BRUSSELS, May 3, 2013 (RISI) - Released in 2012, "New Fortune: Top 500 Rich List" shows the total wealth of the listed people in China is RMB 310.65 billion, accounting for 6.6% of the country's GDP in 2011. More than half of the people listed are more than 50 years old, and the question of inheritance has become an inevitable issue. This also applies to the private enterprises in the paper industry in China.
With many companies launched about 30 years ago, it is becoming time for the second generation to start taking over their fathers' business. The next generation is very different from their predecessors who put in much effort to build up the business and probably did not travel abroad much. However, their progeny have received good educations, many times attending school overseas. They tend to have a broader international view of the world. Still, some say that the younger generations lack experience and good judgment of the market that their elders possess.
In upcoming issues, PPI editors will talk to this second generation and give readers the true picture of the young generation in China. The idea is to discuss a serious theme such as sustainable development in a relaxed tone.
Door to door selling
Li Na, daughter of Li Hongxin, chairman of Sun Paper, is our first interviewee. Li Hongxin himself started Sun Paper by selling paper door to door from the back of his small motorbike just 30 years ago. Now, the company is producing close to 4 million tonnes/yr of a vast array of paper and board products, including liquid packaging board, electrostatic paper, coated graphic paper and copy paper. Sun Paper has around 15 subsidiaries and facilities.
After finishing her 12 years of study in the US, Li Na came to Sun Paper in 2011, and was promoted to vice president in January 2012. The bright, confident, energetic young lady is a profound thinker. She is full of passion and seems to be ready to take over responsibilities from her father. Meanwhile, she knows what she is still lacking and has started to accumulate knowledge and experience step by step.
"Equity", "respect", "innovation", "branding" and "sustainable development" were rarely heard in conversations with the elder entrepreneurs but were repeatedly mentioned during conversations with Li Na. It seems the paper business has a bright future.PPI: What is your current position and your responsibilities? Were you asked to do it or you wanted to take over the work?
Li Na: My current position is deputy general manager (appointed in January 2012), mainly in charge of marketing, sales (domestic and overseas), supply & procurement, logistics and operations of the subsidiaries in Hong Kong.
It was my choice to enter this industry. I often visited the company when I was a little girl and thought it was magic to see raw materials go into one end and paper come out the other! As I have grown up, I have come to gradually understand there has been a big change in paper production compared with the old days. I want to bring the message to the public through my own efforts, letting people know that the paper industry has become "greener". We can see harmonious growth in line with the nature.Which project are you most proud of since you took over the job, and what are the challenges?
Li Na: The proudest thing for me is to have a very devoted, united, practical and motivated team. Almost everyone is thinking about the company's interest, so they are doing an excellent job which I am proud of. I advocate team spirit and try to create a democratic and equal working environment with mutual respect where everyone is welcome to give his/her opinions.
As to the challenges I've come up with, there are three.
- First, to have more knowledge of the paper industry. I found it quite hard when I tried to communicate with customers and suppliers. I don't have a thorough understanding of the company's raw material procurement, production, and sales issues, though I know a bit about them. My father knows everything in this business, after all he gained his experience through the years, but I need time.
- Second, I need to learn how to manage my team and run the company in a modernized way. My major was international trading and science of law, with little management experience. Right now I do my work based on my own feelings and learn from my elders. As the world enters the era of the knowledge-driven economy, a company's fast development is actually the result of investment, technology, marketing, branding and so on, which demands a stronger management capability.
- The last thing would be to improve my proactive strategic thinking. People are trying to transform patterns of economic development in China. As Sun Paper. we are making strategic readjustments every year to adjust to the changing market, which will be a long-term strategic task. I believe there will be big changes in global economic patterns in 10 or 20 years, where the global paper industry will reach a new level and this means a new major task for me.
I studied in America from 1999 to 2011. In a relaxing and happy environment, my academic records were good. But before that when I was in China, I didn't do well, as the learning atmosphere was rather depressing and there were piles of homework and extra classes waiting for me. There was almost no hope for me to go to college.
I went abroad after finishing my first year in high school in China in May, 1999, and studied English from June to August in US that year. Then, I went to the 10th grade there. After just six months, I could understand what the local people were saying. I became very confident and prepared my lessons before class and paid close attention to what the teachers said. I didn't only focus on text books but also learned the pronunciation of teachers. I found the teachers very polite and respectful. The relationship between teachers and students is equal. In such a good atmosphere, I became happier and more eager to learn.
When I was in the US, I had the opportunity to study many subjects which we don't normally have in China, for example astronomy. I also learned how to play guitar, and some games, like basketball and hockey. This can help me to easily find common ground with customers these days. It is easier to become friends and cooperate.
Now I am putting the things I learned at school into my work, which is to make work happier and more efficient. I believe more ideas will come up in a relaxing working environment, which is good to employees and a company. So far, except for attending events in the paper industry, I also take part in forums in other industries, which helps my business.
In addition, Sun Paper is on the track of international development, so to absorb talent and to set up a professional management team is very important. We recruited many excellent professional managers who have an international view. We also invited my classmate in law school in US to join us. He has a PhD. degree in law and has good command of English, Spanish and Portuguese. As a Chinese private enterprise, I believe we are the first company to hire foreigners. To know one's capabilities and put him/her in the right position is the golden principle in modern days.China's paper capacity has witnessed fast growth in recent years. What's your opinion on this? What's the trend in the future?
In recent years, fast expansion in paper industry in China was due to higher domestic demand and technology improvements, which show clearly that China's economy growth is still strong. However, the global financial crisis caused by the European debt crisis brings a series of problems to China's paper industry, such as low demand, overcapacity on some paper grades, and cutthroat competition among companies, as well as declining profitability. This rings an alarm for Chinese papermakers, preventing them from undertaking blind capacity expansion. Expansions should be based on full comprehension of the market trend, government policies as well as competitors' movements.
With continuous development of China's economy and the gradual disappearance of the global financial crisis, excess capacity will be slowly absorbed and the market will be balanced. The Chinese paper industry will be more consolidated with small-sized enterprises falling out of the market. Paper grades will be diversified and will be high quality. The integration of forest-pulp-paper sectors will help Chinese papermakers secure raw materials. The future of China's paper industry is bright, with consumption in the country at only 80 kg/ capita, compared with Europe and America at 200-300 kg/capita.Can you please let us know the current status of PM 26 which just started up. What's your forecast of the market?
PM 26 is producing high quality cartonboard for food packaging, which is run by the joint venture with International Paper (IP), and it started up smoothly. The machine has a very low energy demand. It saves electricity and water as well as steam. The products were well received despite unfavorable market conditions, as customers think the quality is good. We have every confidence in the market.What's your thought of Sun Paper's development in recent few years? What are the future strategies?
Our thoughts on Sun Paper's development in recent years have been correct. It helps us stand out from other Chinese papermakers. In recent years, we sped up the structural adjustment of raw material and products, and are on a "go-global" pace, on the basis of technology innovations. Our company does not just want to be bigger using a lot of energy and resources. Instead, Sun Paper is focusing on technology innovation, management innovation and brand building. Sun Paper now is a low carbon user, intensive, recyclable and green paper manufacturer.
In 2008, we were among the first to recover from the global financial crisis and had a V-shaped recovery; with total revenue at RMB 10 billion ($1.6 billion). Only two years later, our total revenue reached RMB 20 billion ($3.2 billion). In 2012, we set another high record at RMB 30 billion ($4.8 billion).
We have prepared if there is a new financial crisis. We are having an unprecedented revolution in management: optimizing organizational structure and management process, with an aim to improving efficiency. I believe this will bring far-reaching effects to our sustainable development. Next, we will continue to improve our raw materials procurement and diversify our products. This would help us reduce risks and increase competitiveness. We will pursue acquisitions at home and abroad if the timing is right, with an aim to build Sun Paper into a top 50 world-class paper company.What do you learn from your father's generations? What are the main factors linked to their success or failure?
I realize that one's success is actually attributed to many different factors. I found there are six points that I can learn from my father's generations.
- Treat people in a sincere manner. It's important to be faithful, which is often told by my father.
- Always do one thing at a time, be down to earth and not to aim too high.
- Persevere: My father never gives up easily and likes to challenge himself.
- Fourth, be compatible. My father sees people's advantages rather than one's disadvantages and he is always put himself into other people's shoes.
- Good learning ability: Read when you have time. This helps my father form prospective strategic thinking and expertise about this business.
- Have a good employment mechanism. My father respects the people he hires and offers them a large platform to display their talents and explore their potential.
To me, my father is more like a builder. He built up a house and a garden and leaves me to amend it if necessary and to make it look even nicer. The foundation is steady, but things need to be changed to make it a better fit with current trends. My duty is to reform it properly, knocking down some walls, making the room bigger or building up a wall or changing the decoration.As the second generation in the paper industry in China, what do you think are the most burning questions to be solved in this industry? Are you ready to take over the responsibilities from your father?
To set up a new public image for this industry is the duty falling on the second generation's shoulders. I feel upset every time I see a slogan saying: "To save paper is to save trees". I sent out text messages to tell people that "use more paper, and we will plant more trees'. It's true that in China, some small paper mills do harm our environment and cause the public's misunderstanding about our industry. It's time for us to get together to tell the public and to change our image. Currently, most people think about expansion to catch up with the others. I can't say it is wrong, but it's time for us to let the public understand how low-carbon and green this industry is now. This is the recyclable sun-rising industry.
My father's pursuit was to build Sun Paper into a sustainable and respected world class company. Now it's also the goal for me and my brother. PPI
Special thanks to Liv Zhong, editorial assistant of PPI China who contributed to this article.
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