Zhongshan city of entrepreneurs, past and present

5 May 2011

By Staff Reporter

They call Zhongshan one of the ‘four little tigers’ of Guangdong, a city which has boomed over the last 30 years, with an average growth rate of more than 10 per cent. The sprawling city has six townships which specialise in making a particular product.

Its GDP in 2008 was 141 billion yuan, an increase of 10.5 per cent over 2007, with a per capita GDP of US$ 8,100. Last November, a Taiwan firm, Wistron Corporation, announced one of the most important foreign investments in the city’s history — three billion yuan in an industrial park to make liquid crystal opto-electrical products in the city’s high-technology development zone. It will make LCD televisions, LCDs and related products and bring 30 related companies.

The dynamism of the last three decades has been driven by businessmen and women who draw inspiration from the city’s entrepreneurs a century ago. Five of them are remembered in a museum in a pink building in the historic centre of the city; they are part of the business history of China.

The Xiangshan Commercial Culture Museum celebrates a period at the end of the Qing dynasty and the early Republican period when people from the county made a remarkable contribution to China. Most famous is Sun Yat-sen, the father of the Chinese Republic. Previously called Xiangshan, the county was renamed after Sun after his death in 1925; Sun Zhongshan was the name he mainly used.

The five made their contributions in the field of business and two of them, Ma Yingbiu and Kwok Lok, built companies that were pioneers in retailing and manufacturing and are still thriving a century later.

From Guangdong farm to Sydney main street

Ma and Kwok had much in common. The sons of penniless farmers, they left the poverty of their native village in the hope of making a fortune in Australia. Through years of hard work and careful saving, they amassed enough money to go into business on their own and decided to return to China.

Starting with a department store in Hong Kong, they expanded into cities across China and diversified into retail, manufacturing, insurance and real estate. They founded the modern Chinese retail industry.

Ma was born into the family of a poor farmer in Shachong village in 1868. He attended school for only three years before going to work. His father left the family behind and went to work in a gold mine in New South Wales. In 1881, the young Ma went to join him. After six months, the two moved to Sydney. The young man decided that learning English was a priority. He found an Irish woman who needed help on her vegetable farm and could speak Cantonese. He made an agreement with her; he worked on her farm in exchange for three meals and one hour of English instruction a day. With his new knowledge, he set up a fruit and vegetable shop in Sydney, which sold local produce, bananas imported from Fiji and items imported from China. His reputation grew among the Chinese in the city and he began a remittance service, sending money back for them to their relatives at home. It was a turbulent period for overseas Chinese; they were watching with intense interest the efforts of the revolutionaries to overthrow the Qing dynasty and how this struggle would affect their lives and those of their families.

Return to China

In 1910, Ma made the momentous decision to leave his life in Sydney and move back to China. He saw an opportunity to use the knowledge and experience he had acquired in Australia. In 1910, he raised HK$25,000 and opened the Sincere shop in Central, Hong Kong with 800 square feet and 40 staff; it was the first Chinese-owned department store in the city. It bought goods directly from manufacturers, offered lower prices than other retail shops and always gave a receipt. Business was so good that he opened a larger store, with five storeys and more than 300 staff, also in Central. If a customer bought a large item which he could not carry himself, the store would deliver it within 24 hours.

In 1912, the company opened a branch in Guangzhou and over the next decade expanded into Shanghai, Nanning, Singapore, Bangkok and London. Its five-storey Shanghai branch was the biggest department store in China at the time. It opened on Nanjing Road in 1917 after three years of construction and an investment of two million dollars; thousands crowded to see its opening. It included an upmarket restaurant and an entertainment complex with magicians and opera performances. It had many firsts – a roof garden with potted plants, a tea shop, exhibition space, fixed prices, a wide variety of goods from home and abroad and lady sales staff. When tradition prevented women from applying, Ma’s wife herself started to work at the counter – and young women followed her example. By the second year, its annual revenue was four million dollars, double the initial investment.

Change the way of doing business

Its success attracted other entrepreneurs from Zhongshan, including Kwok Lok, who built a larger Wing On department store on the other side of Nanjing Road.

In Hong Kong, Sincere expanded into life assurance and fire and property insurance and manufacturing of products including cosmetics, soap, toothpaste, cola, sweets and biscuits, glass and wooden box. Some were sold to the stores.

The outbreak of the war in the Far East was a major blow. It restricted the transport of foreign goods, especially from Europe and the United States, so Ma switched his purchases to Japan, where he ordered goods with the same specifications. Since Japanese goods did not enjoy a good reputation, he concealed the place where they had been manufactured.

A devout Protestant, Ma lived in a modest way; he did not own a private car and employed only a few of his relatives, which was unusual for a Chinese family company. “My inspiration in founding the Sincere company has been to change the old ways of doing business in China,” he said. “Living in Australia has opened my eyes to large-scale business organisation and strategies. China will regain its national strength if Chinese businessmen modernise their practices to compete in international markets.”

In Ma’s footsteps

The life of Kwok Lok followed a remarkably similar pattern. Born into a poor family in 1874, one of nine children, he followed his elder brother to Australia when he was 18. For two years, he worked in a vegetable farm and then went to work in Ma Yingbiu’s fruit and vegetable shop. After saving money, he and a partner set up a fruit business, importing bananas from Fiji and goods from China. He brought four of his brothers from Zhongshan to help him in the business and bought a banana farm in Fiji, where he also set up a department store.

In 1907, the family established the Wing On company in Hong Kong and, two years later, Kwok moved to Hong Kong as chairman. In September 1918, Wing On opened a six-storey department store on Nanjing Road, Shanghai, opposite that of Sincere. The firm expanded into insurance, warehouses, hotels and textiles, in which it became a major player. By 1931, its firm operated 240,000 spindles in Shanghai and made two famous brands, Golden City and Great Eagle. 3002

The Japanese attacks on Shanghai were a disaster for the firm. In 1932, their bombing destroyed two of its five textile mills; Kwok and his brothers were devastated. They stopped their expansion plans and sales declined. In 1937, the Japanese occupied the remaining three mills and the firm’s dyeing plant. They set up an American company, in an attempt to protect their assets. Kwok went to Hong Kong and then, in 1939, the U.S., taking many of his managers with him. He left the mainland business to one of his brothers.

He set up the Wing On company in San Francisco and New York and died in the United States in 1956.

He and Ma Ying-biu were pioneers, bringing to China the modern retail industry which they had learnt in the west and laying the foundation for its growth in the decades since.

Both Sincere and Wing On had their mainland stores nationalised when the Communists came to power in 1949. In 2005, the Shanghai store resumed trading under the Wing On name but it belonged to a state-owned firm. The exterior was restored to its pre-war appearance but the interior has been drastically refurbished. The Sincere department store returned to Nanjing Road in 1993.

Both Sincere and Wing On are thriving today as listed companies in Hong Kong. Department stores are their principal business.

Chrysanthemum city

The economic growth of Zhongshan in the modern era began with the reform and open-door policy in 1978. The city benefited from its proximity to Macao and to one of the four new special economic zones, Zhuhai, and the fact that it is the native place of millions of Chinese around the world.

It became a centre of export processing of light industrial goods. Six of its townships developed concentrations of product – mahogany furniture, electrical appliances, lighting, food, casual wear and locks and hardware. In addition, the township of Xiaolan is famous throughout southern China for its chrysanthemums.

About half of its population of 2.6 million come from outside the city; thousands moved there from all over China, attracted by the job opportunities and a life better than they could enjoy at home. In 2008, its GDP ranked fifth in Guangdong province.

From furniture to high-tech

In the first 11 months of 2009, its industrial output was 371 billion yuan, an increase of 14.7 per cent over a year earlier, with the fastest growth in telecom equipment, computers and other electronic products, food and pharmaceuticals. Actual foreign investment in the period was US$747 million, up 1.9 per cent.

Foreign trade was hit by the global financial tsunami. Exports fell 7.2 per cent to US$16 billion and imports fell 9.4 per cent to US$6.1 billion. The main export markets are Hong Kong, the European Union and the United States and the main exports high-tech products and textiles.

The government is encouraging the growth of new industries as well as consolidating the existing ones. It has identified shipbuilding, equipment manufacture, electro-nics and information and LCD production as growth sectors, in addition to the existing household appliances, metals, lighting and furniture.

“The west of Guangdong is not as developed as the east,” said Sio Chi Wai, chairman of the Macao Development and Strategy Research Centre. “The light industry sector of Zhongshan is developed and has had a stable economic growth for the last 30 years, with an average of about 10 per cent. In the future, it must change. The economic model will be selling to the domestic market.”

He said that among future growth sectors for Zhongshan would be tourism, gourmet food and retirees. “It has a good climate, medical facilities and public order. Property prices are a third of those in Beijing.”

In 2008, the city attracted 5.3 million tourists, an increase of 3.5 per cent over 2007. Of these, 652,000 came from overseas and 4.63 million from the mainland. Revenue from tourism was 9.72 billion yuan, up 13 per cent, of which US$227 million was in foreign exchange.

Macao and Zhongshan have jointly promoted tourism at international fairs, including those in Lisbon and Taipei.

Joey Lao Chi Ngai, chairman of the Macao Association of Economic Sciences, said that the new bridge between western Guangdong and Hong Kong would be very beneficial for Zhongshan, bringing in people, goods and investment from Hong Kong, Taiwan and elsewhere.

The city will also benefit from being on a light rail line between Zhuhai and Guangzhou which is due to open this year and a conventional railway on the same route, due to be completed in the next two years. The first will carry passengers and the second mainly freight.

MACAUHUB FRENCH