Chapter 384: The Astounding Profits of Changxing Shipping
"Plastic bags—I'm guessing we have a lot of competitors in that space?" Yang Wendong asked.
Wei Zetao nodded. "Yes. Many large chemical companies now produce polyethylene materials. While the formulations differ slightly from ours, they're all viable for manufacturing plastic bags. But those companies chase high profit margins, so their prices are steep. Some of their products are also subject to import tariffs, which makes our cost advantage clear. Plus, plastic bags have extremely low shipping costs—unlike paper products from Division One."
"Good. Our edge is scale and vertical integration," Yang Wendong said with a smile. "Make full use of that and aim for global market share."
"Understood," Wei Zetao said.
Yang Wendong continued, "As for woven bags, even though the quantity is lower than plastic bags, they're more practical and valuable. I'm especially interested in expanding that market. Formosa Plastics is planning to scale up production this year, and we should do the same. If we can't meet demand in Hong Kong, shift production to Taiwan."
Currently, Changxing Group employed over 20,000 people. In a city with just over 3 million residents, that was a significant proportion. Established operations would remain in Hong Kong, but new capacity or products should be relocated elsewhere. This diversification strategy was essential for any large enterprise, especially since Taiwan still enjoyed some trade preference benefits from various countries.
As for the secondary gains in real estate—yes, they mattered. But given the size of Changxing Group and the multiple real estate crises that would come in the future, there would be plenty of opportunities. Since Changxing Real Estate couldn't keep dumping capital into the Hong Kong market, shifting funds to Taiwan and riding the wave of future property growth was a smart alternative.
"Alright. Changxing Industries is also planning to build several new factories in Taiwan this year," Wei Zetao said with a grin. "Many of our business units will invest there to ensure we can support higher production volumes."
"Good," Yang Wendong nodded. "What about Division Four? That's the team in charge of internally developed household items, right?"
Like 3M, Changxing Industries had carved out a niche in practical, everyday products. Most were simple innovations—suitcases were a bit more advanced, but generally the company focused on low-tech, high-volume goods.
"Right now, Division Four manages dozens of self-developed items," Wei Zetao replied. "Last year's total sales reached HKD 27 million."
"That's impressive," Yang Wendong praised. "On its own, that's already the scale of a large enterprise in Hong Kong."
Of course, nothing should be compared to a "cheating" time traveler like himself. Every product Yang Wendong introduced was a blockbuster in his previous life. If he had been based in the U.S., with policy support and political connections, annual sales might've hit hundreds of millions of dollars.
But most products, lacking a special market fit or clear demand, rarely took off quickly. Even 3M had plenty of average-performing items in its catalog.
Wei Zetao scratched his head and said, "Mr. Yang, that figure sounds great, but we've really only achieved it because of the distribution channels built by the other divisions. Without those, we wouldn't even hit 10% of that number."
"Yes, channels are vital," Yang Wendong said, nodding. "But now that we have them, we should maximize their use."
Many major companies had just one or two killer products, and then leveraged those same channels to roll out additional items. Take Coca-Cola: its success with cola gave it the network it needed to distribute Sprite, Fanta, and others. Without that channel power, even high-quality drinks would've struggled.
"Agreed. We're just still waiting on that next breakout product," Wei Zetao added.
"Breakouts aren't easy," Yang Wendong said. "But volume is also a valid strategy. Or you could improve existing products with better technology and tighter cost control. That's a more stable growth path for any business."
Businesses shouldn't depend on one-off hits. Those were rare. Most successful companies were built on distribution, technology, quality, and branding. If a breakout did come along, it would be a bonus—like wings on a tiger. But it couldn't be the plan.
"Understood, Mr. Yang," Wei Zetao replied. "Mr. Yang, everyone, that's the major report for Changxing Industries. We have some smaller business units that didn't perform strongly last year, so we'll leave those out of this meeting.
Once the final financial data is in, we'll submit the complete report to the Finance Department and Mr. Yang."
"Very good. Thank you for your hard work last year, Mr. Wei," Yang Wendong said with a smile. Then he turned to Zheng Yuhua. "Ms. Zheng, Changxing Shipping is now our group's second-largest business. Why don't you go next?"
"Yes, Mr. Yang," Zheng Yuhua replied with a smile. "Changxing Shipping is simpler than Changxing Industries—we only deal in vessels. Currently, we have three major business areas:
First is water delivery for the Hong Kong government. From January to September last year, our fleet delivered an average of 1.5 million tons of water per month. From October onward, due to lower temperatures and rainfall, that decreased. For the year, we transported about 15.5 million tons of water—roughly 17.9% of Hong Kong's total water usage. This greatly alleviated the drought.
This project was driven by social need, and per Mr. Yang's instructions, we kept costs under control and didn't seek profit. It may also be a one-off project, since the government has now negotiated to bring in water from the Dongjiang River. I've listed it as a separate item."
"Yes, just so everyone's aware," Yang Wendong nodded. "For future projects related to disaster relief, the entire group should avoid focusing on profit. The margins aren't worth the reputational risks."
If the disaster was overseas, maybe he wouldn't care as much. But when it came to Chinese communities, profiting off their suffering would be petty. Whether in business or politics, everyone needed a base of support.
"Understood," the group replied in unison.
For any major company, it was critical to do good within its home territory—not just for public image, but because, in the long term, it genuinely helped.
Zheng Yuhua continued, "The second business is our own shipping operation. From Hong Kong, we transport Changxing Industries' products to major markets like the U.S., Europe, and Japan.
On the return trips, we bring in grain from China Resources, industrial materials for our group and other Hong Kong clients, or take on contract shipments."
"This particular business," Zheng Yuhua continued, "generated HKD 68 million in revenue last year, using a fleet of 17 old vessels. Shipping has relatively high net profit margins, so the numbers turned out quite well."
"Alright," Yang Wendong nodded with a smile. "This business was originally intended to support Changxing Industries, but as things grow, you'll need to start taking on standalone operations. Especially now that Hong Kong's drought may be coming to an end, those water transport vessels will soon need to be redeployed for regular business."
"Don't worry, Mr. Yang," Zheng Yuhua replied with a smile. "I've been preparing for this for a while. I've already signed preliminary cooperation agreements with several Southeast Asian ports. Once those vessels are reassigned, they'll be dedicated to running routes throughout Southeast Asia—just like any other shipping company.
Plus, since we have our own shipyards and maintenance teams, our operational costs will be much lower than the industry average."
"Good. Operations are your domain—I'll review the data when it's ready." Yang Wendong nodded again.
In fact, Changxing Group didn't just collect data once a year. The Group Office kept tabs on every subsidiary. While they couldn't monitor every tiny detail, red flags—like factory shutdowns, ship delays, or sluggish sales—were quickly identified.
Each quarter, every subsidiary was also required to submit extensive operating reports—like a publicly listed company, though not quite as detailed as a full annual report. This was standard practice for large conglomerates: maintain tight oversight without micromanaging every process. Balance was key.
"Understood, Mr. Yang. Once the vessels are redeployed, I'll prepare a full report," Zheng Yuhua assured him. "The third business line for Changxing Shipping is our fleet of newly purchased vessels—specifically, the four large oil tankers and two bulk carriers we bought the year before.
We don't operate them ourselves; we lease them entirely to Japanese shipping companies.
We paid a total of USD 48.5 million for these ships, and the annual lease revenue from our Japanese clients is USD 27 million."
"Twenty-seven million dollars?" The room collectively gasped in surprise.
Yang Wendong chuckled. "It sounds like a lot, but in reality, once the client leases the ship, all expenses within the agreed mileage—fuel, crew, maintenance, port fees, insurance—are still our responsibility. So if we can net half of that amount, it's already considered excellent."
Ship leasing might feel abstract to most people, but it's not so different from something many had encountered: car leasing.
Back in Yang Wendong's previous life, car rental companies would lease vehicles, drivers, and fuel to big clients. Depending on usage, a client might pay one-third to half of a car's value annually.
Now imagine that at a massive scale. Ships are capital-intensive, have high operational costs, and carry substantial risk. Add in the global trade boom, and it's no wonder shipowners were raking in huge profits.
"Half?" Everyone's eyes lit up. Anyone with a basic grasp of arithmetic could see how lucrative this was.
It was common knowledge in Hong Kong that shipping companies made good money—especially since some were publicly listed and required to disclose performance data every year.
No wonder Yang Wendong had asked Changxing Shipping to report its results right after Changxing Industries. Their earnings were now comparable to the "eldest son" of the Group.
Zheng Yuhua continued with a smile, "That's the nature of the shipping business. But our debt load is also very high—especially now that we're preparing to buy a second batch of vessels.
I can't reveal the full details yet, but once the deal is public, you'll all be informed."
At this point, it was no secret in the Hong Kong shipping community that Changxing Shipping planned to expand its fleet. The sheer number of stakeholders made secrecy impossible—and unnecessary. This wasn't a corporate acquisition, after all.
Yang Wendong added, "Shipping is an industry I'm very optimistic about. Like manufacturing, it scales naturally with global economic growth. So Ms. Zheng, I hope you'll continue to grow Changxing Shipping into an industry leader.
This business is also critical to many of our other operations. Any business that relies on exports will eventually need shipping support."
Transportation was a key link in any full supply chain. And Hong Kong, being an island, depended heavily on imported raw materials and components. With no local market of scale, sea transport was essential.
If Yang Wendong ever entered the home appliance industry, he'd run into the same problem he faced with rolling suitcases: high logistics costs.
But with his own fleet, that problem would be far less significant. And if a shipping crisis emerged in the future, he could pivot—perhaps into global logistics. He was already preparing for that possibility.
"No problem, Mr. Yang. You can count on me," Zheng Yuhua said confidently.
"Mhm," Yang Wendong replied, visibly pleased. Then he turned to Zheng Zhijie with a smile. "Old Zheng, it's your turn now."
"Alright," Zheng Zhijie said with a smile. "Mr. Yang, everyone—our real estate business is relatively simple. It's divided into two main areas: property holdings and real estate development.
For holdings, we currently own approximately 6.2 million square feet of land. That's 700,000 more than last year—not a huge increase, mainly because we pulled out of Kowloon investments last year and focused on acquiring prime plots on Hong Kong Island, which are expensive and rarely traded."
"Acquiring 700,000 square feet on Hong Kong Island is impressive," Yang Wendong said with a chuckle.
Land prices on the Island were sky-high. In Central and Causeway Bay, prime real estate already cost over HKD 1,000 per square foot. Even less desirable areas went for HKD 400–500. Of course, the price per floor in a high-rise would be much lower when spread out.
Zheng Zhijie clarified, "Actually, not all of it was direct purchase. A lot came through partnerships with Carrefour. We built medium-sized commercial complexes, and our company retained ownership of most of the floor space. These locations aren't exactly premium right now, but they're promising."
Yang Wendong smiled. "That's perfectly fine. As long as Carrefour performs well, those locations will become prime zones. Even if they're outskirts now, they'll be central in the future."
It wasn't just a theory—shopping centers and supermarkets naturally formed commercial districts.
As Wang Jianlin once said in Yang Wendong's past life: "Where there's a Wanda Plaza, that's the city center."
And it wasn't just bravado. It was a proven fact. Commercial hubs shaped the future layout of cities. Changxing Group's own Carrefour network could do the same. What looked like a suburban plot today could become Hong Kong's next urban core tomorrow.
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