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An Exclusive Interview With Cao Dewang, Chairman Of Fuyao Glass Co., Ltd.: Dividends Are The Interests Of Shareholders

2020/7/15 8:29:00 2

InterviewChairmanDividendsShareholdersInterests

A glass of "660.27" has been listed on the stock market. Such a stock age, has enough qualifications to "fraternize" with the Shanghai and Shenzhen stock exchanges.

"Fuyao Glass was issued in 1991 and officially listed in 1993. Frankly speaking, I felt that the company was too small, and it was a listed company to earn tens of millions a year? " Cao Fuyao, chairman of the board of directors of the 21st century economic control group, told reporters.

Today, the glass industry has become the leader of the world. In 2019, the revenue will reach 21.104 billion yuan, accounting for 25% of the global market. It has production bases or service organizations in 11 countries and regions such as the United States, Russia, Germany, Japan, South Korea and 16 provinces in China.

Cao Dewang, now 74 years old, is still vigorous and energetic in the face of the 21st century.

"I've been making glass since 1976. I've been the oldest glass man in China. Now there's no one in China who has been making glass for more than 40 years." Cao Dewang seems to laugh at himself, but he is more proud.

Fuyao Glass is not only the first private enterprise listed in Fujian and the first listed company in China's glass industry, but also the first private enterprise in China to introduce independent director system, employ international accounting firms and promote professional managers. It also won the first anti-dumping case after China's accession to the WTO in North America.

Cao Dewang is also China's first philanthropy worthy of its name. He has created the first equity donation in China. Up to now, he has donated nearly 50% of his personal assets, about 12 billion yuan, to charity. Since its listing, Fuyao Glass has also been generous in cash dividends, with a total cash distribution of more than 15.6 billion yuan.

Standardizing international behavior

21st century: how could you have thought of introducing an independent director system more than 20 years ago. What are the gains and losses of Fuyao Glass in introducing independent directors?

Cao Dewang: after Fuyao Glass stock was listed, I felt that the responsibility was great. I am determined to say that even if we can not become the pillars of our country, we should not become a burden to the country and society. Since the government has approved the listing of Fuyao Glass, I should do a good job in this listed company.

From the day of listing, I started a transformation to improve myself, to make Fuyao Glass a real listed company. I began to conduct international research on corporate governance and development direction, and found the international independent director system, which I think is very good.

Independent directors have two functions in an enterprise. First, as the name suggests, independent directors must be independent, independent of rich people and large shareholders. They represent small and medium-sized shareholders to supervise the board of directors. Second, independent directors are generally high-level intellectuals and think tanks of enterprises. Supervision of enterprises can also help enterprises.

When an enterprise introduces independent directors, it is necessary to make good use of the independent directors. They must have the absolute right to exercise their functions and powers independently. At least, only in this way can they be effective. To be able to do this is of great help to the development of enterprises. Chinese enterprises may have to further strengthen their understanding of independent directors.

At that time, the chairman of Fuyao Glass was Wang Baoguang, not a major shareholder, but a representative of a small shareholder. When we choose him as the chairman of the board of directors, we will choose the influential and capable people to do it, rather than who is the major shareholder.

In the 21st century, it is also in line with international accounting?

Cao Dewang: when we investigate corporate governance abroad, we found a problem. When large enterprises communicate with each other, they attach great importance to the quality of the statements. It depends on who audited the statements. Whether they buy or sell things to you, they will consider your credibility, reputation and scale. Fuyao Glass is the first Chinese enterprise to be audited by the top five international institutes. It is crucial to employ a well-known international accounting firm.

Fuyao Glass introduced independent directors in 1995 and passed the audit of the five international institutes in 1996.

21st century: what are the impacts on Fuyao Glass of the introduction of the independent director system and the appointment of five international audit institutions?

Cao Dewang: it is very important to standardize his internationalization behavior and lay a foundation for himself to go international. If you want to internationalize, you must first internationalize your behavior.

No gain or loss in cooperation with Saint Gobain

21st century: in the process of internationalization, what happened between Fuyao Glass and international giant Saint Gobain from close cooperation to separation?

At that time, it is like the glass company of Saint Gobain. At the beginning, it was because Volkswagen and Audi entered China, and Saint Gobain was the supplier who wanted to follow in.

When Saint Gobain came in, he looked for Chinese enterprises to cooperate and obtained the controlling shares of Fuyao Glass through joint venture. At that time, Saint Gobain wanted to invest heavily in China and spent several billion dollars. Fuyao Glass was just one of their projects.

It turned out that I worked very hard. Saint Gobain came in. I thought he would take over and I would not do it. I could retire. I didn't want to do it any more.

When Saint Gobain retreated strategically and took the initiative to withdraw from Fuyao Glass, I bought back the shares. Not only was there no premium, but also a non competition agreement was signed. Within five years, Saint Gobain would no longer enter China to invest in the establishment of factories similar to Fuyao.

I have been the general manager of Fuyao Glass for 3 years, but the investment must be approved by Saint Gobain. The people in Saint Gobain are very gentlemanly. They never get angry at meetings, but if you have a meeting with you for hours or days, nothing can be solved.

We have no gain and no loss in cooperation with Saint Gobain. Saint Gobain is a huge bureaucracy, and now I understand. Now I approve the projects reported quickly, but the people below can understand that it is not easy for them to get a job.

21st century: Fuyao Glass once introduced professional managers as general manager twice, but they all left because of "acclimatization". What do you think of professional managers?

Cao Dewang: because of the professional managers hired from outside, they are not familiar with the corporate culture after they come in. In this way, we should sum up the experience of our own professional managers in the grass-roots level over the years. If the "airborne" professional manager becomes the general manager, the old employee becomes the deputy general manager, and the professional manager does not understand anything, how do you say (team) to convince you?

What is the purpose of financing?

21st century: the profit level and dividend ratio of Fuyao Glass have been very high. Why not use the advantages of domestic capital market to refinance to expand the industrial scale?

Cao Dewang: the debt ratio of Fuyao Glass is very low now. Although it is said in the statement that the debt ratio is more than 40% (Note: 47.61% by the end of the first quarter of 2020), the bank deposits more than 10 billion yuan. If the deposit is offset with the debt, there is no debt.

In my opinion, as enterprises and entrepreneurs, we must be fair. Big and small shareholders have the same rights and interests. Don't be smart. What do you think financing is for? Why do we need so much money?

At the beginning, the design of domestic capital market divided the capital market into the tertiary industry, serving the primary industry and the secondary industry. If a country's primary industry is developed, it needs the advanced technical support of the second industry; to do well in the second industry, it needs the support of the third industry. Everyone is in place, in line with the mentality of healthy development, so like the machine to turn, the country is very prosperous. I should enter my own role as an entrepreneur.

To truly achieve the development balance between the industry and the capital market, we need every employee to do it selflessly, and the market will be healthy. I am very proud that my efforts over the past decades have not been in vain. I have done so. I have taken good care of all aspects, including the state, shareholders, employees and customers.

21st century: what are your principles or goals for doing this?

Cao Dewang: a kind of ability, a virtue of a team. They say that Fuyao Glass is a family business. I said it has nothing to do with that. Ford, Toyota and Goldman Sachs are also family businesses. The key lies in the mind, realm and character of the leaders.

21st century: Why did Fuyao Glass go to Hong Kong for financing?

Cao Dewang: the purpose of listing and financing in Hong Kong is to cooperate with Fuyao Glass's investment and internationalization in Europe and America. Fuyao Glass H shares are only issued once, because it is enough to invest more than 1 billion yuan in the United States.

21st century: Fuyao Glass has so many dividends, can we invest it with less money?

Cao Dewang: dividends are the interests of shareholders. How can you damage his interests?

There is no contradiction between charity and enterprise

21st century: you donated 300 million shares of Fuyao Glass stock to establish the Heren foundation, which is the first time for China to donate equity and promote the system construction. Have you achieved your original intention and goal?

Cao Dewang: it should be said that the foundation is my practice. Charity is my need, and the needs of society are limited, because charity pursues goodness, which has no compassion. It is necessary to cultivate this heart. Especially when donating such a large amount of shares, this is a knife cut in, it will hurt, not you alone, but the whole family. The stock was worth more than 10 billion at its peak.

I have only 700 million shares (holding Fuyao Glass) in total. I originally wanted to donate 400 million shares to the Heren foundation. They didn't believe that I would donate, so I sold 100 million shares and sold 1.1 billion yuan to donate. It was approved by the State Council when he saw that Cao Dewang really donated. There was no precedent before the equity donation.

I don't know why I don't want to give them up?

I think the foundation is very successful. I just honed myself. This knife can cut into it. I did it. It is because of this mind to do this thing, will have such a good benefit. I'm fair. I won't take advantage of you. Do harm to others, the result is certainly not.

21st century: how to balance philanthropy and business operation?

Cao Dewang: there is no balance. The ambition of entrepreneurs is not for two pieces of money.

The ambition of entrepreneurs I wrote in my book (Note: Cao Dewang's autobiographical work heart if Bodhi), "the country will be strong because of you, the society will progress because of you, and the people will be rich because of you. This is what you do.".

Charity is a good cause. What's the contradiction between pursuing goodness and beauty and being an enterprise? Philanthropy should be promoted as a business. Only when the society is harmonious and stable can you have business; if the society is not harmonious and stable, what business do you have? There is no contradiction between charity and enterprise.

Four conditions for success

The 21st century: what role does the capital market play in promoting the development of Fuyao Glass and what enlightenment does the success of Fuyao Glass bring to the capital market?

Cao Dewang: no big one. It's unrealistic to say that there is no big one. For example, Saint Gobain came in and quit through the Chinese stock market. Saint Gobain was in need of Fuyao Glass at the beginning, but Saint Gobain didn't go out and Fuyao Glass couldn't do it. Good friend with Saint Gobain.

The most valuable thing is that we uphold internationalization, standardization and standardization in enterprise management, and we can consider how to balance the relationship among the state, society and individuals in the distribution of wealth.

21st century: what role do you think the personal charm of founders and helmsmen plays in the development of enterprises?

Cao Dewang: of course, it plays the role of soul.

I am the chairman of Fuyao Glass. I always feel that the success of an enterprise must have self-confidence.

The first is cultural confidence. We should have faith, cultivate compassion, compassion and kindness. Faith can bring a lot of knowledge and wisdom; we should have enough experience in business; we should have profound knowledge, whether it is financial accounting or purchasing sales.

The second is political confidence. Everyone has to talk about politics. The politics of entrepreneurs is to respect heaven and love others. To respect the heaven is to abide by discipline and law, and to pay taxes according to regulations; to love others is to love employees, suppliers, customers and shareholders, and protect their interests. If you do, people will respect you very much. The third is behavioral confidence. Dare to do, dare to be grateful, dare to challenge.

The other is self-confidence. Ability should be enough to support decision-making and management, which is the coordination of morality. Ability must also be greater than position and position in order to succeed. I'm not polite to say that, of course, I have these qualifications.

Facing the reality of global economic recession

21st century: this year, the central government proposed the "six guarantees", one of which is to ensure the stability of the industrial chain and supply chain. What do you think of China's industrial chain and supply chain?

Cao Dewang: as an entrepreneur, we must obey the decision of the Central Committee unconditionally. We will try our best to do it if we put forward it. However, we should not shout slogans, but we should do some real things. I think it is feasible to evaluate the environment correctly and think about and formulate measures based on the conditions of the enterprise itself.

The global development of the epidemic situation is still in a circle, and it needs a process. Now it is easy for enterprises to return to work, but difficult to resume production. The resumption of production involves the problems of capital chain, logistics chain and supply chain. Many enterprises are faced with this problem, and it is not a problem for several months, but for several years.

We can save a penny. Now we are faced with the problem that tens of thousands of employees can't be dismissed. Dismissal means disintegration. How easy is it to cultivate a team?

I suggest that the state help us. Can we reduce the burden of five insurances and one fund? Five insurances and one fund account for one third of our employees' wages. There is also great pressure on enterprises to pay value-added tax. If the enterprise rises again, it will be difficult to collapse.

21st century: are you worried about the global economic recession, how to avoid the retrogression of globalization, can it be avoided, or is there a better globalization path?

Cao Dewang: the epidemic situation is there. Different countries have different systems and different cultures, so we can only face this matter cautiously.

We are under great pressure. We have invested a lot in foreign countries. All foreign factories were closed before, but now they have been gradually restored. However, if thousands of employees are abroad, the basic salary will certainly be paid.

It is inevitable that the global economy will regress. A 20% - 30% recession is normal and will also affect China. Their purchasing power will be weakened, so will our exports.

I think everyone living in this global village has to face these things.

 

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