Chapter 441: Mutual Cooperation with China Resources
Yang Wendong continued, "Also, food safety must be a top priority. We're building a global fast-food chain. There has to be a well-established hygiene system. The U.S. already has protocols in place—study from them. All oils and sanitation supplies must have a defined replacement schedule, and most importantly, it must be strictly enforced. Don't be afraid of higher costs. If KFC expands enough, we can even have Watsons build you a small refinery just for oil processing."
"Rest assured, Mr. Yang," Tian Shengyi replied. "In the service and F&B sectors, strict hygiene standards are mandatory."
"Good. Then it's up to your team to handle operations. If things go well, I'll reward every employee with generous bonuses and overseas expansion opportunities. Also, you need to keep developing new menu items. Don't just copy from the U.S. with minor tweaks—localization is key."
As a business owner, there wasn't much more Yang Wendong could do for them. He could only guide them at the start and provide capital when they succeeded. After that, it was up to the management team.
Sound strategic direction and excellent operations were the two pillars of a successful business—both essential. Now that his part was done, Yang Wendong only needed to check in every few months or visit store locations around Hong Kong during his free time.
"Yes, understood," Tian Shengyi said.
Once the first KFC store was a success, the rest was just about scaling up. Still, operations had their own challenges. Historically, both KFC and McDonald's faced cultural friction when they entered Hong Kong in the 1970s.
Yang Wendong had drawn from KFC's success in mainland China during his past life, replicating parts of their operating model and flavors. Whether it would work in Hong Kong remained to be seen—the market and the times were different.
But flavors could always be refined over time. As long as the team kept testing, the right taste would eventually emerge. The worst thing would be blindly transplanting foreign systems without adaptation.
…
By May, the second KFC store had opened. While the hype wasn't as strong as the first, plenty of people still came to try it. Yang Wendong kept an eye on developments. Meanwhile, the food R&D team was testing new recipes, gauging market response by measuring portion leftovers and repeat purchases. This data would determine which products stayed and which were scrapped.
On another front, this year's other breakout product—sausages—was showing continued growth.
On May 16, Zhou Haoran arrived in Yang Wendong's office with a report. "Mr. Yang, here's last month's order data for sausages from Japan and Taiwan. Based on volume alone, demand is already five times higher than our current production capacity—and that's with us only operating in Kyoto."
"Five times? Then our top priority is expanding capacity," Yang Wendong said. "If we can't produce enough, we'll have to pause market expansion."
Changxing Industries had run into similar supply bottlenecks in previous years. It wasn't new.
Yang Wendong had anticipated the possibility of a supply-demand mismatch. That's why he had told the team to prepare extra production capacity in advance. But capacity had its limits. No one could go all-out from day one—not even with unlimited capital. Skilled workers took time to train.
"I've already told Dongsheng to prioritize producing more equipment for us," Zhou Haoran added. "We're also outsourcing some of the simpler components to other manufacturers."
"Make sure we also have trained technicians, quality control personnel, and enough testing equipment. No compromises on quality," Yang Wendong reminded him.
Sausages were a food product. It was better to be under capacity than to suffer a quality failure. A bad batch of Post-it notes was annoying. A bad batch of sausages could be deadly.
"Understood," Zhou Haoran said. "Also, I've been in talks with China Resources about pork supply. They suggested building a dedicated pig farm in Bao'an County to meet our needs."
"That could work," Yang Wendong nodded. "Demand for pork is going to be huge. Having China Resources build a farm nearby makes sense."
In his past life, China's largest sausage company—Shuanghui—slaughtered over 10 million pigs annually, and still had to import more. The meat and grain requirements of sausage production were massive.
Raising pigs in Hong Kong, however, was nearly impossible due to the pollution and limited land. They could raise chickens, but pigs were another story. That meant relying on external suppliers. But if volume reached a certain point, buying on the open market wasn't viable. It was better to establish a dedicated farm with a strategic partner.
"Here's the problem," Zhou Haoran said. "China Resources doesn't have enough capital right now. They want to borrow from us, or have us guarantee a loan from a Hong Kong bank."
"China Resources doesn't have the money?" Yang Wendong raised an eyebrow.
While it wasn't as massive in the '60s as it would become in the '80s, China Resources still controlled nearly half of Hong Kong's food and light industrial trade. It was a second-tier powerhouse, no question. Not having the money to build a pig farm seemed absurd—unless there was something more going on.
Zhou Haoran explained, "Apparently, the mainland economy is in a really tough spot. China Resources has had its funds pulled for use elsewhere."
"The mainland economy is in trouble?" Yang Wendong asked. "Any specifics?"
"Not really, but there's something involving Huo Yingdong," Zhou Haoran said. "Hong Kong property prices are plummeting, but the price of mainland construction materials is skyrocketing. It doesn't make sense.
Huo Yingdong went to Beijing to meet with senior trade officials. He told them that raising prices like this was short-sighted. But the response from the mainland was blunt—they had no choice. The country needs foreign exchange badly and can't worry about the long term right now."
"I see," Yang Wendong said, thinking it over. "Alright. Have Hang Seng Bank issue the loan. I'll sign the guarantee myself. As long as the farm runs properly, it'll be profitable."
He couldn't see the full picture of the mainland economy, but foreign exchange movements and trade policies spoke volumes. He knew the top planners up north were some of the smartest people in the world. Sometimes, their choices wouldn't be understood until years later.
If they were hiking export prices, it could only mean one thing: the domestic economy was in deep distress and urgently needed foreign exchange.
In that case, helping China Resources was no big deal. Besides, it solved his own supply chain problem. As the customer, his risk was low.
"Got it," Zhou Haoran said. "China Resources also mentioned that the pig farm's grain supply must be imported. They don't want to use domestic grain. They're hoping we can help cover that during the startup phase. Once operations stabilize, they'll purchase grain themselves."
"That's fine. Let them buy from Changxing Trading," Yang Wendong agreed.
Mainland grain supplies were tight. Even if meat exports brought in foreign exchange, material redistribution wasn't easy. Everything was part of the planned economy. But if they bought through Hong Kong, it bypassed all that.
"Alright, then I'll work with China Resources to determine the scale of Phase One," Zhou Haoran said.
"Good," Yang Wendong nodded. "Even if it's a large operation, it's fine. A big pig farm in Bao'an will make Hong Kong's pork supply a lot more stable."
As early as 1962, the mainland had set up three direct express trains to Hong Kong, delivering massive quantities of vegetables, poultry, and meat from cities like Shanghai and Hankou.
The reason for sourcing from so far away? Aside from Guangzhou, no nearby area had sufficient capacity to meet Hong Kong's needs.
Now, if they could build large-scale farms near Hong Kong using Hong Kong capital, it would benefit both sides: more foreign exchange for the mainland, and slightly lower prices for Hong Kong.
Zhou Haoran agreed. "Yes, and from what I hear, Bao'an is still very poor. This farm would help the local economy—though there might be some environmental concerns."
"That's a misconception," Yang Wendong said, shaking his head. "In Hong Kong or industrial cities, livestock waste is pollution. But in the mainland, that stuff is gold. It's perfect for fertilizer—even for fuel once dried."
As someone who had grown up in the countryside of the 1980s, Yang Wendong remembered clearly that people collected animal waste like treasure. For an agricultural country, this was natural.
"Oh—right! I wasn't thinking broadly enough," Zhou Haoran said, eyes lighting up. "So the more pork we buy, the more the surrounding farmers can grow their crops?"
"Exactly. Which means the better our sausages sell, the more we help ordinary people in the mainland," Yang Wendong said.
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