Putting His Best Foot Forward

Quick -- what is one of China's best-known new brands? No, not a low-tar brand of cigarette, a popular candy bar, nor a nifty new digital camera. Believe it or not, it's Liangzi, a nationwide chain of foot-massage shops. Their often plush interiors feature two-meter stone Buddha heads and curtained "opium beds," as well as, most important, legions of young foot masseuses who will expertly push your pressure points -- and all for a few bucks per hour. Liangzi Foot Bath Health & Fitness has taken the country by storm over the past few years, pulling in revenues of $18 million last year.

When 34-year-old founder Zhu Guofan was young, he certainly had no idea he would one day be a successful entrepreneur. Born to a poor farming family in rural Henan province, he never finished high school. His early career included stints selling ducks and chickens in an open air market in his hometown of Xinxiang, as well as running a roadside stand hawking barbecued meat sticks.

Then he noticed the popularity of the local foot masseuses, who worked in rundown shops, and decided to offer an upscale version of the service. After founding his first shop in February, 1997, he was bowled over by its instant popularity. "Every day, over 100 people came to the shop," says Zhu, still amazed at his success. "Back then I didn't understand the concept of a chain store -- but my brother-in-law suggested I open another shop," says Zhu, who sports a buzz cut and cites Haier Group's Zhang Ruimin and Lenovo Group Ltd.'s (LGHLY ) Liu Chuanzhi as brand-building role models.

Now Zhu has 430 shops -- two-thirds his own, with the rest franchised -- and he just opened his first overseas operation in Seoul. All together, Liangzi employs more than 20,000 young masseuses -- all specially trained at Liangzi massage school in Xinxiang in the ancient art of relaxing the client by hitting pressures points on the foot. Most of Zhu's workers hail from his home province of Henan and like him are from a rural background.

How did Zhu push his brand so far so fast? "We have almost never used television or newspaper advertising -- it hasn't been necessary. The way we build our brand is through word of mouth," says Zhu, as he sips Black Label whisky mixed with iced green tea and chain smokes Red Flag cigarettes. "Satisfied customers tell their friends."

Liangzi's success has brought challenges, however. Zhu estimates that there are scores of knockoff shops around China -- and most use the Liangzi name. Meanwhile, to get better control of his franchise, he is planning to reduce the number of shops from 400-plus to about 100 over the next couple of years. The shops will be larger, cleaner, and more efficiently run, he promises. "Many problems with quality have emerged. We are a service industry and the training of our people is most important," says Zhu. Despite that, Zhu still has big plans: Within five years, he estimates he will have 30 massage shops overseas, the majority of those in South Korea. By then, he figures, he will have doubled his revenues, to $40 million. Liangzi's profit margin is a fat 30%.

To further spread the word, Zhu every year sponsors the school fees of some 300 rural children. To promote the Liangzi image of healthiness -- a key attribute of his brand, says Zhu -- the broad-girthed Zhu spent 40 days walking from Shanghai to Beijing when his shops were shut down during the SARS outbreak. His latest publicity stunt: Zhu has just finished a 41/2-month bicycle trip from Beijing to Italy -- following in reverse Marco Polo's route. "My business is closely related to the health of the people," says Zhu, "and making a healthier China is a lifetime goal for me." Big ambitions for a country boy.

By Dexter Roberts in Beijing

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