Chapter 272: Watsons Acquired and the Next Strategic Moves
In the days that followed, Lan Jun's team formally engaged in negotiations with both Watsons and HSBC.
Watsons' owner clearly wanted to cut his losses in Hong Kong and return to the UK as soon as possible. After multiple rounds of price pressure, his face turned red with anger—but in the end, he still sat down to negotiate. Through this process, Lan Jun gradually identified their bottom line.
Finally, on April 6th, after nearly two weeks of talks, all three parties reached an agreement: Changxing Group would acquire Watsons for HKD 5.26 million.
HSBC, serving as the intermediary, earned a 6% commission—partly for introducing the deal and partly as a guarantee fee. This fee meant they were now accountable for the integrity of the information provided by Watsons. If the acquisition turned out to be fraudulent, HSBC wouldn't just bear legal responsibility—they'd also suffer a significant blow to their reputation in Hong Kong's business community.
"Congratulations, Mr. Yang," Sanders said with a smile. "You've just acquired the first British-owned company to be bought out by a Chinese businessman in Hong Kong. This is bound to become a notable case in the city's business history."
"All thanks to your introduction, Mr. Sanders," Yang Wendong replied with a polite smile.
Watsons was not a major company in Hong Kong, but it had some recognition. It had started in the 1820s as a pharmacy and was later acquired by British capital, continuing operations all the way to the present. It had served several generations of Hongkongers.
In the days when hospitals were scarce, most people went straight to the pharmacy when they fell ill. Watsons, being one of the most established, naturally had high visibility and a loyal customer base.
"This opportunity was a coincidence," Sanders said. "Watsons is in retail, and so are you. Although the segments differ, I thought it made sense to bring it to your attention."
"Retail is a very broad concept," Yang replied casually. "Like manufacturing, it encompasses thousands of different models."
"True," Sanders nodded. "Mr. Yang, I know your financial strength makes it unlikely you'll run into repayment issues, but as HSBC is still Watsons' creditor, I'd like to understand your general intentions going forward. Nothing too detailed, but enough for our internal reporting. If Watsons thrives under your leadership, it also reflects positively on HSBC's role in the transaction."
"Of course," Yang understood. HSBC was clearly preparing for a deeper role in future M&A deals.
In his previous life, HSBC's subsidiary, Wardley Investment Services, had become a major player in financial takeovers. Many of Hong Kong's biggest business shakeups—hostile or friendly—had Wardley's fingerprints on them. From the Dairy Farm and Hongkong Land saga to the epic takeover battles between Bao Yugang and Jardine, and the Swire Group mergers—Wardley had been involved.
He continued, "I plan to maintain Watsons' existing business lines, but I'll separate the pharmacies from the cosmetics. Each will operate in its own dedicated space. Smaller units, but more of them."
This was practical. The main cost for pharmacy or cosmetic retail stores was rent. Since Changxing owned a fair amount of property, with more efficient management, the stores shouldn't lose money.
"With your financial muscle, that won't be a problem," Sanders said. "And you've got your own media company. Those two sectors—cosmetics and health—could be easily revived."
Yang smiled, "Relying too much on external support is never a long-term solution. Even if it's from within my own group. Ultimately, the business has to be run properly. What exactly that will look like… I'll know once I roll up my sleeves."
"Exactly. Everyone can talk theory, but execution is hard," Sanders nodded. "What about Watsons' beverage division? That's a huge market—but also extremely competitive."
"Yes, it is," Yang agreed. "I do have some ideas. But I can't disclose them yet."
"I understand. Then I'll look forward to the day Watsons regains its former glory," Sanders said with a laugh.
"I hope so, too," Yang nodded.
Worst case, he could replicate what Li Ka-shing did in his past life: turn Watsons into a global cosmetics retail brand. It would take years of development, of course, but everything started with that first step in Hong Kong.
The next day, the Oriental Daily broke the story: [Century-Old Brand Watsons Changes Hands from British to Chinese Ownership]
Though Watsons wasn't a public company, replacing an entire British management team was impossible to keep secret. Internally, employees already knew, and now the news would reach the general public. The media, naturally, seized the opportunity.
"Watsons got bought out by the Post-it Note King?"
A woman holding a freshly purchased newspaper looked up in surprise after scanning the front page.
The man beside her leaned over, eyes scanning the headline. "Looks like it. I remember Watsons was one of the oldest companies in Hong Kong—even older than Jardine or HSBC."
"It's old, yeah," the woman laughed. "But it never developed much. And now it's been bought out by a Chinese guy."
The man thought for a moment. "This must be the first time a Chinese business has acquired a major British firm here, right?"
"Well, Watsons isn't exactly 'major'—more like mid-sized," she replied. "But yes, it's probably the first time. All the other little buyouts don't count."
Hong Kong had been established for over a century. Countless British businessmen had come seeking opportunities and founded numerous companies. Many went bankrupt, and some might've been acquired by local Chinese businesses, but those were usually too small to attract any real attention.
This time, though, it was different. While Watsons was no Swire or Jardine, it was still one of the more recognizable British brands in the city. Mention pharmacies, and older generations immediately thought of Watsons.
"This Post-it Note King really is expanding fast," the man muttered. "You think he'll go on to buy one of the big British trading houses next?"
"Unlikely," the woman replied. "Would the colonial government or British tycoons even allow it?"
"True," the man nodded and dropped the subject.
At an office in Central, Huo Yingdong stared at the day's Oriental Daily with a hint of surprise.
"Yang Wendong acquired Watsons?"
The man next to him turned quickly. "Watsons? Wasn't that one of the original Hong Kong pharmacies?"
"That's right. Mr. Ding, you've only been in Hong Kong for two years, and you already know its history?" Huo asked with a smile.
"I've done my research," replied Ding Kejian, the head of China Resources' Hong Kong branch. "I looked into most of the major local companies before coming here. Watsons even bought some of their traditional Chinese medicine supplies from us."
"I see," Huo nodded. "Watsons may not be a major company, but it's still one of the most well-known British firms in Hong Kong. Yang's acquisition has some symbolic significance."
"Is Chinese capital finally rising?" Ding asked thoughtfully.
"In a way, yes," Huo said. "Over the years, Chinese-owned businesses have grown steadily. They're still not on par with British firms, but the momentum is there.
And Yang Wendong is at the forefront of that rise. Now that he's acquired a well-known British company—even if a small one—it might just be his way of testing the waters, seeing how the colonial government and British capital react."
Ding paused and asked, "You think there's more to it? Maybe he just saw value in Watsons."
"Haha, maybe I'm overthinking it," Huo laughed. "Watsons has been losing money for years. It makes sense they'd be looking for a buyer."
"But it's still a little strange that Yang Wendong would acquire Watsons," Ding Kejian said. "None of their main businesses are easy to manage."
"Could it be because of Watsons' property assets?" he added.
Huo Yingdong shook his head. "I don't think so. Watsons' properties aren't bad, but if he really wanted similar ones, he could find them with a bit of effort and money. It'd be more trouble, sure, but not impossible.
Acquiring Watsons just for its properties would be inefficient — he'd still be stuck covering the costs of those loss-making divisions, plus all the staff he'd have to carry. Based on Yang Wendong's past behavior, he genuinely cares about his workers. Even if it's partly for reputation, he still tries to uphold that standard."
Ding Kejian pondered for a moment. "Maybe Mr. Yang actually wants those loss-making businesses. He's built his way up to being one of Hong Kong's top Chinese entrepreneurs in just a few years — he probably already has plans for Watsons' operations."
"That must be it," Huo nodded. Then he changed the subject. "What's the government's response to Yang Wendong's museum proposal?"
Ding replied, "They're supportive. A batch of privately held antiques can be sold. As for calligraphy and paintings — as long as they're not by historically famous figures, they can also be sold. Leasing of national-level artifacts is also permitted. The items sent to Hong Kong will be of higher quality, but a security deposit may be required.
As for how to cooperate, that still needs further discussion."
"Good. I think Yang will agree to those terms," Huo said, clearly pleased.
It was a win-win deal — Yang gained a new cultural project, the people of Hong Kong would have access to a rich cultural experience, and the mainland would earn foreign currency.
The only drawback was that such a cooperation wouldn't bring in large amounts of money. It wouldn't significantly reduce the current foreign exchange shortage, but it was still something.
Ding added, "The central government also agreed to dispatch domestic experts to oversee the entire process — from transporting the artifacts, to handling them in Hong Kong, and eventually returning them. This will ensure maximum protection of the antiques."
"Excellent," Huo said with approval. "Preserving the artifacts is the most important part."
Sure, the experts would earn foreign currency from the project — but that was just a side benefit. The primary task was to guarantee the safe handling of the cultural relics. If anything went wrong, the entire agreement could collapse.
Ding asked, "When should we speak with Mr. Yang again? I hope we can settle this matter quickly."
"Let's meet him soon," Huo said after a moment's thought. "Several of his second-hand ships will arrive in Hong Kong soon, and we also need to discuss grain transportation."
"Yes, that's even more important," Ding agreed.
...
Watsons' transfer of ownership from British to Chinese hands caused a stir in the Hong Kong business world — especially once it became clear that HSBC had helped facilitate the deal.
As Hong Kong's de facto central bank, HSBC's involvement carried weight. Even if Chinese capital couldn't acquire large-scale British enterprises anytime soon, this deal made one thing clear — HSBC's new Chief Manager was open to supporting Chinese businesses.
April 8th, Yang Wendong arrived at Watsons' beverage factory in North Point on Hong Kong Island.
A crowd had already gathered at the entrance, including Wei Zetao.
"Mr. Yang," Wei greeted him. "Yesterday, my team officially took over several of Watsons' factories. We've also met with the managers of each store."
"Good. What about the foreigners?" Yang asked.
Watsons, like many British firms, had a management structure dominated by white expats. Even the most capable Chinese staff rarely made it into the top ten ranks.
In fact, when Yang was recruiting for his earlier ventures, the easiest source of talent had been frustrated Chinese professionals working for British firms — people who'd hit the ceiling under foreign bosses.
"They're negotiating," Wei replied. "They want to stay on, but I don't plan to keep them. We'll pay them out according to labor laws and send them on their way."
"Won't they leave us with hidden problems?" Yang asked. "Surely they still control a lot of the company's external contacts?"
"Yes, a lot of those supplier and distribution channels are still under their control," Wei admitted. "But these people have been working at Watsons for decades, and I've already found evidence of shady dealings.
If they try to fight us, we can dig up past misdeeds and potentially take legal action. Honestly, they're just small fries. If not for their skin color, they wouldn't have had any power to begin with."
"Still, we shouldn't go that far unless absolutely necessary," Yang cautioned.
That was an unspoken rule in the business world — just because something was legal didn't mean it was wise. If he made a habit of turning acquisitions into witch hunts, other companies would hesitate to sell to him in the future.
But if someone stepped out of line, then yes — making an example could be necessary. After all, British or not, Hong Kong's laws applied equally. Even in the 19th century, British citizens faced execution in Hong Kong — guillotines for the Chinese, hangings for the British.
"They won't dare take the risk," Wei said with a smirk. "Most of them have spent their whole careers at Watsons, achieved nothing, and helped run the company into the ground. They're basically parasites.
I checked them out in advance — none of them are particularly capable. And frankly, most of them look down on Chinese people. We're not keeping that kind of attitude around."
"Alright, you handle it," Yang replied. "But now that we're at this level, hiring a few foreigners is acceptable. For roles dealing directly with the colonial government or foreign markets, having a white face can be useful."
At Changxing Group's current scale, the marginal cost of higher white-collar salaries wasn't a concern.
"I'll recruit a few suitable candidates for legal and international trade positions," Wei said.
"Good." Yang nodded. "So what's your plan for the different divisions at Watsons?"
"We'll continue operating all the retail stores," Wei replied, "but we'll split the businesses — either it's a pharmacy or a cosmetics store. If a location isn't suitable, we'll relocate once the lease ends.
As for the soda business, I've already sent out headhunters to poach talent from Swire and United Soda. That division needs professionals."
"Alright," Yang said. "Once you've found someone suitable, let them go through your interviews first — but I want to meet them personally too.
Watsons will eventually be spun off as a standalone division under Changxing Group."
At present, Changxing Group's structure included several first-tier companies — such as Changxing Real Estate, Changxing Shipping, Changxing Industrial, Changxing Media, and Carrefour. These entities reported directly to Yang himself.
Beneath them were second-tier business units. In the future, there might even be a third layer.
Watsons would be promoted to a first-tier company, given the massive potential of its cosmetics and beverage divisions.
"Understood," Wei replied.
Yang had already informed him that Watsons would only temporarily remain under Changxing Industrial. Once the internal team had stabilized operations, it would become fully independent.
This was the first major project Yang was personally overseeing this year.
Glancing around the facility, Yang said, "Let's go inside the factory. I want to see how their beverage production equipment looks."
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