Chapter 613
The Growth of the Third Generation
London in late autumn.
In the office building, Ma Shimin felt a headache coming on—the UK investment strategy had been stalled, and the local conglomerates were simply too 'exclusive,' even though Hutchison Whampoa had a relatively high proportion of British capital.
In 1986, Hutchison Whampoa attempted a strategic investment in the British Eastern Telegraph Company, spending HK$23 billion to acquire a 5% stake in the company. However, it was unable to gain entry into the board of directors. Finally, at the end of last year (1989), it cashed out at a high price, making a profit of more than HK$7 million.
In 1987, Hutchison Whampoa invested in Tesco retail group for a 5% stake, but the Tesco board of directors rejected the offer, and the company ultimately exited with only a profit of more than HK$3 million.
Both strategic investments were met with resistance from local conglomerates, clearly demonstrating the difficulties of investing in the UK.
Of course, in addition to the investments mentioned above, Hutchison Whampoa has other investments in the UK:
In 1986, Hutchison Whampoa acquired seven paging companies in the UK and formed 'Hutchison Telecom (UK)'. Later, in 1988, it acquired the mobile phone business of Quadran Group, achieving the first step in its overseas telecommunications expansion.
However, two more British investments lay before Ma Shimin:
First, there was the collaboration between Hutchison Telecom and the British Space Agency (BSA). Hutchison Telecom sought to exchange BSA's mobile phone business for a share swap, after which Hutchison Whampoa would hold approximately 70% of Hutchison Telecom (UK). Following this agreement, both parties invested heavily in next-generation mobile communications in the UK.
Secondly, it acquired the Port of Felicetown in the UK, marking Hutchison Whampoa's first step into the European port business.
The previous investment is being negotiated in an orderly manner, and the final outcome should be very good.
The latter investment is facing two problems: first, the original owner's asking price, and second, the entry of new competitors.
"Simon, good news! I've lobbied 'Orient Overseas Container Line' not to participate in the competition to acquire the Port of Felicedu," Chen Zerui reported to Ma Shimin as he walked in.
Chen Zerui is a representative figure of the third generation of the Chen family and the eldest grandson of the Chen family. He currently serves as a director of Hutchison Whampoa and is learning about overseas business expansion from his mentor, Simon Murray.
It turns out that when the Port of Felicedu was acquired, Orient Overseas Container Line (OOCL), which originally held a 10% stake, also wanted to participate in the acquisition.
At this time, Orient Overseas Container Line (OOCL) was the company with the best financial situation in the Tung family. It had basically escaped the predicament of bankruptcy and was capable of participating in the competition.
Felicetown is the largest port in the UK, with a very busy volume of business, and is an important part of Hutchison Whampoa's port operations in Europe.
Of course, Chen Wenjie and Ma Shimin also made excellent choices in timing, having begun discussions about Felicetown as early as 1989. During the Iron Lady's tenure, the British government implemented a large-scale privatization policy, encouraging foreign investment in infrastructure, and local governments also saw the job creation and tax revenue that port expansion would bring.
The owner and operator of Felixsdo Port is P&O (Porsche Shipping), a long-established British shipping giant. In 1989, the port handled 136 million TEUs and 1600 million tons of cargo, as well as 350 million visitors. It has substantial roll-on/roll-off (Ro-Ro) and general cargo handling facilities, warehouse facilities, and a deep-sea tanker berth.
Ma Shimin was delighted and said with a smile, "In that case, the British Ironworks will no longer hesitate. By the way, you must have agreed to the additional conditions for Orient Overseas, right?"
“I knew I couldn’t hide it from you! Since Orient Overseas Container Line (OOCL) wants to compete, they can’t just back out easily. So I agreed to let them join our acquisition team and take a 25% stake. That way, we’ll no longer be competitors, but partners,” Chen Zerui said earnestly.
Ma Shimin was surprised that the third generation of the Chen family had grown so much, especially since the first generation was still manipulating everything behind the scenes. If it weren't for Sir Chen Guangliang's manipulation behind the scenes, given his understanding of Chen Wenjie, he would never have taken such a risk when Husky speculated on futures.
“Okay. We now own 75% of the shares, but we’ve cleared the last obstacle. HK$11 billion is our bottom line. As for the 25% stake in the Tung family, we still have a chance to buy it in the future.”
Chen Zerui nodded.
As the third-generation 'head' of the family, he had heard from his father that Dong Jianhua of the Dong family actually owed their family a favor. However, this time he did not use this 'favor' to blackmail them, but instead resolved the issue through cooperation.
The impact of the third oil crisis was far less than that of the first and second. In late October, the United States and other countries not only deployed 2.5 million barrels of "strategic oil reserves" per day, but Saudi Arabia and other countries also increased their daily production to 5.8 million barrels. As a result, international crude oil prices plummeted by more than ten dollars per barrel in a single day.
Those who went long on futures and didn't close their positions naturally suffered heavy losses.
Of course, all of this has nothing to do with the Chen family anymore. The Chen family made more than two billion US dollars in total from futures and spot trading, becoming the big winners.
Japan alone spent over a billion US dollars, becoming the largest buyer.
Ping An Bank Building.
The three Chen brothers, Chen Wenjie, Chen Wenming, and Chen Wensheng, came to Chen Guangliang's office together to report on their cash-out activities in Japan.
"In the first half of the year, we completed the sale of all our properties, leaving us with only five properties in Japan: the Shangri-La Hotel, the Nissin Building in Ginza, and the Hope Building."
"Although the Japanese stock market experienced a sharp decline in the first half of the year, the real estate market continued its upward trend, with a significant amount of funds flowing from the stock market into real estate. Even at this time, a large portion of the Japanese public believed that the Japanese government would not allow the real estate market to decline."
It's tragic that we don't even know when danger is approaching.
This is similar to the stock market crash in mainland China in 2015. Some people will always pin their hopes on government intervention or short-term adjustments, thus missing the chance to escape.
Meanwhile, the Japanese real estate market was still putting up a last-ditch effort, but soon everyone would be scrambling to escape.
The Chen family's recent cash-out of nearly US$20 billion in Japan is a resounding success. The eldest branch of the family cashed out approximately US$8 billion, while the fourth branch cashed out over US$10 billion.
There are simply too many suckers; both local Japanese conglomerates and overseas conglomerates are among those who have taken over their assets.
Chen Guangliang said with satisfaction, "Japan's bubble economy has burst and is unlikely to recover in the short term, making it a poor investment destination. Conversely, while the United States has experienced this oil crisis, it should recover quickly and can be a key investment target. In addition, Europe, Australia, Canada, and Southeast Asia are all viable investment options." "Yes."
The current oil crisis will cause asset values in these regions to depreciate, making it a good time to buy at the bottom.
Like Cheung Kong's bottom-fishing, on one hand, it's buying up assets in real estate, hotels, ranches, farms, and food and beverage-related industries; but its subsidiary Hutchison Whampoa is diversifying its business and expanding in all directions.
Time flies, and it's now 1991.
Shortly after New Year's Day, the Hong Kong government released encouraging news: In 1990, Hong Kong's GDP reached HK$7948 billion, and per capita GDP reached HK$132058 (approximately US$1.7). (This represents an increase of over 35% compared to the same period in the previous life.)
Although it has not yet surpassed the UK's GDP per capita (US$1.9), the pound sterling actually appreciated from 1.05 to 1.92 against the dollar between 1985 and 1991, and the UK's GDP per capita was achieved entirely through the appreciation of the pound sterling.
Conversely, the Hong Kong dollar has always been pegged to the US dollar, which puts it at a disadvantage.
However, there is some optimism that Hong Kong's economy will continue to grow, while the British economy is in trouble and the pound will be unable to maintain its exchange rate.
"dad"
Even though Chen Wenkai, the 53-year-old chairman of the board of directors of the Cheung Kong Industrial Group, stood respectfully in front of Chen Guangliang to report on his work.
All four groups have achieved remarkable development, with Midea Group being the most outstanding. In 1990, the entire Cheung Kong Industrial Group had already generated a net profit of HK$12 billion and employed more than 200,000 people worldwide, forming a world-class behemoth involved in all aspects of industry and technology.
What does a net profit of HK$120 billion mean?
It can only be described as terrifying.
This is a company primarily focused on the industrial sector. A net profit margin of 10% is considered extremely profitable, comparable to Samsung's status in South Korea in later years.
"Last year, Midea Games Entertainment completed the acquisition of the Canadian game studio Distinctive Software for US$1150 million. The studio's main product is the Need for Speed series. At the same time, after the acquisition, we entrusted them with the development of some parts of Age of Empires. Age of Empires is being developed simultaneously in the United States, Canada, and Hong Kong."
"At the same time, Resident Evil entered formal development last year. We have been developing PC games since the 90s."
However, there is already a similar game to The Sims in the United States, developed by a company called Maxis.
Upon hearing this, Chen Guangliang showed no reaction.
Originally, he envisioned that Midea Games Entertainment's PC game portfolio should include at least three classic titles: Resident Evil, The Sims, and Age of Empires. Of course, this was just his expectation; the company would naturally have other titles as well, given that Midea Games Entertainment is firmly the world's largest game software company.
"In that case, I'll have Wenhai Changshi acquire it and form another game company to avoid too much global monopoly. You need to release the first versions of Resident Evil and Age of Empires before 1995."
At this point, The Sims was definitely the first-generation product, not the later best-selling version, otherwise he would have known that much earlier.
"If the PC hardware is insufficient, we will definitely release the FC version first, and we will definitely not miss the copyright."
"Um"
Next, the two talked a lot about the future development of the Yangtze River Industrial Group.
The future development of Xinfeng Textile Group will primarily focus on the growth of brands such as Uniqlo (Fast Retailing), Lacoste (high-end), and Xtep (sportswear). Simultaneously, continued technological breakthroughs in the textile field are essential, and investment in new fabrics is indispensable. Furthermore, the establishment of a global industrial and supply chain is also crucial.
Huatai Group has long since moved beyond simply manufacturing for Mattel, now owning numerous toy IPs, brand chains, and related industrial chains. Most importantly, it possesses a wealth of IPs, including classic manga such as *Fist of the North Star*, *City Hunter*, *Mobile Suit Gundam*, *Dragon Ball*, *Detective Conan*, *Doraemon*, and *One Piece*, as well as related IPs like Hello Kitty. Even within the figure and toy sector alone, profits have seen impressive annual increases.
Rongchang Group is also a group with great development potential, continuously expanding its efforts in the fields of yacht manufacturing, hardware tools, and electrical machinery. For high-end yachts, it has the Italian brand "Riva," which it acquired, while for mid-to-low-end yachts, it has "Rongchang." In the hardware tools sector, Rongchang firmly holds the world's number one position in power tools, especially in the application of lithium batteries.
Finally, there's Midea Group, which boasts the greatest development potential. Midea Group itself is divided into Midea Electric Appliances, Midea Electronics, and Midea Gaming & Entertainment. Midea Electronics, in particular, has already developed the world's first VCD player, which is scheduled for a Hong Kong listing this year, followed by a major expansion into mainland China. In the future, Midea Electronics will simultaneously develop new products, including VCD players, portable music players, PHS phones, and mobile phones, while also developing lithium batteries, semiconductors, and LCD panels—a grand strategic plan, naturally relying on mainland resources.
Midea Games Entertainment's future is even clearer: it will undoubtedly become a top global gaming company in both PC and online games. In its previous life, Electronic Arts was valued at $550 billion and Blizzard Entertainment at over $600 billion, but Midea Games Entertainment is far more massive.
The four major groups together form the Yangtze River Industrial Group.
Thinking about all this, Chen Guangliang asked his son Chen Wenkai, "How are Ke Qi and Ze Jing doing at work?"
Chen Wenkai has three sons and one daughter. His daughter, Chen Keqi, is the eldest (27), and Chen Zejing is the second (25). Both of them have already started working.
"The acquisition of the Canadian game studio last year was accomplished by Keqi. She has excellent leadership skills. Since Zejing joined the VCD project team, he has grown rapidly and has been appointed as the person in charge of the project."
Chen Guangliang said with satisfaction, "Yes, our Chen family's third generation is full of talented people. Even if I die now, I will have no regrets!"
"dad"
Chen Guangliang waved his hand and said, "There's no need to be superstitious about those things. I haven't had any such taboos since I grew up with you siblings."
Chen Wenkai didn't take the bait. His father was the pillar of the family. Although the second and third generations all seemed successful, if their father were truly gone, the family business would never have developed as smoothly as it has now. Most likely, they would have tightened their investments—70% for stability and only 30% for growth, instead of the current 30/70 split.
Chen Guangliang didn't put in much effort in raising the third generation. He didn't want them to skip their parents and learn directly from him, their grandfather, which he considered an unhealthy development. (End of Chapter)