Chapter 961: China Power Affairs

After calming himself, MacLehose said solemnly to Xia Yu, 'Mr Xia, the plan you have proposed involves too many areas. It will require a lot of work to refine and formulate a complete implementation plan. After you go back, you will need to send someone here to discuss it together.'

Xia Yu nodded and said, 'This is only right. I also hope that it can be started as soon as possible.'

...

Afterwards, MacLehose, Xia Yu and the others got into their cars and left the New Territories.

Xia Yu sat in the back seat, opened the window and breathed in the fresh air full of the fragrance of nature, feeling a sense of clarity in his mind.

Looking at the fields that passed by, Xia Yu seemed to see modern factories being built in this area.

Just then, Li Qian leaned over next to Xia Yu and asked with a frown, a little worried, 'Yu, didn't you keep telling me that setting up factories in Pengcheng on the mainland across the border could greatly reduce production costs, and that many of your companies have gone over there to set up factories, so why do you still want to set up a technology industrial park in Yuen Long District?'

'Yuen Long District should be less than 20 kilometres from Pengcheng in a straight line, so close together, can the Yuen Long Technology Industrial Park develop?'

Xia Yu looked away from her and back at Li Qian, who was worried about his career. He smiled gently, gently stroked Li Qian's furrowed brow with his finger, and said softly, 'Qianqian, don't worry. When have you ever seen me make a wrong decision?'

'Although the technology industrial park is close to Pengcheng, that doesn't mean it can't develop.'

Seeing Li Qian's confused, yet cute, attempt to make sense of things, Xia Yu laughed lightly, 'Let me explain it to you.'

Li Qian nodded like an obedient primary school student, looking at Xia Yu with big, wide eyes, waiting for his teachings.

Xia Yu gently embraced Li Qian in his arms and began to speak slowly and in a gentle voice.

'Qianqian, the positioning of the Yuen Long Science and Technology Industrial Park is not low-tech light industry, but heavy industry such as electronic high-tech, automobile manufacturing, petrochemicals and other industries. These industries have high barriers to entry, high output value and high added value, and the profit margins far exceed low-tech light industries such as textiles and toys.

'Although the labour costs in Hong Kong are much higher than those on the mainland, they are still not as high as those in developed countries such as island countries, the United Kingdom and the United States.

'Since island countries, the United Kingdom and the United States can maintain the healthy development of companies in the electronic high-tech, automobile manufacturing, petrochemical and other industries despite their high labour costs, there is no reason why Hong Kong cannot do the same despite its lower labour costs.

'Compared to labour costs, the technology costs of these industries account for the lion's share. As long as the technology costs are properly controlled, there is no reason to fear being unable to compete in the market.

'Then there's the mainland. Although labour costs are low there, it's still necessary to be able to compete. It's no use if you can't compete, no matter how low the labour costs are.'

'In other ordinary light industries such as toys and textiles, there are no restrictions on entering the mainland market. Hong Kong companies can set up factories in Shenzhen if they want to. But it's different in the fields of electronic high technology, automobiles and heavy industry, petrochemicals and so on.

'Apart from the electronics sector, which is slightly better, the mainland is not open to foreign investment in the automotive, heavy industry, petrochemical and other industries. We can't get in, and I don't know how many more years we'll have to wait.'

'Even if these industries are opened up, the mainland will impose numerous restrictions. The simplest of these is the lack of a controlling stake, and the maximum profit that can be earned is only 49%.'

'And considering that in these sensitive industries, the tariff costs between the mainland and all countries in the world are much higher than those between Hong Kong and all countries in the world, many parts and components have to be sourced from all over the world, and the tariff costs for entering the mainland are also very high. This cost can offset a large part of the labour costs, or even more than that.'

'Unless the mainland considers lifting restrictions one day, it will be possible to reduce the tariff rate. Before that happens, it is almost impossible for tariffs in these fields to be lowered.'

'Of course, the combined import and export tariffs are the highest. If you set up a factory directly on the mainland to create an entire industrial chain, you only need to purchase raw materials, and the tariffs will be low. And as long as the products produced are not sold abroad, but sold directly on the mainland, then setting up a factory on the mainland will have a huge cost advantage.'

'But even if you don't export and only sell domestically, the current market capacity and supporting industrial chain on the mainland is also a big problem, not to mention the restrictions on industry entry, which are not known when they will be lifted.'

'So I have to be prepared for both eventualities. I can't just sit around doing nothing. It's definitely a good idea to establish a technology industrial park in Hong Kong first.'

Just as Xia Yu said.

Let's take a simple example.

Take the simplest industry, the automotive industry. According to past history, even if the automotive industry is open to foreign investment, there are still many restrictions, and the controlling interest still has to be held by the mainland. Before Xia Yu's time travel, the restrictions had not been completely lifted.

It's fine to sell in the domestic market, where you can have an advantage, just like the price difference between joint venture cars and imported cars, which is more than double.

But when it comes to overseas markets, after the profits are thinly spread, the profits will be similar to those of factories set up in Hong Kong, unless the mainland reduces the import and export tariffs for the entire industry chain to significantly reduce costs.

However, no one knows better than Xia Yu, who has been reborn from the afterlife, the future situation. He simply does not hold out hope for this.

Tariffs are a barrier to a country's economy, and he cannot touch them.

There are only two ways that can work.

One is that the mainland believes that it is already competitive enough in all walks of life, and will take the initiative to lower them.

The second is that in the previous life, in order to join the WTO, China was forced by the European and American countries to make a series of commitments. When the time came, it had to fulfil its commitments one after the other, open up industry restrictions and lower tariffs.

So now if Xiangjiang builds an automobile manufacturing plant, Xia Yu will be able to have 100% autonomy and profits, and there will be fewer restrictions on entering the European and American markets. Because it is close to the mainland, it can make adjustments at any time as the situation in the mainland changes.

The same is true of the automobile manufacturing industry, and as for the petrochemical industry, there is no need to even think about it. Some are waiting, and Xia Yu can't possibly refrain from entering the petrochemical field for the time being just because of this.

The future is to be embraced, but it must be based on the present. One cannot aim too high, and one should first build a good foundation in Xiangjiang.

The only thing that might make Xia Yu give up building the Xiangjiang Science and Technology Industrial Park is if the mainland were to immediately open up all fields to him, but is that possible?

...

Xia Yu's straightforward and easy-to-understand explanation made Li Qian suddenly understand.

'So it's that complicated. In that case, the Yuen Long Science and Technology Industrial Park needs to be established as soon as possible.'

Xia Yu nodded with a smile, 'Yes, it's almost done. Once we get back, I'll arrange for someone to liaise with the Hong Kong government. The public housing plan and the construction plan for Tin Shui Wai New Town are now involved, and MacLehose is paying even more attention to it. He's just as anxious as I am.'

Li Qian nodded slightly, her beautiful eyes betraying a mixture of fascination and admiration. She murmured softly, 'Ah Yu, if your plan succeeds, it will change the lives of at least hundreds of thousands of people. Compared to the charity work I often do, this is truly benefiting society...'

After returning, Xia Yu immediately summoned the think tanks from the three major research institutes. He also summoned Liu Shihao and Chen Jianping from Jiuding Real Estate Group, and Zhao Bo, the general manager of China Power Company, to the headquarters for a meeting.

During the meeting, it was decided that Liu Shihao would lead the team to communicate with the Hong Kong government, while the others would provide support.

After the meeting, Liu Shihao and the others left one after the other, but Zhao Bo, the general manager of China Power Company, stayed behind.

Zhao Bo was a Chinese executive promoted from within after Xia Yu took control of China Power Company, and he did not disappoint Xia Yu. He kept China Power Company in 'perfect order' and carried out his instructions to the letter.

'Zhao Bo, is there anything else?'

Xia Yu asked.

Zhao Bo immediately nodded and said, 'Yes, Chairman, there are some important things to report to you, involving the Kadoorie family.'

Xia Yu's expression twitched slightly, and he nodded slightly and said, 'Go to my office.'

'Okay.'

After saying that, Zhao Bo followed Xia Yu into the office a few steps behind.