Chapter 105: Agreement Reached and Half a Million Dollars in Hand
"Patents?" Robert nodded and asked, "Which ones are you looking to acquire?"
Yang Wendong replied, "We'll need to run some tests first, but I can tell you the general requirements. First, I need an adhesive that can withstand at least 60 degrees Celsius without liquefying and still retain its stickiness even after being exposed to air for long periods.
Second, the adhesive used for Post-it notes—it doesn't need to be too strong, something like medical-grade bandage glue or anything with similar performance.
However, both types must not contain any severely polluting substances or materials harmful to health. Even formaldehyde must be kept within limits permitted by European and American safety standards."
Though the concept of "environmental protection" hadn't yet become mainstream in this era, some industrialized nations were starting to pay attention to it. The UK, for instance, had already introduced its Clean Air Act in 1956 and had begun regulating food, daily goods, and toxic substances.
Back when his company was still running like a workshop, Yang hadn't had the luxury to worry about such things. But now that it was becoming a proper enterprise, he had to start taking these concerns seriously—at least whenever there was a choice.
Besides, managing environmental standards well would also benefit his home, Hong Kong. Even though the colonial government didn't yet prioritize environmental issues, he couldn't be the one to start poisoning the land. Otherwise, the consequences might come back to haunt him later.
Robert nodded. "Our company has thousands of types of adhesive. I'm not a technical expert, but I'll forward your requirements to our headquarters and let them decide how to proceed."
"Great. This is a highly technical matter, so we'll definitely need to have further discussions," Yang replied with a smile.
Robert and Robin exchanged a few quiet words before Robert said, "Alright, let's stop here for today. Personally, I really hope we can reach a deeper level of cooperation."
"I feel the same," Yang said as they all stood and shook hands.
If he could strike a deeper partnership with a company like 3M, it would be nothing but beneficial for him.
3M's main focus was on small consumer goods, and that just so happened to be Yang's current direction. Even though he knew the future was in electronics, that was a field he simply couldn't touch yet. There was no electronics industry in Hong Kong at the moment. It would be years before that began to take shape.
So products like Post-it notes, glue traps, and the newly developed Rubik's Cube—simple items with strong market potential and protected by patents—were ideal for building capital. Capital he would need for future ventures into more resource-intensive industries.
Of course, even with a patent, no individual could monopolize the market. It had to be done through powerful distributors—companies that could scale distribution quickly and effectively. 3M was exactly that kind of company.
And more importantly, they had what Yang needed most: adhesive technology and the supporting industrial chain.
After the two Americans left, Su Yiyi began tidying up the meeting room. Wei Zetao smiled and said, "Looks like the deal is mostly sealed. Now it's just a matter of finalizing the terms."
"I think so too," Yang nodded. "Post-it notes are our ace card. With this kind of business potential, any company would be tempted."
Wei added, "If we can start making our own glue, our production capacity will scale much faster. Don't forget—we already had several close calls when Japanese suppliers couldn't deliver due to rough seas.
But once we start making glue, we'll also need to stock up early on raw materials, or we might run into the same issues again."
"Yeah. It's just the way Hong Kong's industrial environment is," Yang said with a sigh.
For small regions or countries trying to develop industry, the biggest hurdle is that everything has to be imported. That raises costs and drastically slows everything down.
Right now, they could only proceed step by step. Producing glue in Hong Kong was the first goal. As for raw materials, Yang was counting on Taiwan—within a few years, it would ramp up its petrochemical sector. Once that heavy industrial foundation was laid, Yang could either invest there himself or outsource production.
If things in Hong Kong didn't go well, he could just build the glue factory in Taiwan instead. The key was always to keep control over the core raw materials of his main products.
Wei chuckled. "Back when the plastic flower industry exploded, Hong Kong had a bunch of cases where factories couldn't get high-grade plastic pellets.
Many bosses were desperate—personally visiting traders to beg for supply. But most of the time, there was nothing they could do."
Yang shook his head. "Plastic pellets are way more complex than glue. Unless you're just melting down recycled waste, you need an entire petrochemical industry behind it.
There's no way Hong Kong can support that kind of thing—not now, not ever."
Glue was still considered light chemical industry. You could even make it by hand. But the output would be low, quality unstable, and batch consistency impossible. It simply wasn't scalable.
Plastic manufacturing, on the other hand, was tied to the entire petroleum refining industry. Without that, costs would be sky-high, and very few companies could afford to do it well—even in modern times.
That said, Hong Kong wasn't entirely without capability. Mobil Oil still had a refinery in the New Territories that could produce some basic plastics. But in the industrial era, scale was everything, and Mobil's small-scale operation wouldn't last long.
If Yang hadn't seen the future of Post-it notes and glue traps so clearly, he would never even think about investing in the glue industry. It wouldn't be worth it. He'd be better off flipping real estate.
"Recycled plastics are fine for making buckets and such, but definitely not for plastic flowers or high-end toys," Wei added with a smile.
Yang nodded. "Now it's up to 3M. I'm fairly confident it'll go through. But the formal negotiation process will need to be taken seriously."
If it were just about money, that would be easy. But this involved exchanging core interests—and technical support—so things were bound to get complicated.
"I've already started preparing the necessary documents," Wei said.
He had begun collecting background material the moment he heard 3M was coming.
Back at the hotel,
Robert and Robin sat in the café on the top floor. It was filled with Westerners—mostly British—but it felt familiar and comfortable.
Robert asked, "Do you think headquarters will approve what we discussed this morning?"
"Why wouldn't they?" Robin replied, sipping her coffee elegantly. "It's just supporting the setup of a glue factory. That's nothing difficult for us.
As for the patents—there are plenty we can offer. As long as they don't involve adhesives used in automobiles, aerospace, or specialized environments, it won't affect us much.
We can even restrict the license to specific product uses, like Post-it notes and glue traps. That way, there's no chance of future competition from Eric."
"Hmm, true. General-purpose adhesives—many other brands make those too," Robert nodded. "If he's willing to pay, or trade it for regional distribution rights, he might be able to get what he wants."
Robin smiled. "Exactly. And with U.S. labor unions continuing their strikes, upper management has already started considering shutting down or relocating some of our factories. We could transfer some of the old equipment to Hong Kong."
"Old equipment? Then Eric might not agree so easily," Robert frowned.
Robin replied, "Everything is negotiable. If it's older equipment, we just calculate it at a lower value. Who doesn't want a good deal?"
Robert nodded. "That's true."
Robin continued, "The adhesive used for Post-it notes isn't exactly low-tech. It's one of our more important medical-grade adhesive patents, and it'll likely command a higher price.
But as for the glue used in mouse traps, there are quite a few alternatives. Even the double-sided tape adhesive might work. But that's not cheap either."
"Double-sided tape… yes, that might work. Theoretically, it's similar," Robert nodded and smiled. "Too bad the patent on double-sided tape is about to expire."
"Exactly. In the past decade, we haven't had another invention as brilliant as double-sided tape," Robin said wistfully. "Post-it notes could've been the next one—but unfortunately, it's not ours."
3M registered hundreds of patents every year—many of them for innovative products—but few could truly be called world-changing. Transparent tape had been one, and double-sided tape another.
Once such products were released, they brought astronomical profits to the company.
"Shame indeed," Robert said. "But even though we don't own the Post-it patent, if we can secure exclusive distribution rights in more countries, we can still earn a significant profit."
"Exactly," Robin nodded. "Try to finalize the deal with Eric soon. Even if it's just for the Americas, it's worth locking down."
"We'll have to see what headquarters says tonight," Robert replied. "No telling how long those folks will take to deliberate."
The next day, Yang Wendong learned that Robert hadn't managed to get final approval from 3M headquarters the previous night. He wasn't surprised.
So instead, he spent the day personally accompanying Robert and Robin on a walk through Central Hong Kong.
There weren't many sights to see—skyscrapers were more plentiful in America. So the day mostly turned into shopping for local Hong Kong specialties.
By the fourth day, Yang and Wei Zetao returned to the hotel.
Robert personally brewed them coffee and smiled. "Eric, I've got good news. 3M headquarters has approved the cooperation plan."
"Oh? What kind of cooperation are we talking about?" Yang asked.
This time was different from the last agreement, which had simply granted 3M exclusive U.S. rights in exchange for certain benefits. Now, things were more complicated—this deal involved building an entire factory.
Robert explained, "We can provide you with a glue production line capable of producing 5,000 tons per year. We'll also send engineers to Hong Kong to train your team."
"Why 5,000 tons?" Yang asked, surprised. He had only requested a 1,000-ton line—this was five times the scale.
Robert explained, "It's an old production line. We can dismantle it from a U.S. factory and ship it over. It still works just fine, and the cost will be much lower for you, so it's actually a great deal.
As for the output—it doesn't have to run at full capacity. If your demand isn't that high yet, you can just run it at a lower load."
"Used equipment? That's fine," Yang said. He didn't press the issue. As long as it worked and was cost-effective, second-hand machines were acceptable.
Besides, once Post-it and glue trap production ramped up, even 5,000 tons a year might not be enough.
Robert added, "This is a separate deal. You'll need to send someone to the U.S. to inspect the equipment. The value, payment terms—everything will be negotiated separately.
And about the glue patents—you'll be allowed to choose a few. We've agreed in principle, but we're not discussing the exact list today. That'll come later."
"Understood," Yang nodded.
For now, it was just an agreement in principle. Building a factory was a major undertaking. He wasn't in a hurry to bring the production line over immediately—he still needed to stabilize his cash flow first.
Having a clear direction was enough for now.
Robert continued, "Now, let's talk about the exclusive Post-it distribution rights in the Americas."
"And what about the low-interest loan you mentioned before?" Yang asked with a smile. He still wanted that money.
Whether it was enough or not didn't matter—having a large foreign financing deal in place would be a huge vote of confidence for Hong Kong banks.
Robert said, "That loan offer was tied to acquiring European distribution rights.
If you're only giving us the Americas, then headquarters is only willing to lend you $250,000, secured against your future U.S. revenue."
"That's not much. You and I both know this is virtually a no-risk loan," Yang said with a frown.
Robert replied, "You're right. But that's just how business works. We were offering $1 million in exchange for European rights. For just the Americas, the amount has to be lower. It's a fair trade."
Yang smiled. "Robert, I really do want to work with 3M. But $250,000 won't even cover the cost of building a glue factory. How can I increase production with that?"
"So how much do you want?" Robert asked. "It won't be $1 million, that's for sure. Even for 3M, that's a huge number. Plenty of U.S. public companies don't make that much revenue in a year."
"I know. Let's split the difference—how about $500,000?" Yang offered. "You know the potential of the Post-it market even better than I do. Surely you have that much confidence in it?"
To be honest, given how well Changxing Industrial was doing, it was very possible to get another HK$2–3 million loan from Liu Chong Hing Bank.
But that would still be unsecured. Without collateral, he couldn't use leverage to snowball his growth.
A large foreign loan would give him even more borrowing power—and that was exactly what he needed for rapid expansion. The more money, the better. That's why Yang pushed hard on this.
Robert thought for a moment. "Alright, I'll talk to HQ again."
Yang nodded. "Once you've got approval, I'll sign over the distribution rights for the Americas."
"OK," Robert and Robin agreed.
Yang was quite satisfied with this deal. In exchange for the exclusive rights to a moderately sized market, he would receive a large sum of money and a commitment to help build a glue factory.
The cash would enable rapid expansion, and the adhesive technology was even more valuable.
Plus, if 3M developed the Americas well, Yang would still earn a cut of that business.
Then Yang asked, "By the way, Mr. Robert, does 3M have a toy division?"
"Toy division?" Robert was caught off guard. "Not really. We supply materials to many toy companies, but we don't make toys ourselves."
"Oh, I see." Yang didn't press further. It looked like 3M wasn't the right partner for launching the Rubik's Cube.
Two days later, both parties finalized the agreement for exclusive Post-it distribution rights in the Americas.
The deal would only take effect once funds were transferred and the glue factory assistance was formally initiated.
Yang Wendong was now about to receive a fresh round of capital: $500,000 U.S. dollars.
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