They're speculating.
But those investors aren't philanthropists. When they think they've made enough, they'll cash out. And when they exit, the entire market will collapse like an avalanche."
"I understand." Su Yiyi nodded. Over the years, she had learned quite a bit. She wasn't an expert, but she grasped the basics. "Actually, I'm not in a huge rush to expand our number of stores. If you think now isn't the right time to invest, I can wait.
My real concern is controlling costs. Only with low costs can we keep prices low or improve margins. So I want to build our own clothing factory."
"You want to build a clothing factory?" Yang Wendong considered this. "Are you sure? There are plenty of clothing manufacturers in Hong Kong. You don't have to build everything yourself like I did in other industries."
Vertical integration did reduce costs, but if the infrastructure was already in place nearby, there was no need to reinvent the wheel—at least not in the beginning.
In Yang Wendong's case, he had no choice. Changxing Industries needed paper, plastic, and glue—all of which Hong Kong lacked. Importing them was outrageously expensive. Rongyao Electronics was in the same situation: it had to gradually localize its supply chain. Even Changxing Shipping's ship maintenance had to be handled internally.
But clothing was different. Hong Kong's textile industry was already mature—except in the mid-to-high-end segment, which was still developing.
Su Yiyi nodded. "I know. But here's the thing: Yiyan's Home is positioned as affordable, but we still require at least medium-level quality.
The suppliers I've been working with provide inconsistent products. Even if two garments have the same size on paper, they can be noticeably different. And trying to force all these small factories to follow strict standards is nearly impossible. When I push them too hard, their costs go up. When I let things slide, the quality suffers."
"In that case, building your own factory might be the right move." Yang Wendong nodded. "Most clothing factories in Hong Kong are still low-end. Long term, you really can't rely on them."
In the early stages, textile industries everywhere start with socks, hats, and other low-cost items. Then they move on to basic wearables, then mid-range, then high-end products, and finally to creating homegrown brands.
Hong Kong's current textile and apparel sector was still in the "basic" phase. Export numbers were high, but the products were cheap and won international orders by volume. Mid- to high-end garments were still rare. They required better equipment and more time to gain international trust.
While Yiyan's Home didn't demand luxury-level quality, it also wasn't trying to be a street market brand. Having her own textile factory would give Su Yiyi better quality control.
Su Yiyi beamed. "So you'll approve?"
"Go ahead," Yang Wendong said. "Changxing Group can handle the land and construction. But you'll be responsible for equipment and setup. That said, you're pregnant now—don't get involved personally. Hire a professional manager to run the factory."
"Okay!" Su Yiyi smiled. "No problem."
Yang Wendong asked, "By the way, is Hong Kong producing its own yarn for clothing?"
Fabric isn't made purely of cotton. It's often blended with synthetic fibers and petroleum-based derivatives—even socks are like that. The process is called spinning.
"Yes, quite a few companies do that," Su Yiyi said. "A lot of Hong Kong's yarn is exported, actually. Why? Are you thinking of starting a spinning mill?"
"Haha, I'm an ambitious guy. I like developing upstream industries. That way, every part of the chain earns other people's money," Yang Wendong said with a grin. "That's what Changxing Industries does—paper pulp, plastic pellets, glue—all are top sellers."
"I know, but for me to start spinning yarn, I'd need to be selling a lot more clothing. Otherwise, it's not worth the effort—unless you want to compete directly with other textile companies," Su Yiyi said.
"Then we'll think about it later," Yang Wendong replied. "Just focus on the garment factory for now. Once the scale is big enough, we can explore spinning."
In fact, the economic crisis of 1966 wouldn't just be an opportunity in the real estate sector—it would affect the industrial sector too. Many factory owners would lose big on speculative property investments and be forced to abandon their industrial assets.
Others, planning to emigrate for various reasons, would have to sell their factories at deep discounts.
So when the time came, there would be no shortage of golden opportunities. But unlike land, factories required hands-on management after acquisition. How to handle that would depend on the situation.
February 20, 1964.
The first day back at work after the Spring Festival, Yang Wendong convened a simple meeting with the senior management of the company. It wasn't formal—just a motivational gathering to kick off the new year. After all, everything that needed to be discussed before the holiday had already been said.
After the meeting ended, everyone returned to their departments, except for Zheng Zhijie and Wei Zetao, who stayed behind.
The two followed Yang Wendong to a tea table near the window of his office—a spot equipped for brewing and drinking tea, something many bosses across Hong Kong and other Chinese communities were fond of.
"Have a seat," Yang Wendong said with a smile as he began preparing the tea leaves himself.
"Mr. Yang, let me do it," Wei Zetao offered quickly.
"No need. I enjoy the process," Yang Wendong replied as he measured and poured.
Since the boss insisted, the two had no choice but to sit and relax as Yang Wendong brewed the tea. They chatted casually for a while, and once the tea was ready, Yang Wendong asked, "Old Zheng, you're aware of the situation with Yiyan's Home, right?"
"I know it well. I personally handled all the store properties," Zheng Zhijie replied with a grin. "Right now, Yiyan's Home has 137 stores across Hong Kong. Ninety-six of those are our own properties, totaling 176,000 square feet. It's the largest chain clothing retailer in Hong Kong at the moment."
As the boss's wife's business, Zheng naturally paid close attention. Most of the work was supervised by him directly. Normally, a real estate company the size of Changxing wouldn't even bother with small neighborhood shops—especially those in rural areas. But this was different.
And Su Yiyi wasn't just any boss's wife—she had grown up with Yang Wendong through the hardest times. Her position was akin to Empress Ma's to Zhu Yuanzhang.
Yang Wendong nodded. "Yiyi mentioned yesterday that she wants to build her own garment factory because—"
After he finished explaining, Wei Zetao added, "Mrs. Yang makes a lot of sense. Hong Kong's manufacturing sector is huge now, with exports surpassing traditional trade.
But most industries here are low-end. Outside of a few standout products from Changxing Group, you'd be hard-pressed to name a single Hong Kong brand with any technical depth or specialty. That includes apparel. From socks to shirts to jackets, Hong Kong can make them all—but it's all OEM work. Overseas, they're treated like cheap flea-market goods. Even our local high-end department stores like Lane Crawford mostly sell imports."
"That's expected. Japan went through the same process," Yang Wendong said with a smile. "With time, things will naturally evolve. But I'm not one to wait. I plan to replicate what we did with Changxing Industries and help Yiyan's Home enter the apparel industry—not at the luxury level, but at least starting with mid-tier products."
In any industry, controlling upstream processes meant lower costs and better quality. If capital could also dominate the retail end, it was the perfect scenario. Competitors would have no chance.
Even if he lacked time-traveler advantages in this industry, Yang Wendong knew that vertically integrating the supply chain was a solid way to secure long-term profits. And the apparel industry was massive—not just in revenue, but in employment and economic influence.
That said, he wouldn't have gotten involved at all if Su Yiyi hadn't taken the lead.
"I think it's doable," Wei Zetao said, fully grasping Yang Wendong's intention. "I can help Mrs. Yang set up a large garment factory. Whatever Yiyan's Home needs, we can produce. Hong Kong isn't short on talent or equipment.
In fact, we can even follow other players into export markets. With Changxing Trading's overseas distribution network, we could either sell directly or ask for introductions. It shouldn't be a problem."
That was the advantage of a big company. When you had money, people, and channels, breaking into new industries—even with partial resource overlap—was relatively easy. The built-in advantage was immense.
Yang Wendong was pleased with the response. "Alright, I'm leaving this to you. Find the land, buy the equipment, hire people—especially managerial talent. Mrs. Yang can't be too involved with the pregnancy. Appoint a professional general manager to oversee the factory."
"Understood," Wei Zetao replied. "Mr. Yang, do you have a preference on location? Should we build on Hong Kong Island or the Kowloon side? Which district?"
Everything else could be arranged, but the location would have to be decided by the boss himself. For example, the Changxing Industrial Park was placed in Kwun Tong purely because Yang Wendong had decided so—any district would have worked at the time.
Yang Wendong glanced at the map of Hong Kong on the wall, thought for a moment, and said, "Let's go with Kwai Chung, near Gin Drinkers Bay. There's still a lot of open space, and the transportation links are decent."
With the rise of containerization in the West, governments worldwide realized that this was the future of trade—including Hong Kong.
But the challenge was that if cargo ports became fully containerized, what would happen to the traditional dockworkers? Many of them were young men, some even violent. As long as they had jobs, they stayed in line. But if thousands were suddenly unemployed, the consequences could be dire.
That's why many Western countries hesitated to build container terminals. Britain, once Europe's top shipping hub, lost its position to Norway largely because of union resistance.
Hong Kong faced similar challenges. Building a container port while keeping dockworkers from rioting was a balancing act.
But Yang Wendong didn't have to worry about any of that. He knew the container port would eventually end up in Kwai Chung. So naturally, he planned to acquire land there. The current property boom was still driven by industrial demand, but once the real estate crash hit, Kwai Chung would be one of his prime acquisition targets.
"Got it. I'll look for suitable plots in Kwai Chung," Wei Zetao replied.
Yang Wendong added, "Also plan for future expansion. If necessary, make sure there's enough land nearby. We might eventually build a full supply chain in Hong Kong—including a large spinning mill."
If it wasn't going to be big and strong, then it wasn't worth the trouble. Many industries in the future could only survive through massive scale to drive costs down. Otherwise, given the size of Changxing Group today, it would be better to just support external vendors instead of getting bogged down in small operations.
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