Growing up poor as the son of a village official and his schoolteacher wife in the western China province of Sichuan, Liu Yonghao's big goal was getting a new pair of shoes and a bicycle. In his hometown of Xinjin, the best job he could imagine was becoming a factory worker, a profession held in high esteem in Mao's China. At least then, he figured, he would have enough food and clothing.
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.