This plan is quite detailed, specific, and practical. It does not seem to have been hastily drafted, but rather a business proposal that was developed after a long period of detailed research and careful calculations.
Even more alarming was the clause regarding Hong Kong Land Development. For the development and operation of affordable housing, Hong Kong Land Development charged only a nominal "service fee" and a meager markup for management costs. The document stipulated a profit margin of 1% to 5%. To MacLehose, this represented no profit at all, but rather a blatant loss!
An hour passed.
Lin Huowang and Gao Qiaohao said almost nothing, sipping tea, eating snacks, and waiting patiently.
When Lin Huowang picked up the second piece of mung bean cake and took a bite, MacLehose finally put the documents back on the table. He raised his head, his eyes full of scrutiny, confusion, and a subtle hint of vigilance.
"Mr. Xiaolin," MacLehose said directly without any further probing or politeness. "After reading this plan, I am truly shocked and even more confused."
"Your Excellency the Governor, please give me some advice." Lin Huowang put down the pastries with a smile and responded calmly.
"I don't understand." MacLehose stared into Lin Huowang's eyes. "As far as I know, in order to acquire the controlling stake in Hong Kong Land Group, you paid a huge price and borrowed huge debts from HSBC and Jardine Matheson.
Isn't your most important and urgent task now to quickly take control of Hong Kong's core business, leveraging its priceless prime land and prime properties to generate substantial profits, rapidly boost the stock price, stabilize the finances, and even repay some of the debt? This is the most logical business strategy and your responsibility as Hong Kong's owner."
He picked up the plan and tapped it gently. "But now, you've come up with this proposal. Providing land and development resources, practically free of charge, to assist the Hong Kong government in building large-scale affordable housing? The resulting business losses, with all due respect, are absolutely astronomical. This defies common sense, and is completely inconsistent with the logic of a businessman, especially one who just completed a high-risk leveraged buyout."
MacLehose paused for a moment before speaking very carefully: "Unless... you want to emulate those highly respected figures in your history? Would you rather suffer huge losses yourself than work for the welfare of the grassroots of Hong Kong Island? Do you want to be a saint of this era?"
Faced with this almost showdown questioning, Lin Huowang's lips curled up into an intriguing smile. He didn't directly answer whether he was a saint or not, but instead posed a counter-question: "Sir Murray MacLehose, where did you come to the conclusion that I would definitely lose money by doing this?"
"Oh?" MacLehose raised his eyebrows slightly and leaned back on the sofa, as if he had heard an unexpected yet expected and amusing response. "Isn't it obvious? It's written clearly in black and white in your plan!"
He flipped open the plan and pointed out the key clauses: "There are only two ways for your Hong Kong Land Group to cooperate with the Hong Kong government: one is for Hong Kong Land to transfer its own land for the construction of affordable housing; the other is for the Hong Kong government to provide land and Hong Kong Land to be responsible for development and operation. But in either case, the plan clearly stipulates that Hong Kong Land will be completely isolated from the final pricing and sales of affordable housing! You can only charge a cost-based 'construction and operation fee'.
Although you have set a profit margin range of 1% to 5%, MacLehose said with the tone of an insider who is well versed in this matter, "Among all the Hong Kong real estate companies I have come into contact with, not a single one would compress the comprehensive costs, including land, capital, time, manpower, and management, to such an extreme low level!
This "small profit" on paper, when converted into the company's size and Island Properties' normal profit levels, is essentially a massive loss. "It's like asking a top chef to sell bao buns at a street stall for just the price of a firewood." He made a forceful gesture, emphasizing the impracticality. Exorbitant profits at Island Properties are the norm, and what this proposal requires of Hong Kong Swire is tantamount to giving up a significant portion of those profits.
"Your Excellency, Governor, what you see," Lin Huowang's smile deepened, and he also had a calmness that looked down on the chess game, "is only the part written for you in the plan."
Without waiting for MacLehose to retort, he continued, "Yes, judging solely from the public housing sector, Hong Kong Land is hardly profitable. But please take a closer look at the supporting components of the plan, and even the commercial development plan I have included."
Lin Huowang tapped another document. "In the heart of each large new town where 'home ownership' is a priority, our Hong Kong Land Group will lead the development and hold the core commercial property—Dragon Plaza! This is more than just a shopping mall. It will be a super commercial complex integrating top-notch retail, dining, and entertainment. More importantly,"
Lin Huowang then laid out the most crucial point, "Around each large-scale affordable housing community and each Dragon Plaza, we have also planned supporting high-end office parks, Dragon Jump theme parks, and... adjacent high-quality, market-oriented commercial residential projects!"
"At the same time, to support convenient travel and commercial vitality for the entire community's huge population, the Hong Kong government must cooperate with us and establish a station on the planned future MTR line at the heart of these new communities - at the entrance of Dragon Plaza! The station must be named 'Dragon Plaza' station."
"Your Excellency, Governor, when hundreds of thousands or even millions of low-cost residents are introduced to a new community, they need consumption, entertainment, and employment. Dragon Plaza provides retail, catering, and basic employment opportunities.
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