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Ernst & Young



By Helena Iveson

Exceptional Magazine - Ernst & Young

Cao Dewang, the newly crowned Ernst & Young World Entrepreneur Of The Year, went from selling fruit to founding a glass company that made €600m last year. Cao tells us why he’s trying to start a cultural revolution when it comes to corporate governance and philanthropy.


Chinese press interviews are usually as stage-managed as North Korean rallies with questions pre-approved and vetted, but the Beijing press conference celebrating Cao Dewang’s award was an informal and unpolished as the man himself. “Ask me anything you want,” he says in his heavily accented Mandarin Chinese.


The Chairman of Fuyao Glass Industry Group and China’s 53rd richest man (FORBES 2008) beat out 42 other entrepreneurs vying for the title at the awards ceremony in Monte Carlo, each of whom had already won the national award in their home countries. Previous winners of the international award include Jeff Bezos, founder of Amazon and Wayne Huizenga, the only person in history to have founded three Fortune 500 companies.


After the award ceremony, the normally ebullient 63 year old with perfect pitch-black hair, whose image features very prominently in all of Fuyao’s literature, was decidedly humble when he explained what it felt like to win. “When I was standing at the podium, a Chinese man who doesn’t speak any English in front of international CEOs from world-famous corporations, I was very moved about how far I had come,” he says. “And I will be very proud if my success helps more Chinese entrepreneurs move onto the world stage.”


Cao, from the southern province of Fujian whose natives are famous in China for their entrepreneurial spirit, founded Fuyao Group in 1987. The company quickly specialized in the production of automotive safety glass and industrial technological glass. He has turned Fuyao into China’s leading automotive glass manufacturer, with more than half of the overall domestic market. The company also supplies glass to automakers around the globe, including Audi, Hyundai, Volvo and Ford.


He credits his success down to three main factors. “To succeed you have to have integrity, thrive on hard work and have the kind of character that can overcome lots of obstacles,” he says, in between barking orders down his gold cell phone every couple of minutes.


One of Cao’s aides described Cao as xìngqíng, meaning someone who doesn’t hide their feelings. “That’s true,” he says, taking a puff on one of the cigarettes he chain-smokes. “I have a strong character and believe fully in my abilities. I also don’t change my opinions easily.”


Cao is remarkably free of the idioms and expressions that Chinese public figures often parrot in public – he has long thrown off any ideological dogma when it comes to business. “I don’t have any guiding principles when it comes to making decisions. A good manager will come to a conclusion which is dependant on the current market rather than following some kind of ideology,” he explains.


It will have escaped no one’s notice that Brand China’s reputation has taken many hits over the last couple of years thanks to contamination scandals at home and abroad. “China has to make higher quality goods for the sake of the country,” Cao says, adding that he hopes that winning this award goes someway to restoring the country’s battered image for quality products. “It‘s long been Fuyao’s motto to produce premium quality glass, which is in short supply in our country.”


National pride is certainly a driving force for Cao. Echoing somewhat ironically what the president of General Motors famously said in its boom years - “what's good for our country is good for General Motors, and vice versa" – he says that the sentiment is now true for Fuyao: “what’s good for China is good for Fuyao, and vice-versa.”


Despite the news that GM, one of Fuyao’s biggest clients have filed for bankruptcy, he doesn’t believe it will have a major impact on his company. “We have so many other major customers around the world,” he says.


In fact he seemed remarkably unworried about the shoddy state of the world economy. “We’re not planning any new projects at the moment, instead we are focusing on maintaining our current projects,” he says. “I haven’t yet had to alter the company’s course, and because I am naturally optimistic, I believe that the current situation brings opportunities,” he explains. “And compared to this time last year, Fuyao’s exports have increased as everyone still needs glass.” He waved off questions about cash reserves – “we don’t have any problems,” he says.


He does believe though that China’s state-run enterprises will suffer. “Those kinds of companies will definitely make more of a loss than privately run enterprises. Companies like Fuyao have the flexibility to adjust to the financial crisis.”


The awards aim to identify role models for the next generation of entrepreneurs and inspire successful entrepreneurs to develop their businesses even further. And in China where the business environment can be more Wild West than Washington DC, Cao is considered an inspiration when it comes to corporate governance.


“I have always been interested in corporate governance as I believe that it is a very important management issue,” Cao says, whose first name Dawang means prosperity and virtue.


Although more than two decades of market-oriented reforms have transformed China into one of the world’s economic powerhouses, standard corporate governance practices have not kept pace as the country leaves its state-run shackles behind.


But Cao’s insistence on high corporate standards combined with his success in building a group that accounts for about 60% of the domestic automobile glass market and 30% of the US market is why he won the Ernst & Young accolade.


“He is a pioneer in corporate governance, from restructuring Fuyao as one of the first joint-stock limited companies in Fujian province, to being one of the first companies in China to introduce independent directors to its board,” says J. Christer Ericsson, Chairman of Sweden’s JCE Group and Chairman of the independent judging panel.


“When Fuyao was listed on the Shanghai Stock Exchange in 1993 corporate governance became even more important as why would people buy our stock unless they trusted us?” Cao says. “I also found that learning from the experiences of other companies abroad helped my ability as a manager.”


Despite his lack of English skills, from a very early stage Cao wanted Fuyao to be an international player. “There just isn’t enough money to be made in China alone as prices are too cheap,” he explains.


But his international outlook doesn’t mean he wants to expand abroad for the sake of it. Though the Chinese government is encouraging its home-grown businesses to go on a shopping spree and buy outside the nation as part of its “go-global” campaign, Cao says he has no interest in mergers and acquisitions at present. “In the glass industry, China’s technology is very advanced thanks to our leading R & D department and there is no point in expanding without gaining that kind of benefit,” he says.


He relies on his son Cao Hui, who did his MBA in Thailand and worked in America before becoming a company director, to provide Fuyao with a more international outlook. “Isn’t he handsome?” he asks drolly as he gets his son, who is one of three children - to stand up – the joke being that the two men are identical.


Alongside his focus on corporate governance, Cao’s interest on philanthropy marks him out. In February he announced he will donate nearly 60% of his interest in Fuyao, valued at more than €300 million, to a charitable foundation named after his father. If the foundation, which would focus on education, medical care and poverty alleviation, is approved, Cao’s donation would be one of the largest ever charitable acts by a Chinese Mainland entrepreneur.


This is not the first time that Cao has hit the headlines for his philanthropy. In 2008 alone he donated more than €15 million for the Sichuan earthquake relief effort.


Just like many of China’s most successful entrepreneurs, Cao is a self-made man who experienced poverty during his childhood. Because of his own limited formal education - Cao didn’t start primary school until he was 9 years old and had to drop out at 14 as his farmer parents didn’t have enough money to pay for his education – educating poor children from rural areas is one of his charitable focuses.


“The biggest problem facing China is the divide between rich and poor,” he says when explaining why the fund is so important to him. “Plenty of people are making fortunes, but not enough money is trickling down to people. Industry also needs to tap into rural areas.”


The act of philanthropy represents a profound change from recent times where, because of China’s tumultuous recent history, the emphasis was on personal survival rather than giving to others.


But with the current gaping chasm between rich and poor in China, Cao hopes that other Chinese business successes will do the same and give money to good causes. “And it’s ultimately in everyone’s interest. If small and medium-sized businesses start going bust it can travel upstream,” he says.


Cao started his own business at the age of 16, selling cut tobacco before then working as a farmer, chef and fruit seller. Aged 30 he joined the Fuqing Gao Shan Special Glass Factory as a merchandiser. In 1983, when China was beginning its fledging economic reforms, the factory was making a loss and the local authority didn’t have the means to turn the business around. Cao was asked to take over the factory and had it making a profit within a year.


The business gradually expanded until in 1993 when China began accelerating its market-orientated reforms. Fuyao Group became an experimental unit in a government-led stock reform initiative. Cao acquired capital to purchase shares until he and his family owned 65% of the stock. In June that year Fuyao Group was formally listed in Shanghai and its stock price skyrocketed from 2 Chinese Yuan to over 50. Ever since that experience, Cao says he won’t rely on the market for funding. “I would always rather take a loan to raise capital than go to the market,” he says.


Aside from work, Cao is a golf fanatic who rises everyday at 4am to hit balls under the floodlights. The president of Fujian Golf Association has been known to insist some of his work force join him at that hour. “It’s my habit to get up at that time,” he says, taking another puff on his cigarette. “It’s healthy,” he says wryly.

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