Client 1: Zhang Yin

INTERNATIONAL HERALD TRIBUTE: Business

China's 'Queen of Trash' finds riches in waste paper

by David Barboza
15 Jan 2007

HONG KONG: Just five years ago, Zhang Yin and her husband were driving around the United States in a used Dodge Caravan minivan, begging garbage dumps to give them their scrap paper.

She and her husband, who was trained as a dentist, had formed a company in the 1990s to collect paper for recycling and ship it to China. It was a step up from life in Hong Kong, where she had opened a paper-trading company with $3,800 to cash in on China's chronic paper shortages.

"I remember what a man in the business told me back then," Zhang Yin said. "He said, 'Waste paper is like a forest. Paper recycles itself, generation after generation.'"

Zhang took that memory all the way to the bank. As a result of her entrepreneurship, she is now richer than virtually any other woman anywhere in the world, including Oprah Winfrey, Martha Stewart, and the chief executive of eBay, Meg Whitman. Her personal wealth is estimated at $1.5 billion or more.

Her companies take heaps of waste paper from the United States and Europe, ship it to China and recycle it into corrugated cardboard, which is then used for boxes that are packed with toys, electronics and furniture that are stamped "Made in China" and then often shipped right back across the ocean to Western consumers.

After the boxes are thrown away, the cycle starts all over again.

Late last year, Forbes magazine named Zhang the wealthiest woman in China. She may even be the richest self-made woman in the world, challenging a handful of others, like Giuliana Benetton, who started the Italian clothing company with her brothers, and Rosalia Mera, who co-founded Zara, the Spanish clothing retailer, with her former husband.

Most of the world's richest women inherited their wealth: from the Walton sisters of Wal-Mart fame to the daughters of the men who created Mars candy bars, L'Oréal cosmetics and BMW.

But not Zhang. She started out from a modest background, the daughter of a military officer. Now she dominates the world's paper trade through her giant companies, one centered in Dongguan, just outside Hong Kong, and the other based in Los Angeles.

"She's a visionary," said Herman Woo, an analyst at BNP Paribas, which helped her large paper company list shares in Hong Kong. "She doesn't mind putting a lot of money in at the beginning, to build the company."

That company, Nine Dragons Paper, is now the biggest paper maker in China. It raised nearly $500 million when it went public in Hong Kong last March.

Since then, shares of Nine Dragons have quadrupled, giving the company a market value of more than $5 billion. The Zhang family controls 72 percent of the company, which makes it one of the richest families in China.

Zhang's smaller venture, America Chung Nam, which is based in Los Angeles, is one of the world's biggest paper trading companies, with ties to recycling yards in New York, Chicago and California.

No other U.S. company sends so much material to China, in as many containers, as America Chung Nam, which was named the top U.S. exporter to China by volume for the fifth consecutive year in 2005, according to Piers Global Intelligence, which tracks import and export data.

Now, with the paper industry shifting to China, where labor and land are cheaper, Zhang and Nine Dragons are vowing to take on the world's global paper giants, like International Paper, Weyerhauser and Smurfit Stone.

"My goal is to make Nine Dragons, in three to five years, the leader in containerboards," Zhang said emphatically during a short interview in her Hong Kong office. "My desire has always been to be the leader in an industry."

Zhang rarely grants interviews, and when she does, they are brief and controlled by an army of handlers.

Zhang does not go into detail about how she made her fortune. In a society known for close ties and hidden deals between government officials and business leaders, she says simply, "I'm an honest businesswoman."

Zhang was the oldest of eight children born into a military family from northern Heilongjiang Province, near the Russian border. During the Cultural Revolution, which began in 1966, her father was sent to prison, like millions of others who were branded "counterrevolutionaries" or "capitalist roaders."

When the Cultural Revolution came to a close in 1976, her father was released from prison and "rehabilitated." She went to work as an accountant.

After economic change got under way in China in the early 1980s, she moved to the southern coastal city of Shenzhen, one of the first areas in China allowed to experiment with capitalism. There she started working for a foreign-Chinese joint venture paper trading company.

In 1985, she ventured to Hong Kong, which was then still a British colony. Ng Weiting, who was her partner in Hong Kong in the 1980s, says Zhang was driven and tough and had figured out how to get the best performance out of those who worked for her.

"When her employees asked for a pay raise, she would grant it if it was reasonable," he recalled. "But when her employees made mistakes, she would criticize them severely. She made it clear when to reward and when to punish."

Analysts say Zhang's ebullient personality made her a great saleswoman and a savvy deal maker.

There were occasional threats from competitors, but being a woman was not a problem, Zhang said.

"Actually, I didn't find it difficult," she said. "I found men respected me."

After Hong Kong's paper market proved too small for her ambitions, she moved to Los Angeles in 1990 and married for the second time, to Liu Ming Chung, who was born in Taiwan, grew up in Brazil and is fluent in English.

Together, they formed America Chung Nam. At the time, China's fast- growing economy was suffering from shortages of raw materials, and the country began looking overseas for scrap metal and used paper. Zhang Yin was one of the first to sell scrap paper to China.

China's own paper products are poor quality, often made from grass, bamboo or rice stalks. Most paper made in the United States and Europe is derived from wood pulp.

America Chung Nam quickly made deals with American scrap yards and began shipping huge containers of paper back to China. The demand grew so fast that in 1995, Zhang (who also goes by her Hong Kong name, Cheung Yan) returned to China to found Nine Dragons, opening her first paper making facility in Dongguan, a major manufacturing hub in the bustling Pearl River Delta region near Hong Kong. Liu now is the chief executive; Zhang is the chairwoman.

A decade later, the company has 11 giant paper making machines, 5,300 employees, $1 billion in annual revenue and a huge new facility under construction in the country's other booming export hub, the Yangtze River Delta area near Shanghai. Reported profit last year rose 349 percent to $175 million.

Nine Dragons is now one of the fastest growing paper companies, and yet it says it cannot keep up with demand for container board, the material used to make boxes, because of the booming growth in the Chinese economy and exports.

Foreign paper companies have been slow to build a sizable manufacturing base in China, Analysts doubt they will catch up any time soon. And Chinese manufacturers have advantages. They burn cheap coal rather than clean but expensive natural gas. And they are capitalizing on less expensive labor and the newest machinery, while paper makers in the United States and Europe are often using less efficient machines from the 1970s and 1980s.

"It's very difficult for U.S. companies to get into this business now," said Woo at BNP Paribas. "I heard five or six years ago they looked at opportunities but they didn't do anything.

"Right now," Woo added, "the largest globally is Smurfit Stone. Weyerhauser is No. 2. By 2008, Nine Dragons could be No. 1."

Analysts have been nearly unanimous in their praise of Zhang, though she came under some criticism for appointing her 25-year-old son as a nonexecutive member of the Nine Dragons board of directors.

But Zhang vigorously defends the appointment, saying her son is qualified and Nine Dragons is, after all, a family company. She has a second son in high school. And her younger brother, Zhang Chang Fei, is the company's deputy chief executive.

Zhang jumped to No. 5 this year in the Forbes ranking of the wealthiest people in China, from No. 107 last year, largely because of the huge public stock listing.

She has not lost her ambition, though. Sometimes called the Queen of Trash, she doesn't disown the title. But, she said, "Some day, I'd like to be known as the queen of containerboards."

Client 2: Carlos Slim

Carlos Slim is the richest man you've never heard of

An interview with Mexico's Carlos Slim

by Chris Hawley
Mexico City Bureau
May. 30, 2007 12:00 AM

MEXICO CITY - Carlos Slim Helú's business career began on the playground, trading baseball cards.

He would buy the adhesive-backed paper cards at a candy stand in downtown Mexico City, then make a meticulous record of each trade in a ledger notebook, carefully evaluating whether he had come out on top in deals with his peers.

By age 12, he had moved on to trading stocks and bonds. Before turning 30, he owned a soft-drink company and a stock brokerage. Now, at 67, Slim is the world's second-richest man and is closing quickly on Bill Gates, according to Forbes magazine's most recent rankings. Slim's business empire stretches from Mexico to the United States - it includes major stakes in companies such as CompUSA and Saks Fifth Avenue - yet most Americans have never heard of him.

Slim accumulated his $53.1 billion fortune by collecting companies in much the same way he did baseball cards. He searches for businesses that are undervalued, infuses them with cash and uses the size of his holdings to overwhelm the competition. He now owns stakes in more than 220 businesses but says he has never forgotten the lessons of his youth.

"Buying well is a discipline," he told The Arizona Republic in a rare interview, noting that trading cards was "the first type of business negotiation you do as a child."

"There were always doubles, so you traded them with the other boys, the difficult ones to get and the easy ones. Some boys had a few and some had a lot."

These days, Slim has a lot. His wealth has caused some resentment in a country where 40 percent live in poverty and thousands emigrate each year to seek opportunity in the United States. Both the U.S. and Mexican governments complained recently that Mexico's economic growth is stunted because large conglomerates such as Slim's have too much control.

From the minute many Mexicans are born - perhaps in one of Slim's Star Médica Hospitals - they begin putting money in his pocket. They use electricity carried by Condumex brand cables, drive on roads paved by the CILSA construction company firm and burn fuels pumped from Swecomex drilling platforms. They communicate through Telmex phone lines, smoke Slim's tobacco, which is sold under the Marlboro brand, and shop at Sears Roebuck of Mexico, a subsidiary of his huge Carso Group.

"It's hard to live a day without buying one of his products," Sandra Morales, 31, said as she ate lunch in the Plaza Insurgentes shopping center - a property owned by Slim - in Mexico City. "He's so rich and powerful and in a country where there are so many poor."

Slim says that he is held to a double standard because he is Mexican and that many U.S. companies such as Microsoft, Boeing and Intel enjoy similar dominance of their sectors. During a two-hour interview in Spanish in his Mexico City office, Slim puffs a cigar and offers similarly strong opinions on everything from Mexico's future to Bill Gates' charity efforts.

A love for numbers

A widower, Slim spends most of his time in a relatively modest, second-story office above a branch of his Inbursa Bank. He keeps a buzzer on his desk to summon assistants, who cater to his numerous and varied whims.

Slim's many obsessions still include baseball. His favorite team is the New York Yankees. Sitting at his desk, he pulls out a notebook with a treatise he is writing, purely for pleasure, on Barry Bonds' statistics.

"I like numbers," he said. "Words speak to some people; to others of us it's numbers."

Slim says he inherited his drive from his father. Julian Slim Haddad was a Maronite Christian whose family left Lebanon when he was 14 to escape persecution by the Ottoman regime. Julian Slim opened a general store, called the Star of the Orient, in Mexico City just as the violent Mexican Revolution was beginning to sweep the country in 1911.

It was the elder Slim who forced Carlos and his siblings to keep ledgers of their allowances and expenses.

"Carlos: remember that all assignments given to you must be done on time, quickly, in much clearer letters and without erasures. If not, I'm going to deduct from your allowance," says a note in one of the ledgers, which Slim still keeps on his office bookshelf.

Slim also adopted his father's penchant for profiting during crisis. During the 1980s, when Mexico's economy buckled under a debt crisis and other businessmen scrambled to get their money out of the country, Slim snapped up stock at fire-sale prices. He bought controlling stakes in the Sanborn's chain of restaurants and department stores, a tire company, hotels, paper mills and more.

Soon after, in 1990, Slim made one of his most controversial purchases.

The Mexican government was auctioning off several state-owned enterprises, including Teléfonos de México, the state-run telephone company, also known as Telmex. Slim and his partners, France Telecom and Southwestern Bell, beat two other groups of bidders. The consortium paid $1.76 billion for a 20 percent controlling stake.

Since then, the market value of Telmex stock has rocketed from $7.39 billion to $41.2 billion. The company owns about 90 percent of Mexico's phone lines.

Members of the opposition Democratic Revolutionary Party alleged that Slim underpaid for Telmex and demanded that then-President Carlos Salinas de Gortari be impeached for negligently selling Telmex at less than market value. A congressional committee, controlled by Salinas' party, later found no evidence of wrongdoing, but suspicions linger in Mexico that Slim curried favor with Salinas to win the auction.

Slim says he won Telmex because his offer was better - about 8 cents more per share than the next bidder, according to the government.

"A lie repeated many times begins to be believed," Slim said. "We won because we paid more."

Integrating an empire

After acquiring Telmex, Slim's net worth increased dramatically. He integrated his companies so they did as much business as possible with each other. At the Carso Group, the holding company for many of Slim's investments, Rule No. 6 on the list of 10 corporate principles is: "Money that leaves the company evaporates."

The domination of large Mexican conglomerates such as Slim's chokes off growth of smaller companies, says Celso Garrido, an economist at Mexico City's Autonomous Metropolitan University who studies Mexico's business dynasties.

The resulting shortage of good jobs drives many Mexicans to seek better lives in the United States, says Roderic Ai Camp, author of Mexico's Mandarins, a book about the country's power elite.

Even Slim compares his business model with that of another company often accused of monopolistic practices: Wal-Mart.

"If Wal-Mart invests a billion dollars and others invest $100 million, Wal-Mart is going to grow more. So if we invest $2 billion a year over many years and others invest $500 (million) or $100 million, it's illogical for them to have the same size as us," Slim said.

Along with Telmex, Slim controls América Móvil, the world's fifth-largest cellphone company with 124 million customers in 15 countries. In the United States, he controls Tracfone, a pre-paid cellphone company that claims 8 million customers.

Slim's holdings, in business and beyond, are now so vast that he sometimes loses track of what he owns. Yet, the small boy with the ledger notebook still surfaces from time to time. While speaking in his office, Slim impulsively decides he needs to know the value of his necktie, which was lying on a chair nearby.

He stabs a button on his intercom, reaching his assistant, Silvia Esparragoza.

"Silvia, how much do these ties cost there in Sanborn's?"

"Those ties cost, on average, 481 pesos," she replied.

"About 43 dollars," Slim said, figuring the exchange rate in his head. "Is that with tax?"

"Yes, with tax," she said.

"On sale or not on sale?"

There was silence from the intercom. "Um, I don't remember," Esparragoza said.

Looking disappointed, Slim flips the intercom off. "The tie is from Sanborn's, but the shoes I buy from Saks, which isn't my store," he said.

Then he corrects himself.

"Well, we're partners, but it's not my store," he said, smiling.

In fact, the Slim family is Saks' biggest shareholder, with 17.4 percent of the U.S. company's shares.

Riding Mexico's market

Slim's fortune has surged in recent months - by at least $23 billion since February 2006, Forbes says - primarily because of his holdings in Mexico's booming stock market. The market is up 58 percent in the past year as large corporations have posted robust earnings.

As Slim's wealth has grown, so has the criticism.

Business groups regularly complain about Telmex's business phone rates, which are more than twice as high as in the United States. In April, U.S. Treasury Secretary Henry Paulson said Mexico would benefit from more competition. Mexican President Felipe Calderón pledged in April to make it easier for companies to enter the telephone market.

Slim came under fire again last June, when Bill Gates announced he would retire from Microsoft in 2008 to devote his time to his Bill and Melinda Gates Foundation. Days later, Warren Buffett - whom Slim recently passed in the Forbes wealth rankings - announced he would donate most of his $52.4 billion fortune to Gates' foundation.

"The fact that Bill Gates and Warren Buffett are channeling the majority of their fortunes to philanthropy exposes Slim's passivity," wrote Jorge Zepeda Patterson, a respected Mexican columnist.

"Instead, we Mexicans continue donating 'philanthropically' to Telmex's finances, thanks to its extraordinary rates and profit margins."

In March, Slim pledged to inject $6 billion into his three charitable foundations - the Carso Foundation, the Telmex Foundation and the Condumex Foundation for History Studies - over the next four years, for a total endowment of $10 billion. He also plans a new building for his Soumaya Art Museum, named after his late wife that is aimed at exposing disadvantaged Mexicans to European art.

But he says his most important pursuit is a new, for-profit venture called the Latin American Development and Employment Generator, or IDEAL for its acronym in Spanish. The company will build infrastructure projects - dams, hospitals, universities and toll roads - and, in many cases, operate them at a profit. Slim says such projects would create more jobs than charity projects undertaken by Gates and Buffett.

Slim says overall, he's optimistic about Mexico's future. He says Mexico's economy soon could begin growing at a rate of 5 percent a year - about twice the average rate so far this decade - enough to generate more jobs and discourage as many Mexicans from emigrating.

What Mexico needs most, he said, is better education, especially in engineering, and more investment in machinery.

Meanwhile, Slim has begun passing day-to-day control of his companies to others, including his three adult sons. He rolls his eyes when asked how he would like to be remembered.

"I think they must teach that question in school, because they always ask me that," he said.

Slim's own companies employ 218,000 people. Ensuring that those companies are strong may be his most important contribution to Mexico, he says.

"When I die, I'm taking nothing with me," Slim said. He taps a balance sheet that shows the increasing value of his companies. "Everything I'm leaving is right here."

Reach the reporter at chris.hawley@arizonarepublic.com.

Client 3: Ratan Tata

India not thinking big enough: Ratan Tata

by Sindhu Bhattacharya
Friday 25 May 2007
05:43 IST

NEW DELHI: The jury may be out on whether India can achieve the all-important 10% gross domestic product (GDP) growth target anytime soon, but India Inc’s most prominent face - Ratan Tata - is clear that “we, as a country, are not doing enough to reach this landmark”.

Speaking at the concluding session of the CII National Conference and Annual Session, Tata was categoric. “India is not thinking big enough, not taking bold steps,” he said when asked about the possibility of touching the 10% mark.

And, as if this was not indication enough of where our policy makers are lagging, Tata said that compared to the targets India has been setting for itself, China seems to be leaping ahead due to its risk-taking ability.

“Take the example of tourism. Why don’t we, as a country, set our sights on a target of 10 million tourists by 2010? We think 4-5 million is good enough but if we push ahead we can certainly achieve the 10 million mark…We shouldn’t worry too much about infrastructure, airports etc, these will come up as business increases. Similarly, we need to be bold in other areas for growth to accelerate,” Tata added.

Tata’s comments came in the wake of Planning Commission deputy chairman Montek Singh Ahluwalia sounding a positive note, with his assertion that India was “very close” to achieving the 10% GDP growth number.

But Tata was not merely talking big. Take the example of the ambitious Rs 1-lakh car project, which attracted many nay-sayers when the idea was first mooted. But a bold approach by the chairman of the largest Indian business house pushed Tata’s men into creating something that was almost unimaginable some years back.

And his dream appears pretty close to realisation, with the launch of this car slated for early next year.

Not only did Tata exhort the industry as well as the government to take a bold approach to decision making, he also surprised many by revealing that the various companies under the Tata Group spent a whopping Rs 600 crore last year on Corporate Social Responsibility (CSR) initiatives, up from Rs 450 crore spent the year before. And this was done even when there has been no specific charter, no mandate within the group for engaging in CSR activities.

Asserting that he himself has made “very little personal gain from the growth and prosperity of the Tata Group,” Ratan Tata said. “It is important for some of us (the industry leaders) to become role models, be moderate in the way we live and conduct ourselves”. This would help dispel the notion that big business is selfish, bad, he added for good measure.

Tata’s comments assume significance in wake of Prime Minister Manmohan Singh warning companies against forming cartels in the conference.

Singh stressed that price stability is necessary to spread the benefits of economic growth.

“The operation of cartels by groups of companies to keep prices high must end,” he said.

Clients selected: Zhang Yin & Carlos Slim

Similarities:

both are successful businessman/woman
dare to risk: invest more to gain control (power) in their business, and willing to collect things or businesses that are undervalued to make their business strong
rich: this shows their status & how powerful they are in the business world