Chapter 963: I want all businesses to flourish

Xia Yu smiled faintly, 'I do know, because I was the one who proposed it.'

Bao Yu's eyes flashed with surprise, and his brows furrowed slightly. He thought that Xia Yu always had a deeper meaning in everything he did, so he immediately asked, 'Ah Yu, I remember that you have already started moving your factory to Pengcheng, so why do you want to build an industrial park in Xiangjiang?'

'Everyone is moving to Pengcheng, and you're going against the grain!'

Xia Yu said indifferently, 'Bao, the industries that have moved to the mainland are basically labour-intensive industries such as textiles, garments, and toys. They have low technological barriers and rely heavily on labour costs. I'm not doing that kind of thing.'

Bao Yugang accepted Xia Yu's reason, but he still felt that something was wrong. After thinking for a while, he asked, 'Regardless of labour costs, there is also the investment and operating costs of factory hardware. Even if the land price in Yuen Long is low, it is still higher than that in Pengcheng. Even if the Hong Kong government builds an industrial park, it may not necessarily be able to attract enough companies.'

Xia Yu smiled and said, 'Lao Bao, I don't particularly know what MacLehose was thinking. After all, I'm not a worm in his stomach.'

'But if the industrial park is built, I alone can build quite a few large factories. As long as I have a market and enough business, manufacturers in the supporting industrial chain will naturally follow.'

'The industrial cluster effect is correct everywhere.'

Bao Yugang's brows relaxed, and he nodded slowly, saying, 'That's right. Although your factory hasn't been established, I believe you can do it.'

'What industries are you going to do? Do you have a plan?'

Xia Yu replied, 'Automobiles, machinery manufacturing, electronics, petrochemicals, and so on.'

'Companies in the automotive, machinery manufacturing and electronics industries already exist, and the petrochemical industry will be built later.'

Bao Yugang nodded understandingly. He knew that Xia Yu did indeed have companies in these industries, which he had previously acquired from the Jardine Matheson Group, such as Jardine Engineering Corporation and Jardine Motors, as well as the Tiangong Electronics Group he had set up himself.

There was just one thing he hadn't figured out yet, and that was why the real estate industry, which was currently booming, had been omitted from the Hong Kong government's plans.

He abandoned the ship and went ashore, and is now making a big splash in the real estate industry. If there really is a risk, he would have planned for it long ago.

'Ah Yu, the real estate industry is currently booming, why is it not mentioned in the plan? Could it be that the real estate industry will change in the future?'

Xia Yu shook his head and said, 'The future of real estate is definitely bright, but whether it is for Hong Kong or for ourselves, it is best if the real estate industry is only half bright.'

'Half bright?'

Bao Yu frowned and muttered, thinking about the attributes of real estate, which can be divided into commercial real estate and residential real estate.

He wondered, 'Is there a risk with commercial and residential real estate?'

Xia Yu nodded and said, "Yes, Lao Bao, you should know the difference between commercial and residential real estate, right?'

Bao Yu did not hesitate to say, "Of course I know.'

'Commercial real estate is a heavy asset operation with high investment and development costs, and it looks at stable long-term returns.'

'Residential real estate has a lower investment cost, focuses on marketing, reaps short-term gains, and emphasises high turnover.'

Xia Yu interjected, 'That's right.'

'And from a marketing perspective, the core of commercial real estate is investment, and it faces investors; the core of residential real estate is living, and it faces consumers.'

'No matter how hot commercial real estate is, there is always a limit. Investors buy or rent shops to do business, which is good for social and economic development and an important part of economic circulation, accelerating the circulation of money.'

'Residential property is different. Consumers have a limit to how much money they have. If housing prices are too high, consumers will need to borrow money from the future to buy a house. Income basically goes to banks and real estate developers, and very little is spent on consumption.'

'Therefore, residential property is a business that prospers while all others decline.'

'Hong Kong is a window on the mainland and a meeting point between the Pacific and Indian oceans. Its geographical location is destined to make it a bustling trading place where all businesses meet.'

'As long as Hong Kong is a prosperous commercial centre, the commercial real estate market will naturally rise with it.'

'But Lao Bao, do you think it's good or bad for Hong Kong, for the mainland, that Hong Kong's residential real estate prices have gone up?'

Bao Yugang shook his head and said decisively, 'It's definitely not good. House prices are inversely proportional to Hong Kong's potential. Rising house prices are draining Hong Kong's potential, and the ones who suffer are the ordinary people.'

'For us and for the general public, the best thing is for all businesses to flourish.'

'Doing business is like growing leeks: harvesting them over and over again and selling them makes money for fertiliser to open up new land to grow more leeks, so that everyone can eat. But if you just dig them up by the roots, in the end there will be no leeks left, and people will starve and the land will be deserted.'

Xia Yu smiled and said, 'Lao Bao, that's a vivid metaphor.'

After laughing, Xia Yu put on a serious face and said, 'So whether it's for our own sake or for the sake of the entire Xiangjiang, Xiangjiang's residential real estate really can't be allowed to fly wild.'

'However, we also know that the real estate industry is too low-skilled, so everyone with a bit of money goes into real estate development. More or less every wealthy family is rushing into the real estate industry. The real estate industry has been driven up by everyone's speculation together, and if we want to stop it, it will be extremely difficult.'

'But if we just let it go, in ten, twenty, or thirty years, this bubble will burst one day, and by then there will only be a mess, the people at the bottom will be full of grievances, and our foundation will also be eroded. In the end, we and our descendants will bear the consequences and the blame.'

'I've spoken to MacLehose. Although the Hong Kong government has now begun to rely on land sales, it's not that serious yet, and commercial real estate can still be sold.'

'So MacLehose supports it too. For a Brit with a British mission, I really admire him for being able to do this.'

After a long period of contemplation, Bao Yugang asked, 'So you plan for your Jiuding Real Estate Group to focus on developing the commercial real estate market and go against everyone in the residential real estate market?'

Xia Yu did not hide it and nodded, saying, 'Yes, although there is a suspicion of being a hypocrite, in Hong Kong, I really want to be an entrepreneur with social responsibility, not a capitalist who drinks people's blood.'

'I don't care about it abroad, but Hong Kong is my hometown after all, and I am also a Chinese. We always have to be treated differently. A gentleman knows what to do and what not to do.'

Bao Yugang laughed and praised, 'Well said, a gentleman knows what to do and what not to do!'

'I'll bear this with you!'

'After all, you are the leader in the real estate industry, and after successively merging with a few companies, I have also barely squeezed into the top ten in the real estate industry. If we act together, the probability of success will be greater!'

'As for Lao Huo's words, let's talk to him when he returns. It's up to him, but from what I know of him, he doesn't value money, and he harbours great national righteousness in his heart. He won't refuse to do this kind of thing, it's just a matter of making money in a different way.'

Xia Yu smiled and said, 'With Lao Bao and you by my side, I'm full of confidence!'

Bao Yugang shook his head and laughed, 'I'm just playing a supporting role, don't put a high hat on me. You didn't even tell me before, thinking only of doing it yourself. You must be confident of success, don't I know you?'

'But Ah Yu, when it comes to this, I have a problem with you. Do I seem like someone without a bottom line? Why didn't you call me in on this?'

Seeing Bao Yugang's stern face and unhappy expression, Xia Yu felt a little embarrassed, but he couldn't admit it.

He brazenly retorted, 'Bao, how could I not think of you? I'm not hiding it from you now. If you'd asked, I would have told you straight away.'

'The main reason I didn't tell you for the time being is that nothing has been decided yet. The Hong Kong government hasn't officially passed anything yet. If it doesn't pass, and I tell you about it, wouldn't that be slapping myself in the face?'

Bao Yugang looked at Xia Yu doubtfully from top to bottom.

Xia Yu looked normal, with a calm and composed expression, and let Bao Yugang look at him.

Bao Yugang withdrew his gaze and smiled, 'Okay, let's say what you said is true for now, and we'll let it go.'

Then he took a sip of tea and said, 'Starting tomorrow, I'll adjust our real estate strategy and focus on developing commercial real estate projects.'

'The profits from commercial real estate are actually not low, and the annual income can far exceed bank interest. In fact, it is a sure profit, as long as the business environment in Hong Kong continues to improve, the rate of return will also continue to increase.'

'The key is still patience.'

Xia Yu smiled and said, 'Lao Bao, it's not that we're giving up the residential real estate business. In fact, we need to do even better. The greater our influence on the market, the more we can suppress housing prices.'

'If we give up residential real estate outright, then there will be no way for us to get involved.'

'If there is a lot of residential construction and everyone has a house, I don't know who they will sell the houses they develop to!'

'Just watch them speculate!'