past Really is prologue

Hongdou Group, oneof China's manufacturingGoliaths in terms ofgarment industry,always keeps weavinglegends and fermentingflourishes. "Hongdou'"is a transliteration ofChinese characters "'redbean", which bearsa special meaning inChinese culture: rod beanisjequirity, symbolizinglove and blessings, asthis connotation declares.Hongdou Group alxvaysrefreshes its progresses:shang Lin'

In 2oo6, Hongdou Group had a stellarperformance both in output and sale sectors:garment output ranked the first and revenue, thesecond, valued at 14.3 billion Yuan. Six of thefirst batch of well-known trademarks in Chinabelonged to Hongdou; Last year, Hongdou Groupwas rated as one of the most competitive brandsby Ministry of commerce. Among the top 5oprivate enterprises, it ranked the ninth. This yearthe other three titles of Chinese famous brandswere pocketed by Hongdou. Besides. it is alsothe first one who passed the assessment of socialresponsibility of enterprises conducted by ChinaNational Textile & Apparel Association.

As the president of Hongdou Group. ZhouHaijiang himself is also a Hatcher of legends:the first president of private enterprises in Chinaobtained through mass election: the first Chinesetextile industry entrepreneur appeared in thecover of "Forbes" magazine; the firstChinese garment entrepreneurs madehis voice lingering in MIT forum, toname but not a few. "Red" and "Green"is a unique defination made by ZhouHaijiang for its company. "Red" refersto Communist Party building inside theircompany; "Green" points to the socialresponsibility. The equation "PrivateEnterprise = Modern enterprise systemParty Building" is a spirit sustenancefor Hongdou's operation and also a vividexplanation of Zhou Haijiang!s character.

Zhou Haijiang created a lot of "lirst',which also reflect the vicissitude of China's privateenterprises:

President obtained throughmass election

At the end of 1987, Zhou Haijiang. ~vorking ata university in Nanjing, entered Hongdou Group,which sent a sensational at that time. "Studentsresigning from the civil service and carved outwith his father" is more like a milestone of Chineseprivate enterprise of that day nourished by theopening up policy, in fact, from 1957 when hisgrandpa Zhou Linsheng started a small cottonprocessing workshop to 1983 when his fatherworked as director of that Knitting factory, nomatter how many changes they went through,Hongdou Group's head has always been in thegrasp of Zhou's family. In September of 2oo4,Zhou Haijiang got the appointment certificateof president from his father, however, this wasnot a so-called inherited appointment, becauseZhou Haijiang gained his power through fiercemass election with other 21 eligible candidates.Zhou Haijiang won a runaway with 49 votes outof 5o directors. After being elected as president.Zhou Haijiang said: "I am pleased to be elected

as president of Hongdou Group, but the mostimportant thing is" system selection "is finallyapplied in our enterprises which guaranteed thesustained and healthy development of enterprises."

First Chinese textileentrepreneur appeared in thecover of "Forbes" magazine

On February 7th, 2oo5, a Chinese faceappeared in the cover of "Forbes" magazine, thecover commentary was: "In Search of China'sApparel Fortune". This "Chinese face" is ZhouHaijiang. At that time, China's textile industrywas faced ~vith a potential "identity crisis": thebeginning of that year, with the withdraw oftextile trade quotas~ some people speculated thatChinese textile enterprises will suffer lack ofsocial responsibilities, reduction of staff welfareas well as increasing ecological pollution, etc.xvith these questions, "Forbes" came to Chinaand found Hongdou Group. "China's textile andgarment enterprises is improving their productmix rather than in blind pursuit of export volume."such assessment was made by "Forbes" after theirinterview of Zhou Haijiang, whose refined manner,humor and wisdom overthrew Western impressionof Chinese entrepreneurs, which made him the firstChinese textile and garment entrepreneurs appearedin front cover of the "Forbes" for 52 years.

Hongdou Group has a strong penchantfor social responsibility; Hongdou Grouphas a sewage treatment team led by ZhouHaijiang. In 2oo3, business invested over 3omillion RMB to build a sewage treatmentplant, which doesn't merely solve internal sewagetreatment, but also help some other local smallbusinesses to resolve sewage issues. For years oftheir contribution to social responsibility, HongdouGroup became the first enterprises who fullyimplement "corporate social responsibility", and thefirst enterprises that got CSC9oooT authenticationin the "2oo7 China Textile roundtable CorporateSocial Responsibility Forum"."China's voice" echoed in MITforum

"Globally, more division of garmentmanufacturing industry market should bepoctketed by China, and Europe and the UnitedStates apparel manufacturing enterprises shouldrecognize China's garment industry's competitiveedge, meanwhile, China should speed up structuraladjustment and industrial transfer to engage inother more profitable industries ...'. This is fromthe speech delivered by Zhou Haijiang in MITforum in April 2oo6. This is the third "first" createdby Zhou Haljiang for five years: the first Chineseclothing entrepreneur boarded the MIT forum.Zhou Haijiang's viewpoints aroused great interestsof hundreds of participants. A Chinese overseasstudent with high excitement made a conversionwith Zhou Haijiang after speech, because ZhouHaijiang's ambitions to the development of nationalindustry with his ability refreshed his impression ofChinese entrepreneurs.

On October 16th, 2oo7, Zhou Haijiang tookpart in Congress of CPC and become the focus

of Medias home and abroad, here are somehandpicked questions to share:

Q: Could you tell us what is your total capitalof your company? There are 8oo directors in yourcompany, so what do your and your family's stocksaccount for'? And what do your employee's salaryon average?

A: Our company enjoyed 5o years' history.In 1957, three cotton workers pitched in and setup a cotton workshop, my grandfather was one ofthem. But unlucky as them, their business, like atiny boat in the stormy ocean, went through a lotof suffers till 1983, when my father who was thecommunist secretary of our village at that time.was appointed as the leader of that enterprises.In 1988, I quit teaching career and came to thiscompany, so three generations of our familydedicate our enthusiasm and efforts to Hongdou.My own stock constitutes 1o% of the total, and allthe stocks of our family make up less than 3o%(of the headquarter of our company). At present,the salary of our workers is 2o thousand RMBon average per year. whereas salary of those staffworking in offices is a little bit higher.

Q: What's your anuual export volume tothe Unite State? And what's your plan for yourcompany's development?

A: In the era of planned economy, privateenterprises like Hongdou had no access tothe quotas of export, whereas when it cameto market economy, productivity capacity isthe criterion to distribute quotas, so we areentitled to have some. After the withdraw ofthe limitation of quotas, our export volumewill increase accordingly. In the past, Japan isour main destination, now we have two tradecompanies in New York and Los Angeles,respectively. Our export value is 1oo milliondollars annually, 6o% of which are produced inEurope and America with the latter surpassingslightly. We strive to make Hongdou the worldfamous brand, so our cost keeps climbing,fortunately, central government encouragescompanies to expand business abroad, so weestablished a industry center in Kampuchea,who offers a lot of preferential policies, such ascheaper land and labor resource, but design andsale mainly rely on Europe and America.

Q: Except garment, what kind of otherproducts do you export to Japan and what's thevalue'? Are those products processed as requiredor of your own brand? What's the proportion ofyour own brand of your total export? AI present,Shanghai's stock market sho~vs a positiveperformance, have you ever considered to gopublic in overseas market? Do you have somecooperation or operate affiliated company withJapanese counterparls? If not, do you have anyinlention to that?

A: We export nothing to Japan except garment,which account for less than 3o% of total. 1oo% ofour product sold in Japan are designed or processedof our own, and our own brRnds don't occupytoo much shares. We still have a nice yew base,which were planted for seven years, after goinginto public, we will reap 2oo million every year, so

we decide to list this section into public overseas.For the time being, we discuss this project withan American company, and so does a Japanesecompany. We have much cooperation with Japanin terms of garment, due to strict requirements ofJapan in product's quality, we made many qualitycontrol regulation accordingly.

Q: During the 17th Congress of CPC, presidentHu Jintao paid much importance on capitalmarket, capital policy as well as capital means, sowhat's capital strategy of Hongdou for your nextdeve1lopment?

A: We nlade a lot of efforts to accelerateindustry upgrading and transferring in order tomanage capital operation well. Based on soundcapital operation, we can further manage capitaloperation better. Good achievement in turn tobenefit stock holders. After the 17th Congress ofCPC, our main task is to make our public companymore flourish !

Q: What's your goal for your company's nextphasc?

A: Brand building and R&D of technologyhave always been our endeavors. We believe thatbrand construction need underprops from threeaspects: brand connotation, brand image andbrand backup.

A brand's connotation consists of two items:technology and culture. Technology includesadvanced techniques and equipment, skilledworkers, prot~ssional leaders and conceptions andso on. It is saf~ to say that Jiangsu Province's textileindustry equipment is not only leading China butalso the world, whereas our brand influence isfar behind our counterparts, and the crux lies onthe different attitude to cultural value. We ignorethe maintenance of engine, then how do we getthe power to advance, so we should not merelyemphasis on technical content but also the culturalcontent.

How come the top international enterprisesfocus on construction of products images ratherthan that of leader image, because the brandimage features continuous, and can be inheritedand accumulated. Therefore, a brand operation isnot a matter of two or three days, however, it isgenerations' pursuit and efforts. So if we want tobe part of the market division home and abroad,we have to pay importance on products imagesconstruction

Last but not the least, intellects, innovation,quality and social responsibility are also the mostimportant supports to brand cultivation.

"Private Enterprise=Modem enterprise systemParty Building", an unique conception made byZhou Haijiang, which not merely paints a horizonfor private enterprises' development but also aidsHongdou Group itself to tbrge prosperities. Due toits cohesive po~vcr and everlasting charm, we cansay in no uncertain terms that more achievementsare ahead of them, and past really is a prologue forHongdou!