BUSINESSWEEK ONLINE: JULY 3, 2000 ISSUE|
Liu Yonghao (int'l edition)
How different Liu's outlook is today. The 48-year-old Liu is chairman of the $434 million New Hope Group, one of China's largest private companies. As many old state enterprises are being shut down and their workers laid off, private companies are becoming an ever more important part of China's economy. And entrepreneurs such as Liu are overcoming the years of prejudice that long relegated them to second-class status in socialist China. Indeed, Liu and business leaders like him are becoming the role models for Chinese young people.
Liu's is a tale of amazing perseverance. Despite being a good student in his village, Liu's future was waylaid by the Cultural Revolution, and so he spent three years tending pigs. Later, he was able to enter the Sichuan Machinery Industry Cadres Management School, a technical training school for college-age students and employees of state enterprises. After graduation in 1976, he was assigned by the school to teach electronics, making just $4.60 per month.
Dissatisfied with his meager lot and intrigued by the nascent economic reforms being introduced by Deng Xiaoping in the early 1980s, Liu and his three brothers scraped together $120 and formed a company. ''I realized the opening of China had begun,'' says Liu. ''So I thought we should grasp the opportunity.'' By 1989, they had a thriving business selling chickens and animal feed. Then, in 1995, the brothers split the company they called the Hope Group into four parts, with Liu taking charge of one subsidiary, the New Hope Group. The name was born of the Liu brothers' hope that private companies would be key to the future of China's economy.
It hasn't been an easy path. Deep-rooted discrimination against private entrepreneurs made it difficult for Liu to obtain loans or contracts for his company. He had a harder time because his business was focused on China's poor western regions. Doubting that his fledgling company would survive, officials were reluctant to deal with him. ''Before, private companies couldn't easily buy land or build factories,'' recalls Liu. ''Enterprises in western China found it even harder to get loans.'' But Liu had good timing: He was concentrating on the food market just as consumers began to have money to afford meat. New Hope was well placed for the boom in animal production and animal feed.
SELF-IMPROVEMENT. Now his company is a powerhouse. It has 46 feed and food-processing factories across southwest China and in Vietnam. It does property development in Sichuan and in the northeast China city of Dalian. And it is the biggest shareholder in the Beijing-based Minsheng Bank, China's first private bank. New Hope, which employs 6,800 people, has been profitable since it was founded, and revenues reached $434 million last year, up 14% over 1998.
Liu has worked hard to promote private enterprise. Six years ago, he organized Project Glory, a group of 10 private enterprises seeking investment opportunities in China's poorest western regions. Last year, Liu gathered in Beijing 41 entrepreneurs who all pledged to maintain good business practices, including paying workers on time and maintaining product quality. Liu also pleads the case of business in his roles on the Chinese Industry & Commerce Federation and a government advisory body, the Chinese People's Political Consultative Conference. ''Not only does the government need to accept private companies,'' he says, ''we must also must improve ourselves.''
Things could get even better for Liu. China is now pressing to develop the west and invest billions in infrastructure. New respect for the role of private business should also help. Chinese private companies now number over 1.5 million, up 20.5% in the past year alone, and employ more than 20 million people. ''Private companies are one part of the economy that can create social value,'' says Liu. ''The development of private enterprise will help the whole country.'' You can bet the onetime villager will keep broadcasting that message.
Kumi Sato (int'l edition)
Sato, 40, is the ideal messenger. Thirteen years ago, the Tokyo native returned from working as a McKinsey & Co. consultant in New York to take over Cosmo Public Relations Corp., a family business that was floundering after the death of her father. Undaunted by Japan's male-dominated business environment, the bilingual, bicultural Sato took a firm that mainly did publishing for Japanese blue chips and turned it into a full-fledged public-relations shop that specialized in helping foreign companies, such as United Parcel Service, enter the Japanese market. Sato altered Cosmo's corporate culture by hiring foreign employees and emphasizing merit over age or gender.
Along the way, Sato noticed that women she interviewed to be employees had the smarts but not the knowledge of business to succeed. The problems were obvious and long-standing: Japan's female workforce was hamstrung by a lack of role models, networking opportunities, and practical education. Women who quit careers to raise families usually lost them permanently and were isolated from information that could help them improve their personal lives or recharge their careers.
Womenjapan.com was Sato's solution. With $500,000 of her own money and $3 million from family and contacts in the U.S., she launched the site last September. Some 15,000 members have signed up. The site offers career counseling and advice on everything from finding a divorce lawyer to smart investing to securing capital to launch one's own company. Womenjapan.com earns revenue through advertising and consulting fees from companies trying to reach women, who are the fastest-growing segment of Japan's online population. Sato expects to turn a profit in three years.
Sato wants the site to be more than just a virtual playground. She wants to bring users face-to-face and has sponsored an awards ceremony for women with their own e-business plans, with $9,500 in seed money as the grand prize. An Osaka housewife who had a plan to help care for the elderly via the Internet won. Sato says womenjapan.com offers practical solutions rather than simple fashion tips, unlike the many Japanese women's magazines that ''treat women as an audience that's simply interested in consumption.''
Sato attributes her success to an achievement-minded family. In 1902, her grandfather stowed away on a ship to the U.S. and later returned to Japan to become education minister and speaker of the Lower House of the Diet. Her mother and role model, Taeko Matsuda, helped rebuild Japan after World War II and recently earned an engineering PhD at Tokyo University at age 72.
Sato attended an American school in Tokyo--her parents believed an international education and English fluency are crucial for the new generation of Japanese--and graduated from Wellesley College in the U.S. Today she still runs Cosmo. But womenjapan.com is where her heart is. ''Mission and business can coincide,'' Sato says. She's determined to make that happen for Japanese women.
Joichi Ito (int'l edition)
Ito is a rarity in the Japanese business world. He's bicultural, having spent his formative years in Canada and the U.S., where his father was a chemistry professor. A college dropout, he started Eccosys in 1994. It designed some of Japan's first Web sites and helped firms set up online operations. That was the start of a string of winning ventures: Eccosys grew into Digital Garage, a leading Web consulting firm. Ito also set up the Japan offices of PSINET, an Internet service provider, and portal Infoseek Japan, of which he is chairman.
Neoteny ''is not about personal gain,'' says Ito, ''but about encouraging a lot of good companies to bloom.''
Michael Mou (int'l edition)
Mou isn't toiling in obscurity now. The advent of the wireless Internet and booming demand for cell phones has made telecom equipment hot--and vindicated Mou's early bet on the sector. Nearly 10 years ago, he started making cellular phones using the GSM standard common in Europe and Asia. An original-equipment manufacturer for Motorola Inc., DBTel is one of the hottest Taiwan companies around. ''I have always said that the personal communicator could create the future of Taiwan,'' he says. His company's stock is up 330% in the past 12 months.
But he's also cautious, remembering that he came close to bankruptcy twice in the early '80s, when inventories got out of hand. ''They were very bad experiences,'' he says simply. As a result, Mou avoids debt as much as possible. Still, he is pushing aggressively to expand DBTel's production capacity--from 3 million handsets last year to 18 million this year. Says Mou: ''We are the pioneers.''
ONLINE ORIGINAL: A Chat with Michael Mou
Jaime Augusto Zobel de Ayala II (int'l edition)
One example is his success at the family's Globe Telecom, which he has built into a winner in the Philippines' brutal cell-phone wars. Globe had mostly wallowed in losses since its founding in the early 1990s. But last year, it saw profits surge fortyfold, to $22 million on sales of $222 million. New subscribers are signing up at a rate of three per minute, triple last year's pace. Globe now expects to overtake Philippine Long Distance Telecommunications Co., the troubled former monopoly, to become the leader in cell-phone subscribers by the end of the year.
To revive Globe, Zobel de Ayala shook up management, acquired a smaller mobile carrier, created a nationwide digital network, and pushed customers to use prepaid cell-phone cards--thereby eliminating the bad-debt problem plaguing other operators. Most importantly, Zobel launched a wildly popular text-messaging service that has Filipinos sending 18 million messages to one another every day.
Zobel de Ayala also made an important acquisition for the family banking business: He engineered the takeover of Far East Bank & Trust Corp. The purchase, done along with the Development Bank of Singapore, adds to the Ayala group's already powerful Bank of the Philippine Islands. Zobel de Ayala has also been pushing the group to embrace the Internet and bring its telecom, property, and banking operations together online.
When not busy with day-to-day management, Zobel de Ayala is an avid environmentalist. He's a board member of the World Wildlife Fund in the U.S. And--as a snorkeler in a family of divers--he has campaigned to save the Philippines' spectacular coral reefs, imperiled by dynamite, cyanide, and other destructive practices used in fishing. Watch for more bold actions on behalf of his family's centuries-old business.
N.R. Narayana Murthy (int'l edition)
Now, Murthy is working to make Infosys as respected around the world as it is at home. Last year, he handed over daily management of Infosys to co-founder Nandan Nilekani. Murthy spends half his time traveling the world, meeting customers, investors, and even students. The U.S. is very competitive, so ''we have to increase our brand equity there,'' says Murthy. Infosys' U.S. customer base doubled last year, to 200 clients.
Murthy, a humble engineer from southern India, is in some ways too shy for his role as model and statesman. He doesn't like to talk about it, but he gives away untold millions of dollars in gains from the Infosys stock he sells when prices rise, mostly to benefit higher education in India. This year, he was awarded one of India's highest civilian awards, the Padma Shri, for his contribution to the IT industry. Murthy sits on a Prime Ministerial task force on developing technology, which he says is the key to eradicating India's poverty. ''If technology is to reduce costs, to improve production, who needs these more than the poor?'' he says.
Despite the phenomenal rise of his fortunes, Murthy retains his modest ways. He still does a full day's work and then some, but these days he allows himself one indulgence. Instead of arriving at his Bangalore office at 6 every morning as he has for years, Murthy now starts at 7 a.m.
ONLINE ORIGINAL: A Chat with N.R. Narayana Murthy
Hiroshi Mikitani (int'l edition)
Turns out he was right. Rakuten ranks as the largest and most popular shopping destination on the Japanese-language Web. And Mikitani is one of the brightest stars to emerge on Japan's fledgling Internet stage. Millions of consumers log on daily to the electronic marketplace to buy everything from fresh fish to insurance to toys from stores that don't have the money or inclination to set up their own network and operate a Web site. In April, when Mikitani took Rakuten public on Jasdaq, Tokyo's over-the-counter market, it was the most successful debut by a Net company in Japan this year. Rakuten, which is 50%-owned by Mikitani and his family, raised $430 million in the offering. The company's market cap has since soared to $6 billion. Many of Japan's other newly listed e-ventures, by contrast, have seen their share prices plummet during the recent sell-off in technology stocks.
Mikitani, who dresses casually in polo shirts and khaki pants, has an easygoing manner. But don't be fooled: He's a workaholic driven by ambition. With his wife at his side, he works 15 hour days, often six days a week. And apart from the occasional round of golf, he has no hobbies. His aim is to create Asia's biggest consumer shopping and trading destination. He's managed to build up Rakuten from 13 vendors to more than 3,100, who all pay him a monthly fee. The site attracts some 70 million page views a month, second only to Softbank's portal, Yahoo! Japan. Operating profit in the first three months of this year reached $1.9 million on sales of $4 million, nearly reaching the total of Rakuten's profits and sales in the whole year of 1999.
If not for a stint at Harvard Business School, where he earned an MBA in 1993, Mikitani might still be an investment banker at the staid Industrial Bank of Japan. During his bank-sponsored years at Harvard, he learned about the challenges of running a business and took note of the rise of Net startups in Silicon Valley. Mikitani was shaped by U.S. culture well before his Harvard days. As a child, he lived for two years in New Haven, Conn., where his economist father taught at Yale University.
Upon graduation from Harvard, Mikitani returned to the IBJ where he worked for two years and saved enough to launch Crimson Group, a merger-and-acquisition consulting company he still operates today. In 1997, he plowed his savings into Rakuten, which so far has remained debt-free. ''I wanted to set up a real Internet business, a model for other startups in Japan to follow,'' says Mikitani. He's on his way.
Li Ka-shing (int'l edition)
Reflecting his roots as an immigrant from China, Li lives modestly--though he's stepped up security since his eldest son was kidnapped four years ago. Bodyguards now shadow him. A believer in feng shui, Li redrew the plans for his 70-story Cheung Kong Center so that it wouldn't be affected by the angular Bank of China building, which stands menacingly next door. Li's corner office commands one of Hong Kong's most stunning views. ''The money flows in, and it's captured here,'' he told another tenant in the building. Indeed.
Masayoshi Son (int'l edition)
Even though Softbank's shares have fallen 70% since mid-February, they are still up fourfold over the past 14 months. One reason is Son's strategy of placing hundreds of tiny bets on a whole range of new technologies, instead of seeking a controlling interest in a few. ''On the Net everything moves so quickly, so you have to do things differently,'' says the 42-year-old ethnic Korean billionaire who grew up dirt-poor in southern Japan and now lives in a palatial home in central Tokyo. Son's strategy, while still unproven for the long haul, has become a model for investors around the region.
Richard Li (int'l edition)
A favorite of Hong Kong's gossip masters, the unmarried Li creates headlines simply by going to the barber.
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