Summary of Key Points
This article highlights that the values of state-owned enterprise (SOE) entrepreneurs are a core competitive strength for the long-term and healthy development of their companies, using real examples from firms such as China Resources, China Overseas Property Development, and Baosteel. It emphasizes that outstanding SOE entrepreneurs—like Fu Yuning, Ning Gaoning, Sun Wenjie, and Li Ming—adhere to principles of integrity, honesty, self-restraint, and accountability. These individuals do not seek short-term profits or personal luxury; instead, they focus on sound business practices that enable their companies to remain stable through economic fluctuations and even become industry leaders. The article calls for society to recognize and appreciate the spiritual wealth of these entrepreneurs, arguing that values of integrity and righteousness are crucial for the enduring success of SOEs.
Detailed Explanation
1. Values as the Corporate “Moat”: Why Has China Resources Property Become the Largest in Market Value?
China Resources Property has become the largest real estate company in mainland China despite market fluctuations, not through aggressive expansion but due to its values of self-restraint. Fu Yuning implemented two key systems at China Resources:
- Compensation Discount for SOEs: Given the advantages of state-owned status (access to resources and reputation), managers’ salaries were reduced by more than 5% compared to market standards (for example, if the industry salary is 1 million yuan, China Resources would pay 950,000 yuan).
- Capital Cost Constraints: The use of group funds (capital and loans) was treated as a cost, and profits had to exceed this cost to be considered genuine (for instance, with a 1-million-yuan investment and a 50,000-yuan cost, the company needed to earn at least 60,000 yuan in profit).
These seemingly strict measures prevented reckless spending and waste. When the real estate bubble burst, other companies failed, but China Resources survived and even saw its market value soar.
2. “Decent Living” Is Not Luxury: The Importance of Managers’ Self-Positioning
Ning Gaoning and Fu Yuning set standards for a “decent life” for their managers—enabling them to live in good homes, drive good cars, and send their children to quality schools—but without pursuing luxury items like private jets or yachts. Fu Yuning said, “If you want a private jet, leave China Resources.” Ning Gaoning put it this way: “The company is the ox; the investors are the owners, and we are the herders—while the ox isn’t ours, we must take good care of it.”
These standards helped managers resist greed and vanity, preventing them from misusing company resources for short-term gains. For example, Fu Yuning insisted on managers paying any unpaid taxes, even if it meant offending some people; Ning Gaoning emphasized that self-discipline comes from understanding one’s own responsibilities.
3. The “Puritan” Who Rejected a 100-Million-Yuan Annual Salary: How Resolute Is Sun Wenjie’s Commitment?
Sun Wenjie, the founder of China Overseas Property Development, led a life of abstinence (no smoking, drinking, mahjong, golfing, or romantic entanglements). After 20 years in Hong Kong, he declined an offer of a 100-million-yuan annual salary from a private real estate company, saying, “I was trained by the Party; I want to continue contributing to the country.”
He was also strict with his subordinates: if a leader left immediately after a flight to play golf, employees would follow suit and possibly engage in wasteful behavior. China Overseas Property’s culture focuses on quality products and value for money, avoiding flashy public relations. Its current market value ranking second among mainland Chinese real estate companies reflects this approach to “sunlight profits.”
4. Integrity Is More Important Than 300 Million: Why Did Baosteel’s Li Ming Succeed?
Before the steel price reform in 1993, delaying deliveries would have allowed Baosteel to earn an extra 300 million yuan, but Li Ming chose to deliver on time. The following year, when steel prices dropped, companies that delayed delivery suffered losses, while Baosteel’s integrity earned it more customer trust. Another example: When a Korean company criticized Baosteel’s product quality, Li Ming published the criticism in the company newspaper, which led to a renewed order from the client.
Li Ming believed that short-term gains mask problems; only by facing criticism head-on and maintaining integrity can one achieve long-term success. This is in contrast to many companies today, which try to cover up flaws. Baosteel’s approach 30 years ago demonstrated a higher level of moral integrity.
5. The Spiritual Wealth of SOE Entrepreneurs: Why It Matters
The authors mention that these entrepreneurs (Fu Yuning, Ning Gaoning, Sun Wenjie, Li Ming) may not be well-known to the public, but their values have contributed to the enduring success of their companies. Their common traits include:
- Not blaming external factors but focusing on internal improvements.
- Not pursuing personal wealth at the expense of the company’s interests.
- Adhering to ethical and honest business practices.
The article suggests that the State-owned Assets Supervision and Administration Commission (SASAC) should explore these stories, as they can not only improve SOEs but also positively influence the broader business environment. When arbitrage opportunities disappear, values of integrity and honesty become the true differentiators for entrepreneurs.
Final Conclusion
While innovation and capability are essential, in the long run, values of integrity, honesty, and self-restraint are what enable companies and entrepreneurs to succeed and stay stable. The spirit of these SOE entrepreneurs is worth learning from by all in the business community.