Zhang Yin: building a business empire out of scrap

Zhang Yin has a reputation for wanting to keep out of the spotlight. As an entrepreneur, she doesn't see the need to put herself in the public eye. She couldn't help but grab headlines, though, when in 2006, Huron Report named her China's richest person. With a fortune estimated at 27 billion yuan (2.6 billion euros), Zhang was the first woman to top the list.

Humble beginnings

Zhang founded Nine Dragons Paper in 1985, after losing her job as an accountant in a Hong Kong firm that went bankrupt. It is almost incomprehensible that the business empire Zhang built was started with a mere 30,000 yuan (2,895 euros) that she had saved up. But Zhang, having come from a soldier's family in Heilongjiang was used to hard work.

Money Week reports that in a rare interview, Zhang reminisced about her childhood. She came from a large family, and she remembered having meat on the table only during holidays. She said the lack of material things taught her to appreciate the value of possessions, and adds that her parents had always encouraged their children to face life head-on and solve their problems independently.

Those wise words might have something to do with Zhang now being the world's richest self-made woman, richer than either American talk show host Oprah Winfrey or British author J.K. Rowling, who shot to fame with her Harry Potter series.

Slow road to success

In 1990, Zhang and her husband Lai Ming-chung, a Taiwanese doctor who was raised in Brazil, moved to Pomona, California where they started a paper collection company out of their apartment. They would buy waste paper from garbage dumps, and send it back to China to be made into packaging for China's growing consumer-goods market. The company, American Chung Nam, Inc. (ACN), is now the biggest exporter of waste paper in the United States.

In 1996, Zhang went back to the Pearl River Delta to set up Nine Dragons Paper. Two years later, she expanded her business into the production of cardboard, to satisfy the growing demand for packaging. Today, Nine Dragons is China's biggest manufacturer of cardboard with a clientele that includes multinational giants Sony, Nike and Coca-Cola.

The next step was opening the family business, Zhang, her husband and her brother Zhang Chingfei own 72 percent of the company, to an IPO (initial public offering). The stocks were offered on the Hong Kong market in 2006, and share prices rose by 40 percent on its first day of trading.

Zhang told Xinhua that foresight played a key role in her business success. "While most domestic producers were using machines with a production capacity of less than 50,000 tons, our first machine had a capacity of 200,000 tons. We have higher goals."

The company is planning to invest 593 million euros to double its capacity in 2009. The company is set to build a 2 billion yuan (193 million euros) plant in order to increase capacity to 800,000 tons of paper products annually, bringing the company closer to its goal of becoming the world's number one producer of packaging paper products.

Challenges ahead

Low overhead was a strong factor that contributed to the success of ACN. Garbage dumps in the US were more than happy to sell their waste paper at a low price. Shipping was also relatively cheap as ships going back to China were almost empty after delivering their cargo American ports. However, this tend may be changing. In the United States, waste paper is slowly being treated as a commodity and according to Bloomberg, prices have risen from 100USD (74 euros) a ton in the 1990s to 135USD (100 euros) a ton currently. The US government might also restrict the export of scrap paper to China.

China's paper-making industry is heavily reliant on imported waste paper. The sector has been growing faster than any other in the world. It is currently the world's second highest in terms of production, 49.5 million tons in 2004, and consumption, using 54.4 million tons of paper.
And China has ten million tons of paper every year that are either burned or buried in landfills without being sorted from other garbage.

Li Jianhua, a member of the National People's Congress, has proposed that China should have laws to improve its waste paper recycling system by establishing recycling agencies and unifying standards for sorting waste paper. Li sees this as a way of solving the raw material shortage in the country's paper-making industry and building a resource-efficient society.

Zhang realizes that environmental protection is part of the business that she runs. Nine Dragons puts an average of 2 to 3 percent of the cost of a project towards pollution prevention and the company monitors its waste water discharges round-the-clock.

Zhang also emphasizes, however, that she didn't make her fortune out of recycling paper. In an interview with her published by Women of China, she said, "How could a person become rich by recycling waste paper? In fact, what I have done in recent years is to translate recycling paper into paper manufacturing."