Jiang Xipei: China in Transition to Marketization, Government Guidance Still Needed

Jiang Xipei, Chairman and CEO of Far East Holding Group Co., Ltd. Attends and Addresses the Forum

    The 2nd Made in China Forum 2025 & Made in China Top 10 Quality Products Award Ceremony was held on November 13, 2016 in Beijing. Jiang Xipei, Chairman and CEO of Far East Holding Group Co., Ltd., was present at and addresses the forum. He pointed out, “China is still a country in its transition to marketization, where some business would not grow into industries easily without guidance of the government and even face greater challenges competing internationally. Under such circumstance, therefore, the government is needed to perform its guidance so that companies might act practically to adjust themselves to the age and keep pace with the times.”

     His address is recorded as follows:

    Jiang Xipei: My speech today is about the gene and development of companies. The gene of a company is of great importance. As we all know, among the top 500 companies of the world, 18 were Chinese in 2005, while in 2016, we have 110 and Japan has 52. This was unimaginable one or two decades ago. Since the top 500 list is arranged according to their turnover, we can at least conclude that they already have sized big enough, which also means the competitiveness of a nation. Today, China has a place in the stage of the whole world, a place in the very center point. We are delighted to see the changes brought by the development. It is beyond our dream to see private enterprises achieving such a great success forty years ago, even ten or twenty years ago, because forty years ago, we did not own a single private company in China’s manufacture industry. Today, we own over 2 million companies in this industry, among which 288,000 are above designated size, or make a revenue of over RMB 5 million annually, to put it in other words. The average value of total asset hits RMB 130 million and net asset, RMB 69 million, making a net profit of over RMB 10 million, which is at an annual basis. This is what we call Chinese private enterprises.

In the 2016 rich list, 568 people from the Greater China possesses property with assets worth over RMB 1 billion, outnumbering 535 from the US. Among them, 470 billionaires are from mainland China, and 100 of them are from Beijing, more than those from New York City. It is indeed an amazing accomplishment, which indicates that if a company is to seek development, it is particularly important to underline its gene, which includes shareholder structure, governance framework, business pattern, enterprise culture and others.

     First, I would attach great importance to shareholder structure, which means how we should choose our career partner. It is as important as selecting your spouse. The top crucial choices we make in our lives are to choose a good spouse, a good business partner and good shareholders.

    Most shareholders are probably your brothers and sisters or your relatives and friends who can share profits as well as responsibilities. You need chances and platforms of this kind which provides you the gene for a solid foundation for further development. They don’t just support you financially, but in many others ways too. In Far East, which I started 31 years ago in 1985, we spare 50% equity for the shareholders and the other half has already gone to our core staff. The platform of business partners attracts those who value their careers and those who have shared commissions and responsibilities with us, so that we could do what we have done so far.

    Second, governance framework means that we need to show leadership, executive ability and synergy in enterprise governance. Laws, human feelings and reasons should be given consideration in the operation of companies, but most fundamentally, companies should be developed under the ruling of laws and regulations. Many companies, especially startups, put personal ties in the first place, followed by reasons and then laws, which requires adjustment.

    Third, business pattern is something that many companies need particular discussion in their development. Ultimately, it requires us to provide the best products and the best services to win customers and market. Being it market-oriented or innovation-oriented, the goal is to produce cost efficient products. More often than not, overwhelming technologies are difficult to do in the beginning stage, but they would turn out to be perfect when succeeded. Although we may not have perfect existing legal protection for intellectual property right, we have reasons to believe that it would be constantly improving in the future. What you have to do is to make constant innovation in the business patterns and profit models to keep the capability of making profits. It is especially true for listed companies, because if you don’t bring them return, they are going to vote with their feet.

    In addition, the spirit of the founders is also critical, by which I mean a sense of mission and of being master. These are something the founders don’t lack, but what they also should have are innovation, spirit of adventure, cooperation, professional dedication, learning and honesty. Those are the values that would make regrets and stop us from moving on if we miss some of them. As for Far East, we have put forward our principle of five “satisfaction”, that is to make the customers satisfied, to make the staff satisfied, to make the shareholders satisfied, to make the government satisfied and to make the community satisfied. As a Chinese enterprise, we can’t agree more with what Professor Xu mentioned just now and what has been reported and taught by him on many occasions. He was my instructor back in CEIBS and what he has noted is that we must be market-oriented and customer-centered, for this leads to the future of Chinese companies, particularly those in manufacture industry, which, I think, is an undoubted idea.

     However, our country itself is still in its transition to marketization, where some business would not grow into industries easily without guidance of the government and even face greater challenges competing internationally. Under such circumstances, therefore, the government is needed to perform its guidance so that companies might act practically to adjust themselves to the age and keep pace with the times.

    Finally, enterprise culture, including values and feelings, is a gene that all companies need, for it is their core value.

Thank you!