Chapter 379: Partnership with Standard Chartered Bank
"Alright." Yang Wendong nodded. "And what about the sausage project? How is Dongsheng progressing?"
Instant noodles and sausages were the perfect pair. Though not the most nutritious, they were highly filling and had a massive market in any developing economy. Even in countries where instant noodles weren't very popular, like many in the West, sausages remained a favorite—not only because of the taste, but also because traditional Western sausages were often too hard or greasy for many people's liking.
Zhou Haoran replied, "Dongsheng has successfully developed equipment that can mix starch and meat into sausage form through extrusion. The outer casing has also been designed. However, the fast-packaging machinery and corresponding production line haven't been developed yet."
"Mhm, alright. I guess we'll have to wait a little longer," Yang Wendong said.
In his previous life, he knew how sausage packaging was designed. Though he never fully understood why it was done that way, the fact that it had become the industry standard meant it had proven value. He had already patented that packaging style and sent the information to Dongsheng. But developing the equipment needed for high-speed packaging on a production line was much more complex.
Zhou Haoran added, "Dongsheng has been making great progress in equipment R&D over the past two years. They've also hired several experienced engineers from overseas. I believe they'll crack the packaging system soon."
"Dongsheng has definitely been a worthwhile investment," Yang Wendong said with a smile. "Even without considering the direct economic returns, they've helped us design so many custom machines—it's saved us so much time."
As a time traveler, Yang Wendong had many product ideas, but they were all end-user products. Without the right manufacturing equipment, those ideas would remain just ideas. Professional machine designers were essential.
If no Hong Kong company could do it, he'd have to rely on Japan. Aside from the higher costs, the time spent on communication, language barriers, and cultural differences would cause endless delays. That was why, in the early stages of Changxing Group, he'd deliberately invested in local equipment manufacturers—just to ensure that custom machines could be built locally.
Of course, no matter how much support he gave, Hong Kong's manufacturing ecosystem could only produce relatively basic systems. For more complex technologies, they'd still have to rely on imported equipment. Fortunately, most of Changxing's current products were simple enough to be handled in-house. That was a huge win in terms of efficiency.
As for the future—particularly the electronics sector—he knew that many advanced machines couldn't be produced in Hong Kong or Taiwan. He'd have to import them from Europe or the U.S. That would be one of the biggest challenges in developing a foundational electronics industry. Still, back in the early days of semiconductors and LCDs, there weren't yet any global technology blockades. As long as he moved early, he could keep up with the leaders.
Zhou Haoran grinned. "Exactly. Dongsheng can now produce a wide range of injection molding and textile machines. They're also working on a beverage production line. It's been hugely beneficial to us."
Yang Wendong nodded. "Alright. Let's leave it at that for now. The supermarket boom won't last forever. Once we have solid distribution, you should expand into all Hong Kong retail outlets. Talk to Zhao Chengguang about that.
And if production capacity is sufficient, send shipments to Taiwan as well. We've already got channels there. From there, we can expand into Southeast Asia and even Japan."
Once a company reached a certain scale, all the earlier investments in distribution channels could be reused for future products. The same applied to brand awareness. As a result, long-term costs would drop dramatically.
"Understood," Zhou Haoran replied.
January 10, 1964 — Friday
Yang Wendong arrived at the headquarters of Standard Chartered Bank in Central, Hong Kong, in response to an invitation.
"Mr. Yang, welcome to Standard Chartered," said Albert, the bank's regional head, who stood at the entrance with several senior executives to greet him.
For the founder of the most influential Chinese financial conglomerate in Hong Kong, Standard Chartered Bank was pulling out all the stops.
"Mr. Albert, a pleasure," Yang Wendong replied courteously.
Albert smiled. "Mr. Yang, let me introduce you to our team."
After a round of introductions, which allowed everyone to put names to faces on both sides, the group made their way up to the bank's top floor—to a meeting room on the eighth floor.
Looking around and then out the window, Yang Wendong commented, "Mr. Albert, considering Standard Chartered's reputation, this headquarters building seems a little… underwhelming?"
Hong Kong's leading Chinese banks were racing to build skyscraper headquarters. Hang Seng Bank had a 22-story tower in Central; Bank of East Asia had an 18-story building. Even smaller banks generally had office towers with more than ten floors.
It wasn't just a matter of prestige or office space. A modern, prominent headquarters was the best advertisement for a bank—and it reassured customers about depositing their money. That's why even Liao Chong Hing Bank had gone through the same process a few years ago.
By comparison, Standard Chartered's six-story building looked outdated—despite its large floor area.
Albert sighed. "You're absolutely right. I feel the same way. But there's not much we can do. We're technically just a branch. Any major investment must be approved by headquarters in London. And they just don't see the need. They think this building is 'good enough.'"
"That kind of thinking definitely stifles growth." Yang Wendong nodded. "So, about our last discussion—what did London say about the cooperation proposal?"
In fact, one of the major reasons for Standard Chartered's historical decline was exactly this: the lack of local decision-making authority. Many sound business decisions based on local market knowledge were rejected by the London headquarters.
Worse still, profits generated in Hong Kong were siphoned off to the UK, leaving the local branch with limited funds and flexibility. No wonder they eventually fell behind.
Albert said, "Headquarters is very willing to work with you, Mr. Yang. But the amount involved this time is quite large. They'd prefer that you coordinate a joint loan with other banks."
"I understand." Yang Wendong nodded. "Then I'll reach out to HSBC and see what they say."
In normal corporate finance, when a deal involved significant risk or capital, companies often invited other investors to share the load. The same principle applied in banking. Unless they were absolutely confident, banks usually formed syndicates for major loans.
Yang Wendong had already anticipated this. And as someone who understood how banks worked—not just from books, but from practical experience—he knew better than to expect one bank to carry the whole burden.
For him, all that mattered was locking in the loan. Whether the money came from one bank or five didn't matter.
"Alright, I'll begin negotiations with HSBC as well," Albert said with a polite smile.
Yang Wendong followed up, "I've heard that your relationship with HSBC isn't particularly friendly? I haven't heard of much cooperation between you two for quite some time."
Albert shook his head. "I wouldn't say it's unfriendly—it's more of a longstanding competitive relationship. And as you know, Mr. Yang, Standard Chartered's scale has gradually fallen behind HSBC in recent years, so naturally, there hasn't been much collaboration."
"Fair enough," Yang Wendong nodded.
In the landscape of British banks in Hong Kong, Standard Chartered had clearly lost ground to HSBC. Since the 1960s, the gap had only widened, eventually allowing banks like Hang Seng and even smaller Chinese banks like Hysan to catch up or surpass Standard Chartered in the local market.
Of course, that only applied to the Hong Kong branch. Standard Chartered's global headquarters remained a substantial institution.
After leaving Standard Chartered, Yang Wendong headed straight to HSBC. There, he was again welcomed into the office of Sanders.
"Mr. Yang, I heard you were just at Standard Chartered?" Sanders asked with a chuckle while preparing tea.
Yang Wendong showed no sign of discomfort and countered playfully, "Mr. Sanders, there's nothing in Hong Kong you're not aware of, is there?"
"Haha, not quite." Sanders laughed. "But yes, I have a decent relationship with Standard Chartered's executives. I only just found out that you'd visited them."
"I see." Yang Wendong smiled. "Well, Mr. Sanders, you know as well as I do—when it comes to business, cooperation is about finding the right partner."
It was common to have informants in rival companies, and it wasn't even illegal. As long as no core proprietary information was leaked, sharing general knowledge about business dealings or visitors was hard to classify as corporate espionage.
"Of course," Sanders nodded. "That said, HSBC and Changxing Group have had a longstanding partnership. Whatever you need, we at HSBC can fully provide."
"But that wasn't your stance earlier," Yang Wendong said with a light smile.
Sanders responded, "Yes, well, I had to consider the risks. That's my job. However, our board of directors has reviewed your proposal and approved the partnership. We can meet your financial requirements entirely—but there are a few conditions."
"What conditions?" Yang Wendong asked.
"Interest rates and collateral," Sanders explained. "As you know, Mr. Yang, this venture involves considerable risk. As a bank, we need a higher return in the form of interest.
For collateral, we'd prefer stable assets—some of your Hong Kong real estate holdings, or perhaps shares in Changxing Industries."
"If you already have sufficient collateral, why demand higher interest?" Yang Wendong asked sharply.
Sanders laughed. "Ah, now that's the trade-off. It's one or the other, Mr. Yang—your choice."
"A classic case of 'pick one,' is it?" Yang Wendong chuckled. "Very well. I'll send someone to work out the details with your team.
But just so you know, I'll also be pursuing cooperation with Standard Chartered. Whichever side offers the better terms will get the deal."
"Perfectly reasonable," Sanders said with a smile. "Then rest assured—we'll put together the most competitive package possible."
After the meeting, Yang Wendong returned to Changxing Tower and summoned Zheng Yuhua.
"What's the situation with the Japanese banks?" he asked.
Zheng Yuhua reported, "So far, things are going smoothly. Since our vessels will be pledged as collateral to Japanese banks, their risk is lower than it is for Hong Kong banks.
Right now, Mitsui Bank has agreed to continue financing us, as long as we keep placing orders with Mitsui Shipbuilding. They're offering up to 65% of the vessel value in loans, but with a 1% higher interest rate than before."
"1%?" Yang Wendong thought for a moment. "I'm okay with slightly higher interest rates, but 1% is too much. See if you can negotiate it down to 0.5% or 0.75%.
Or, if they can increase the loan-to-value ratio beyond 65%, then the 1% premium becomes acceptable."
As long as the financing amount was high enough, the interest rate increase was tolerable. Compared to the massive profits these ships would bring during the coming Middle East energy crisis, a 1% interest premium was negligible.
"Understood. I'll go back and renegotiate," Zheng Yuhua said. "The Japanese banks shouldn't be a big problem. What's your plan for local banks?"
Japanese financial regulations limited how much financing their banks could provide. Even if Japan financed most of the cost, the remaining portion had to be covered by Hong Kong banks. And this small portion was crucial—it determined how much capital the shipowner had to commit personally. The more the local bank contributed, the higher the leverage. That was the essence of doing business in shipping.
"I've already negotiated with both HSBC and Standard Chartered," Yang Wendong explained, bringing her up to speed. "HSBC's initial reluctance was actually a wake-up call. We can't rely solely on overseas banks for cooperation.
So this time, our preference will be to finalize the deal with Standard Chartered. If they're not willing to cover the full amount, even partial funding is fine. What matters is building a relationship with a second British bank here in Hong Kong. That's in our long-term interest."
In the early days, Yang Wendong had worked closely with HSBC but had also kept relationships with local Chinese banks for real estate deals. He had always made sure to keep his options open.
The shipping sector was different. With fewer financing events, and HSBC covering the last round completely, he hadn't thought much about diversification.
But with larger shipping investments coming in the next few years, it was time to establish strong ties with Standard Chartered as well.
"Understood, Mr. Yang," Zheng Yuhua nodded.
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