How Chinese firms evolved to gain global reach

By Zhang Ni Source:Global Times Published: 2019/9/28 18:03:40

Liu Yonghao speaks at the Caijing Annual Conference in Beijing. Photo: VCG

Born in 1951, Chinese entrepreneur Liu Yonghao has witnessed most of the ups and downs since the founding of the People's Republic of China (PRC) in 1949. 

His company, New Hope Group, is one of the success stories among the raft of private enterprises that have grown alongside China's reform and opening-up. From feed production to agricultural technology and food processing, it has more than 40 factories in operation or under investment in countries along Belt and Road routes. 

Before the 70th anniversary to celebrate the founding of the PRC, Liu sat down with the Global Times to discuss his entrepreneurship journey and insights into private enterprises in China.

'First pot of gold'

Liu is the youngest brother in a family of four children from Southwest China's Sichuan Province. In the 1970s, they all graduated from college. Believing their lives could be vastly improved, the siblings decided to aim high. 

"Living standards at that time were quite low. We wanted to use our hands and our intelligence to create value and change our lives," Liu told the Global Times.

So the four started their first company in 1980 in Chengdu, capital of Sichuan, which was to assembling and selling audio equipment.

"We worked well with the production team and already had produced a prototype, but the secretary of the people's commune said we were capitalists. He said no one could have a joint venture with the production team," Liu said the plan flopped.

Two years later, changes had taken place in the countryside - specialized households began to rise. Those households integrated specialized commodity production together with the family's regular economy, which enabled autonomy and allowed them to keep revenue for themselves.  

"If we couldn't do it in the city, could we be a specialized household in the countryside? We could plant vegetables, raise quails, pigs and chickens," Liu said. This time, their proposal was approved. 

Having scrimped and saved 1,000 yuan ($142) - 17,250 yuan today adjusted for inflation - to get the business started by selling watches, bicycles and even their family's belongings, the business was launched. 

By renting some land and raising chickens, pigs and quails, Liu said his "first pot of gold" came from raising quails. "We became the biggest quail breeding company in China," he said. 

However, the huge pressure Liu and his brothers bore was lack of funding. They borrowed money from relatives as banks at that time were reluctant to lend to individuals. 

At the end of their rope, Liu and his brothers had to borrow more from their relatives. But at the end of the year, they could not pay them back. 

"We were so anxious that we almost jumped into the Minjiang River [in southwestern Sichuan]. Finally, we bit the bullet and we sold all the newborn chickens so we could pay our debts," Liu said.  

Later, the company switched to livestock feed production, which makes a subsidiary of New Hope, New Hope Liuhe, still the biggest livestock feed production company in China today. 

Recognition for entrepreneurs

In 1993, the first entrepreneurs were selected to become members of the National Committee of the Chinese People's Political Consultative Conference and deputies to the National People's Congress. Liu was among the first cohort, and he was invited to deliver a speech at the Great Hall of the People in Beijing. 

Titled "There is hope for private enterprises," Liu said in his speech that at the time, many people were concerned about private enterprise: Do private firms have a future and hope? Are private firms doing any good? Should we have private firms? 

"I explained that I was an entrepreneur from the private sector and I don't see anything wrong in being among this group."  

In early 1992, late leader Deng Xiaoping had inspired the country as well as Liu, with the landmark speeches he gave on his Southern Tour, during which Deng visited manufacturing powerhouses in southern China.

"He [Deng] said that whether capitalist or socialist, development is the absolute principle. We should prioritize economic development as the central task. What was strongly advocated at that time was the private sector economy as a beneficial supplement to national economic construction, part of the socialist economic system," Liu said. When he gave his own speech at the Great Hall of the People the following year, Liu said he was deeply touched as he remembered Deng's words. 

The need to elevate the status of Chinese enterprises on the world stage was reinforced when in 1998, Liu attended the World Economic Forum, dubbed the Winter Davos, in Switzerland, a global gathering of world leaders and entrepreneurs. 

He found there were lots of politicians from different countries and business leaders from international enterprises, but only a few Chinese enterprises were represented. 

"What left an impression on me was that only about five languages were used at the forum and Chinese wasn't one of them. There were very few Chinese interpreters as well. It was difficult to communicate with other attendees since it was hard to find a Chinese interpreter," Liu said.  

Now the situation has changed. "At the Davos Forum, more than half the topics relate to China. Chinese people are everywhere. People talk about China, pay attention to China, and write about China. Many Chinese corporations attend the forum," he noted. 

Liu pointed out the number of Chinese firms that were listed on the Fortune Global 500 this year as evidence of the success of entrepreneurship in the country.

This year, 129 companies among the Global 500 companies are from China, 40 of which are private corporations, the Xinhua News Agency reported on September 26. 

"I'm very glad and proud that Chinese private firms have begun to gain a foothold globally," Liu said.  

In terms of the core values of entrepreneurship, he believes they are hard work, learning, being enterprising and taking responsibility.

By responsibility, he said his company should continuously work on its products. The essential requirement of food manufacturing is always to focus on quality. 

The company pays close attention to environmental issues and makes efforts to achieve win-win cooperation among its staff and across all their supply chains.

"These are all our responsibilities. And there is a broader sense of responsibility. We are actively involved in poverty alleviation initiatives, and contribute to public welfare deeds," Liu said.  

"The prosperity of the country relies on every enterprise and every sector of the society. When every 'cell' of society remains healthy and strong, the country will become strong," he said.

Zhang Dan and Li Sikun contributed to the story
Newspaper headline: Private ambitions

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