Chapter 230: Preparations for Future Drought
By the end of September, the calendar had quietly turned to the 30th.
Lately, Yang Wendong's attention had been focused primarily on the shipyard project at Drunken Bay in Kwai Chung. A more specialized team had been dispatched to Drunken Bay to conduct a detailed underwater terrain survey, along with assessments of various external factors, to determine the cost of land reclamation required to build a shipyard in the area.
September 26th, at Geely Building:
Yang Wendong was reading a newspaper when—
Knock, knock, knock! The sound of knocking echoed through the room.
Looking up, Yang Wendong saw it was Zheng Zhijie and called out, "Come in."
Zheng Zhijie stepped inside and said, "Mr. Yang, there are a few things I need to report to you."
"Go ahead," Yang Wendong said as he set down the newspaper.
Zheng Zhijie began, "Over at our residential construction site in Causeway Bay, we may need to pause work for three days due to a lack of water. Many construction processes require large quantities of water."
"Water shortage?" Yang Wendong raised his brows. "Is the municipal water plant not supplying water anymore?"
"It's not that," Zheng Zhijie explained. "There's still a water supply, but it's been inconsistent, with very low pressure. That's why we plan to suspend work for three days to store enough water in the tanks before resuming construction. A lot of operations on-site rely on a stable water supply. If we run out halfway through a task—like mixing cement—it could cause major losses."
"I understand." Yang Wendong nodded. "Water shortage is a city-wide issue right now. It's only natural that we're affected too. Let the workers take three days off. They could use the break."
Historically, Hong Kong experienced its most severe water crisis in 1963, but the warning signs had already started appearing as early as 1958. The then-Governor Black negotiated with the mainland as early as 1959 to transport water from Guangdong's eastern province and even built a pipeline to a reservoir there.
However, by 1962-63, the drought intensified. Rivers near Hong Kong in eastern Guangdong ran dry, triggering the worst drought in Hong Kong's history.
Eventually, the Hong Kong government, in cooperation with the mainland, initiated the construction of a major canal to divert water from the East River, which ultimately solved the issue.
During the drought, it wasn't just ordinary citizens who suffered—commerce and industry were severely affected as well. Many sectors relied on water, even power generation.
"We've already given the workers time off," Zheng Zhijie continued. "The second thing is that the land reclamation budget for Drunken Bay is now finalized. The estimated cost to reclaim enough land for a shipyard is around HK$6 million. I also checked with Zheng Yuhua. Building a full-scale repair facility and dry dock will cost another seven to eight million."
"So all in all, just over ten million," Yang Wendong nodded. "And how much to acquire that plot of land?"
"It's not expensive," Zheng Zhijie replied. "While not exactly deserted, it's not a prime location either. Even with a large area, it shouldn't cost more than HK$300,000 to 500,000."
"Hmm." Yang Wendong paused to think, then added, "In that case, secure a larger area that can be reclaimed. If business goes well in the future, we might need to expand the shipyard."
That scenario wasn't far-fetched. In the coming years, Kwai Chung was set to become the central hub for shipping in Hong Kong. The demand for ship maintenance and repair would inevitably skyrocket.
Many of the current shipyards would eventually be shut down or relocated due to rising land development value, and if that happened, Yang Wendong could capture a larger share of the market.
"That should be possible, but we'll need to negotiate with the colonial government," Zheng Zhijie noted.
Yang Wendong asked, "Has the government approved the project yet?"
"There's no official documentation yet," Zheng Zhijie responded. "The process hasn't been completed. But generally, they won't object. The colonial government adheres to free-market principles. Aside from basic utilities like water, electricity, and buses, most commercial projects get approved if the applications are proper."
"Alright. Let's get the license as soon as possible. That'll give me peace of mind," Yang Wendong said with a nod.
The containerization revolution was already a global trend in shipping. However, limited infrastructure and a massive labor force had slowed its adoption.
Previously, Yang Wendong hadn't been sure whether the Hong Kong authorities were aware of this trend. Now it seemed that even if they knew, they hadn't invested serious effort into identifying suitable sites.
Or perhaps, they simply hadn't considered Kwai Chung yet—which gave Yang Wendong a valuable head start.
"I'll urge the government to expedite things," Zheng Zhijie promised.
Yang Wendong picked up the phone, dialed an internal extension, and said to Zheng Zhijie, "Ask Zheng Yuhua to come up too. Let's all discuss this together."
"Of course," Zheng Zhijie replied with a nod.
…
Since they were all in the same building, it only took two minutes after receiving the call for Zheng Yuhua to arrive at Yang Wendong's top-floor office.
"Mr. Yang," he greeted.
"Take a seat," Yang Wendong gestured, then said, "There's been progress at Drunken Bay… Lao Zheng, fill him in on the details."
"Sure." Zheng Zhijie quickly explained the situation to Zheng Yuhua.
Upon hearing the news, Zheng Yuhua grinned. "That's fantastic. Having our own shipyard will make things so much easier. Companies like Swire, Wheelock, and Jardines were able to grow big in large part because they had their own shipyards."
Yang Wendong asked, "What about personnel? Are we going to poach from existing shipyards in Hong Kong?"
"Yes," Zheng Yuhua replied. "I know quite a few engineers in this field. As for regular workers, we can train them ourselves over time."
Yang Wendong nodded. "Good. Work together to finalize the budget and timeline. Let's get that shipyard built as soon as possible."
"Understood," Zheng Yuhua said, then added, "Mr. Yang, this shipyard will require a significant investment. For funding, we may need to approach a bank."
"I'm aware," Yang Wendong replied. "Once we receive the license from the government, I'll go talk to Saunders at HSBC. While I'm at it, I'll also bring up the purchase of new vessels from Japan."
"Thank you, Mr. Yang." Zheng Yuhua smiled.
"There's something else," Yang Wendong said. "You're aware of the current water shortage in Hong Kong, aren't you?"
"I am," Zheng Yuhua nodded. "The entire city's affected. Even people living in luxury homes face unexpected water cuts. Only the ultra-wealthy seem untouched."
Yang Wendong continued, "Originally, our plan for buying vessels included both new and used ships. New ships would serve our shipping company's business, and the used ones would be for Changxing Industrial's exports. But now, I'm considering buying more used ships for coastal operations."
"Coastal operations?" Zheng Yuhua was quick to catch on and asked, "Are you thinking of transporting water from the mainland to Hong Kong?"
"Exactly," Yang Wendong confirmed with a nod.
The best long-term solution for large-scale water transport would be to build a canal. But that would take years. Historically, it wasn't until 1965 that water from the East River was fully diverted into Hong Kong. Only after large-scale freshwater storage facilities were constructed internally did the city finally overcome its decades-long water shortage.
Before 1965, millions of residents in Hong Kong, along with the city's vast industrial, commercial, and construction sectors, were all under extreme water pressure. At times, an average person could only receive one liter of water every three days—barely enough to survive on drinking water alone.
The impact on industry was even more severe. In 1963, Hong Kong's industrial exports experienced a rare decline. For a conglomerate like Changxing Industrial—already the largest industrial group in Hong Kong and poised to grow even larger in the years ahead—the effects of a drought would only become more serious.
Whether for the sake of his own business interests or for the survival of millions of Chinese residents in Hong Kong, Yang Wendong knew he had to act early and prepare ahead of time. Even if a natural disaster couldn't be completely avoided, at least the losses could be minimized, and he could help ensure a more comfortable life for the masses.
Zheng Yuhua thought for a moment and said, "Mr. Yang, from my personal standpoint, the more people transporting water, the better. But looking at it from the company's perspective, we can't predict if this drought will persist. What if a major typhoon rolls in and brings water back to eastern Guangdong? Then all those water transport ships would have no business."
"If that happens, I'd actually be happier," Yang Wendong chuckled. "At worst, we just redirect the old ships to regular regional shipping operations. Like you said, the biggest cost for old ships is maintenance and repair. But we'll soon have our own shipyard—cutting that cost alone means we're not going to lose money."
Right now, due to the water shortage, the colonial government was already commissioning some Hong Kong cargo ships to go deep into the mainland to purchase water and bring it back to Hong Kong.
That, too, was a business opportunity—the government footed the bill. But for Yang Wendong, there were already too many ways to make money in the future. If it was just about profit, there'd be no need for him to get involved in this at all.
The reason he was setting up this water transport operation now was because, once the drought reached a critical point, ships would become drastically insufficient.
In this era, the reason shipping could make big profits was precisely due to the scarcity of vessels. Right now, if the government needed just a few ships, that was manageable. But in another year, when the drought got worse, the demand could suddenly shoot up to dozens of ships. Where would they find that many idle vessels?
And of course, capitalists would take the opportunity to raise prices. In the end, it would be the average citizens paying the price.
Zheng Yuhua nodded thoughtfully and said, "Alright, then I'll purchase some very old vessels—ships that can start by transporting water. Once the drought is over, we can use them for near-sea operations around Southeast Asia. We won't bother with those long-haul trips to Europe or America."
"Sounds good," Yang Wendong said with a nod. "As long as there are no safety issues, even scrap ships are fine. Just pick ones that are still functional. Use them for a few years, then send them off for scrapping."
Scrap ships weren't necessarily unusable vessels. From an economic standpoint, they were simply no longer cost-effective, or in some countries, they had passed legal usage limits and could no longer be operated.
In the early years, dismantling old ships and recycling their steel was one of Hong Kong's major industries. Many of these ships sailed in from Europe and America just to be scrapped here.
Some of the early Chinese shipping tycoons in Hong Kong got their start by buying scrap vessels at low prices, especially in the early 1950s. They used these ships to run coastal routes and built their empires from there.
"Understood, Mr. Yang," Zheng Yuhua replied. He then added, "Just a reminder—ships like these can't be used as collateral for bank loans. Even though they're cheap, we'll have to pay for them entirely out of pocket."
"Right." Yang Wendong asked, "So how much do these very old ships or scrap vessels cost?"
"For decent-quality ones, around one million Hong Kong dollars—same as the one we previously bought from the U.S. Back then, the Americans were planning to scrap it and sell it for steel. But ships like that are rare."
"For lower-quality ones, it could be just a few hundred thousand. In fact, during downturns, some European or American companies might even give them away for free or pay others to take them off their hands."
"Alright then, we'll use our own funds," Yang Wendong agreed with a nod. "I'll reallocate money from elsewhere."
At that price, even purchasing several dozen small ships would cost only around ten million HKD. Even if they were only used for water transport, the cost of operations and fuel could be spread out.
More importantly, if his own industrial operations had priority access to water transport, it could prevent massive losses caused by water shortages. If he ignored the situation and let things spiral, just the damage to his businesses in Hong Kong could exceed ten million easily.
Zheng Yuhua reminded him again, "Mr. Yang, while scrap ships are cheap, they're not something you can buy immediately. It depends entirely on market supply. If we need a large number of ships quickly, we may have to buy freighters like the Shun'an—and those are much more expensive."
"That's fine," Yang Wendong said without concern. "Higher-quality second-hand cargo ships can be used for much longer anyway."
He wasn't worried. As long as the ships were seaworthy, they'd be profitable by 1967 at the latest. In fact, before then, he planned to purchase a large number of both new and used ships—otherwise, it would be a waste of his knowledge of the future.
"Understood." Zheng Yuhua then asked, "So we've now got two major projects. Do you want to delay the purchase of new ships from Japan for the time being?"
"No need," Yang Wendong shook his head. "As long as the expected return is high enough, operating on credit is still worthwhile. Treat these three projects as separate. The only one we'll fund entirely ourselves is the purchase of old ships for water transport. The other two—I'll finance them with loans."
In the shipping industry, whether you're buying ships, building them, or leasing them to clients, you often need to borrow heavily from banks.
Loan-to-value ratios in shipping were often even higher than in real estate.
And during the 1960s, global shipping was in a period of rapid growth. Hong Kong's Chinese shipping magnates were mostly built during this very decade.
"Alright," Zheng Yuhua nodded. "One more thing—if we're buying ships in bulk, we'll need to start mass recruitment, especially for the old ships. They'll need experienced technical engineers."
"No problem. Go ahead and start recruiting," Yang Wendong said. "Having a large team of crew members will be the foundation of our future expansion anyway."
Even without the drought issue, he would've needed to recruit on a large scale sooner or later to prepare for shipping expansion.
…
The Next Day – Peninsula Hotel:
Yang Wendong arrived at a deluxe suite. Inside, a young woman in a white bathrobe was casually preparing lunch.
"Yushan?" Yang Wendong called out with a smile as he entered.
"Brother Dong!" Bai Yushan turned around. "I had the hotel prepare all your favorite dishes."
"My favorite dishes aren't these," Yang Wendong laughed and swept her up into his arms. "Let's get down to real business first!"
"But it's still daytime~" Bai Yushan said, even as her resistance melted into soft laughter.
The delicious food nearby began to cool, slowly, quietly...
…
An hour later, Yang Wendong stared at the food with mild regret.
"The weather's not even cold, let's just eat it like this," Bai Yushan said without a care. "Reheating and sending it back is too much of a hassle."
"Alright." Yang Wendong didn't feel like making a fuss either. After that bit of physical activity, he was both tired and starving.
There was no microwave, which made things inconvenient.
Actually, he already had a few ideas for electronic products in mind. Once the Kwun Tong Industrial Park was complete, he planned to branch out into the electronics industry as well.
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