Feeding success

In 1995, Forbes magazine put out its first China "rich list", and the Liu brothers, who established China's largest feed company, began to be known as the richest Chinese. In the same year, Jin Weidong, 31, also started his own feed company, but he says he didn't do it for money.

Jin says that he actually got poorer when the business began. He already held a senior position in a foreign feed company based in South China, earning $5,000 a month. By making the decision, he had to quit the job and leave Shenzhen, one of the most cutting-edge cities in China, for his hometown Shenyang, a less well-known city in the northeast of the country.

However, his company, Wellhope Agri-Tech Co Ltd, has since achieved sales of 3.5 billion yuan by the end of 2007, and Jin estimates that the sales will go up by over 30 percent to 5.5 billion yuan this year.

This year Wellhope is expected to sell 1.8 million tons of animal feeds. That makes it the largest feed company in northern China, and one of the top five feed companies nationwide.

Furthermore, Shenyang is no longer Wellhope's only base. After over 12 years of expansion, Wellhope now has over 15 factories throughout China. It has also set up mills in neighboring countries, including Nepal, Vietnam, and the Democratic People's Republic of Korea.

Jin now works in Beijing, and he takes his new home as a sign of the success of his strategy in the early days, when instead of creating a business in big cities, he focused on less-developed northern China. He says he gave up the comfort of big city living to concentrate on regional areas because it is easier to start from a less competitive market. He says he knew some day, "when we got strong enough, we would be back".

In the 1980s, China's feed industry was dominated by foreign companies. Most domestic feed makers at that time were State-owned companies under the grain administrations of different government levels. Feed at these State enterprises was made from poor quality grain, he says.

"Only second-class grain was used to make feed, and only second-class people were in the feed business," says Jin.

As a result, the domestic feed industry lacked incentive and the technology the enterprises used fell behind. When the market was opened up, foreign enterprises entered and soon dominated the market. "In any province, the biggest and best feed company was a foreign enterprise," Jin recalls.

He was working for one of these enterprises back then. With a master's in animal physiology and biochemistry, he had worked as a sales manager in several foreign enterprises including Chia Tai Group and Conti Feed Group after working two years as a university lecturer.

Jin was diligent and smart enough to get a quick promotion. By 1995, he had become the assistant for the Asia general manager of Conte, the US feed giant, a rare position for a Chinese citizen. Though the white-collar job enabled him to live a decent life, it did not satisfy his ambition.

"When I worked at these enterprises, I felt that business is really miraculous and that there are rules to follow to create wealth," says Jin. But on the other hand, he felt bad as a Chinese to see that the market was controlled by foreign enterprises. He thought with professional training and proper technology, it would be possible to create a company and compete against the global feed giants

So in 1995, Jin quit his job and invited six friends, all of whom were also working at foreign feed companies. Jin says most of them had worked as sales managers, and they understood the market. The team also had tech-savvy partners, including the youngest PhD in animal nutrition in China at the time. With their combined talents in marketing and technology, Jin felt that they could make a good team and invited them to join him to start a business.

Jin says some of them replied immediately, but the most reluctant was Shao Caimei, the only woman among the seven. Shao was a good technician, and according to Jin, one sixth of China's feed companies make products using a prescription created by her, which meant more than 2,000 feed mills were using her work.

"For many clients, she is the one that could determine everything," says Jin. But when Jin decided to invite her, Shao was also a new mother, and she worked in Beijing.

Determined to enlist her, Jin visited her nearly 10 times, finally bringing her on board. "I told her that we could not give her anything, but we needed her and she would make our business possible." Although Jin could not offer Shao higher pay than her old job, she went to Shenyang eight months later and is still there.

Jin says Wellhope's focus on technology is its biggest asset. China has around 1,500 feed companies, but most are small and the technology is relatively simple.

Jin says his company employs the best talents in the industry. The average profit rate for the feed industry in China is 2 percent, but Wellhope manages to make it as high as 5 percent.

As the company has developed, Jin has tried to lure more top talents, as he did in the early days by sharing his own wealth.

All the original six members were shareholders. And in 2000, the number of shareholders went up to 20. Now there are 50. Jin says he persuaded shareholders to spread their wealth with more people in order to grow the business.

"It is true that we are still a private company, but we have the characteristics of a public enterprise," says Jin, adding that he'd like Wellhope to be listed on the stock market in two to three years to make it a real public company.

The fast development has also made Wellhope a target for mergers and acquisitions by larger enterprises. But Jin says he has refused all offers, including one from Liu Yonghao, owner of China's largest feed company, New Hope. (His brother Ling Yongxing runs East Hope feed company.)

"Mergers and acquisitions have to happen between strong and weak enterprises," says Jin, "but we are both strong. Although they are bigger in scale, we have the best expertise in the feed business."

Meanwhile, Wellhope is also expanding with its own series of mergers and acquisitions.

Jin says over 90 percent of the current feed companies will be pushed out of the market, and he wants to expand Wellhope's share. The goal, says Jin, is to develop into the third largest feed company in the country with an output of 5 million tons a year by 2013.

(China Daily 09/15/2008 page12)