Reuters Magazine: The Made-in-China CEO

Thu Jun 28, 2012 6:39am IST

Zhang Yue, founder and CEO of Broad Group, gestures as he talks about his building designs during an interview with Reuters in his office at the company's headquarter in Changsha, Hunan province April 26, 2012. REUTERS/China Daily/Files

Zhang Yue, founder and CEO of Broad Group, gestures as he talks about his building designs during an interview with Reuters in his office at the company's headquarter in Changsha, Hunan province April 26, 2012.

Credit: Reuters/China Daily/Files

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(This piece originally appeared in Reuters Magazine)

By Terril Yue Jones

REUTERS - Zhang Yue fondly caresses the blueprints as he slowly flips through them, occasionally pausing to stare at a drawing as he explains his new project.

The plan seems impossibly ambitious: Build a 220-story building, the tallest in the world, in just four months by using the rapid-construction techniques his company has developed.

Zhang, a slight but wiry and intense man of 52, says "Sky City" - as he has dubbed it - can fix many of the world's pollution, congestion, transportation and even disease problems by completely purifying the tower's air. The 838-meter-tall building (10 meters taller than the Burj Khalifa in Dubai, currently the world's tallest) will hold schools, a hospital, 17 helipads and some 30,000 people. It will, indeed, be a city in the sky.

His dreams don't stop there.

Pinned up on his office wall are plans for a project even more audacious - an almost preposterously massive building two kilometers high. When asked to estimate the odds of this 636-floor giganto-scraper ever being built, Zhang responds without hesitation, "One hundred percent! Some say that it's sensationalism to construct such a tall building. That's not so. Land shortages are already a grave problem. There's also the very serious transportation issue. We must bring cities together and stretch for the sky in order to save cities and save the Earth. We must eliminate most traffic, traffic that has no value! And we must reduce our dependency on roads and transportation."

Tenaciously pursuing a lofty vision is a hallmark of Zhang's success at Broad Group, but also that of many entrepreneurial Chinese chief executives in these days of heady growth in the world's second-largest economy.

The recipe for success for all these CEOs includes: 1) the vision and guts to seize upon a bold, even outlandish idea; 2) a relentless drive to build a company; and 3) an outsized ego to drive the process and overwhelm the skeptics.

Chinese founder-CEOs such as Zong Qinghou of drinks-maker Wahaha (until last year China's richest citizen), automaker Geely CEO Li Shufu, and Huawei chief Ren Zhengfei all have compelling, almost mythic personae that color most facets of their companies.

"In these entrepreneurial firms, the products and services are the passions of the founder," says Chris Marquis, a professor of organizational behavior at Harvard Business School who studies Chinese business executives. "They were employee No. 1, and now have hundreds of millions or billions of dollars in sales, and thousands of employees. These CEOs have been there every step of the way, and their vision has been what's driven the company."

These entrepreneurs are all known for thinking big ... and then bigger. Zhang Yue's Very Big Idea is to save the world by conserving energy, reducing congestion and pollution, and making homes and offices much more healthful places by purifying stale air he says is responsible for 68 percent of human illnesses.

"Each era had an issue of its time; each era had a mission of its time," Zhang says in an interview in his headquarters on the outskirts of Changsha, the capital of south China's Hunan province. "Our era's problem is not productivity and it's not wealth. It's not even politics or democracy. In society today - including China and all the countries of the world - we're facing the increasingly grave problem of environmental pollution."

Zhang, who ranks No. 186 on the Hurun Report of wealthiest Chinese, built his estimated $1.19 billion fortune on industrial cooling systems and air conditioners. He started his company on the back of some patents for non-electrical air conditioning, and later expanded into industrial strength chillers and air purification systems that have been installed in Madrid's airport, a U.S. military base, and throughout Europe and the Americas.

The devastating 2008 earthquake in Sichuan province that left more than 87,000 people killed or missing was a turning point for him. Horrified at the widespread collapse of buildings, including many shoddily built elementary schools, he set out to design safer, environmentally sounder buildings. He realized that by prefabricating building-floor slabs with pipes and wires built in, ready to be connected once modules are in place, buildings could go up much faster, and with only 1 percent of materials discarded as waste.

Last December, Broad Sustainable Building, his construction unit, erected a 30-story hotel in Hunan province in just 15 days. (A time-lapse video of the build has notched almost 5 million views online.)

Zhang next plans a 50-story building, and perhaps a couple more with 30 floors, while he drums up funding for Sky City 220. He's also hoping to set up franchises so such buildings can go up anywhere; he has seven in China so far, and is aiming for 150 around the world.

CHINA'S OLD-SCHOOL CEOs

Broadly speaking, there are two types of chief executive in China. The traditional one is the bureaucrat head of one of the traditional state-owned enterprises (SOEs) - mammoth, lethargic behemoths, often monopolistic, including the telecom operators, banks, insurance companies, oil and steel producers. Their leaders are generally intelligent and capable managers, but most are Communist Party stalwarts who have served quietly in local and central government agencies or ministries.

They are generally not looking to shake things up. They don't have any game-changing ideas, prefer not to rock the boat, and would find the appellation "disruptive" - one embraced by so many Western CEOs - to be anathema.

"This kind of career path tends to be more system-oriented, in pursuit of steady growth for the organizations," says Katherine Xin, a professor of the China Europe International Business School in Shanghai. "They are more attuned to government policies, to the political, geopolitical environment. These CEOs tend to be promoted through a well-established ladder of career path, step by step."

China Construction Bank, the world's second-largest lender by market capitalization, illustrates the SOE model well. Recent Chief Executive Guo Shuqing had stints as vice governor of Guizhou province and as China's foreign currency regulator, and was appointed last year to become head of China's stock market regulator. His favorite saying is, "Listen to both extremes and take the middle course," reflecting his desire to please as many people - and irk as few - as possible.

THE NO-SCHOOL CEOs

A new breed of Chinese CEO has sprung up in the wake of China's economic reforms since the 1990s. Entrepreneurial CEOs in China share few personality traits or management techniques with those SOE (state-owned-enterprise) CEOs. They are keen to innovate and seize opportunity, are eager to leave a legacy, and are legendary for their tenacity.

Wahaha's Zong leapt at an opportunity to develop a market presence in the beverage business. Establishing a distribution channel deep into China's countryside to supply remote towns with Wahaha products was one of his biggest accomplishments. He is also renowned for his persistence, and his willingness to delegate to his talented staff.

Many of these entrepreneurial Chinese CEOs were hardscrabble businessmen who started making and/or selling products on a small scale - furniture, real estate, auto parts - and added bits and pieces along the way. That's how Du Kerong, head of Tianjin-based Xinmao Group, built his closely held conglomerate. He started with a construction materials company that evolved into a real estate firm and eventually into the Xinmao Group, which today employs more than 30,000 and has more than 100 subsidiaries in real estate, construction, hotels, fiberoptics, software and other high-tech fields.

The charismatic but fiercely private Du sprang to prominence in late 2010 when he made a billion-euro offer for a Dutch cable manufacturer, muscling in on an all-European deal that had already been agreed upon. His bid failed, but it exemplified the style of this new strain of Chinese CEO - brash and flush with cash and ambition, but inexperienced outside of China.

"They are very sensitive to their environments, very alert to new opportunities and extremely flexible to pursue these new opportunities," says Xin. "And one of the most important characteristics is that they are very pragmatic: 'Whatever works.'"

STEVE JOBS IN A SMART CAR

In his work and in his personal life, Zhang Yue seems to have a desire to comprehend everything. Back when he was an art student, he wanted to understand Leonardo da Vinci's Mona Lisa. An instructor told him that to do so, he would have to paint it himself. So he did.

He is a hands-on manager.

"Zhang Yue is really passionate about the research and design of the products, and creating objects," says Harvard's Marquis. "It's about the ability to create these different products that have driven him . . . That's what he saw as his big role - interacting with designers."

Marquis knows that makes Zhang sound like the late Steve Jobs, and he thinks it's a fair comparison. Zhang preaches an altruistic, almost ascetic life, and he is a sage and paternal figure to his workers, offering free dorm rooms and cafeteria food for all. Employees wear white shirts and dark pants, and everyone's nametag bears a motivational slogan, such as "Innovate Life Now." Zhang's ID card says, "Wanshen Ziwo" ("Perfect Oneself ").

The honor code rules at Zhang's corporate campus - Broad Town, where some 1,000 of his 4,000 employees work. The supermarket register is unmanned; people swipe payment cards. Dorm-room doors are always unlocked. All employees are expected to abide by guidelines laid out by Zhang in a booklet called "Life Attitude of an Earth Citizen." Tenets in the book include, "Whenever possible, travel by bicycle or public bus," and "Unless absolutely necessary, do not fly."

Broad employees are urged to use energy-efficient lightbulbs, buy more local and less packaged and frozen food, and "Most importantly, only have one child. This will allow our population to return to a level that the earth can bear."

Zhang leads by example. He and his wife have one son, who graduated last year from Carnegie-Mellon University in Pi ttsburgh, Pe nnsylvania. Zhang lives on campus and drives a tiny Smart car - gas-guzzlers are scorned at Broad Group.

"We have to transform!" he explains. "If China continues down this path, by 2030 it will look just like the U.S. Practically everyone will have a car, and China's farmland will all be parking lots and highways."

Asked what appeals to him about Western business management techniques, Zhang scoffs. "I'm not going to talk management," he says. "Listen to me: Everyone must learn integrity, to be an honest person. If people are honest, you don't need to manage them. Where people are the most dishonest is concerning the environment. It's the over-consumption problem."

That explains his war on waste.

"Life Attitude of an Earth Citizen" includes exhortations not to buy disposable products or books or newspapers that will be quickly discarded. Wasting food is a cardinal sin. One employee ruefully recalls being fined 200 yuan for not finishing his dinner - his picture was also posted in the cafeteria, and he was banned from eating there for two days.

Employees say all these rules have made them more conscious of conserving soap, recycling plastics and shying away from taxis.

"We need to adopt rules, but it's good for me, like to save hot water, save energy, be honest," says Charles Qiang, 26, who has been working at Brand for three years. "I could learn how to be a man, and how to be a gentleman."

Office lights are turned off during lunchtime, so any employees who stay at their desks must work by natural light. Those desks, as well as the office shelves, are made of wood recycled from the boxes in which Broad Sustainable Building receives copper tubing from Japan. Zhang's office is dim, with remote-controlled curtains that block heat-creating sunlight and the lights off. He frequently checks an air-purity monitor built into a cellphone his company developed. Broad's systems purify 100 percent of a building's air, and Zhang proudly shows visitors that the particulate matter is extremely low there. He has a large floor-model purifier in his office in addition to the central air purification - perhaps because he chain-smokes Kent cigarettes.

STATUES FACING WEST

The recent Steve Jobs biography is still displayed in bookstores in China and touted on the occasional bus stop ad, but Chinese executives rarely look to the West for business philosophy. Japanese executives revere the teachings of quality master W. Edwards Deming and management guru Peter Drucker, but there are no such widely admired figures among Chinese executives.

Zhang, however, has studied the great writers and intellectuals of Western culture, and in Broad Town, he has erected 43 statues honoring some of his favorites. Confucius, Aristotle, Socrates, Plato and Pythagoras stand with Abraham Lincoln, Winston Churchill and Robespierre near Broad's Versailles Palace-like Economic Management Institute. Also on pedestals are inventors da Vinci, James Watt and the Wright brothers. There is the Chinese poet Li Bai, as well as Balzac and Shakespeare. Napoleon and Deng Xiaoping stand vigil nearby, as do Alfred P. Sloan, Jack Welch and inventor-consultant Frederick Winslow Taylor.

"Sloan, and Taylor, and Jack Welch were good; they emphasized management efficiency," Zhang says. "I think these American and European management experts made contributions to man's productivity. That's why I included them."

Zhang hopes the monuments that live on after him will be structures of a different kind. Can those monster sky cities really be built? Could they withstand a 9.0 earthquake?

"My guess is that it probably is possible," says Steven Moore, professor of sustainable design at the University of Texas. "But what's missing from this conversation is a civil-society conversation about how it is that we really want to live, and what will it take technologically to do that. Just because we can build two kilometers up doesn't mean we should."

Zhang insists that his towering towers are the solution to Earth's converging crises of land, overpopulation, pollution and transportation.

"Many people will hesitate, and say, 'You broke free from convention, but you're taking on how much risk and at what cost?'" he says. "No! That's precisely what I want to do: Break with convention - outrageously, without cost, without risk. Everything Broad does is breaking with convention. My buildings will be extremely stable, as solid as a mountain."

Perhaps it is not surprising that in this land where emperors long ago did the seemingly impossible by building the Great Wall over thousands of miles of rolling mountain ranges that another Chinese leader plans even more extraordinary monuments in another direction - up, instead of out.

If Zhang Yue's Sky Cities are erected, they will be the towering legacy of a CEO whose ambition was not to keep the world out, but rather to save it from itself.

For Reuters Magazine: click here

(Reporting by Terril Yue Jones; Editing by Bob Roe, Jim Impoco and Jan Paschal)

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