As Tsingtao brews, so Lucy Yuan grows

PUBLISHED : Monday, 23 July, 2007, 12:00am
UPDATED : Monday, 23 July, 2007, 12:00am

Company secretary started as bottle-cap maker

Lucy Yuan Lu's first job at Tsingtao Brewery was small but important - making bottle tops. When Ms Yuan, who was 20 at the time, joined the state-owned firm in 1975, the mainland had yet to open its economy and Mao Zedong was still in power.

The girl grew with a company that is now one of the world's best-known brands. Annual production capacity has surged from 50,000 tonnes to five million tonnes, factories from three to 50, and staff from 1,000 to 20,000. In July 1993, Tsingtao was the first mainland company - or H share - to list in Hong Kong.

And Ms Yuan turned from factory worker to top executive - she is now company secretary. After four years with the company, she joined the statistics department before studying for a degree in political administration.

Tsingtao Brewery was established by the German colonial government in 1903 - when the penultimate emperor Guangxu was still on the throne. The brew was initially for German residents and the army, but somehow it survived through two world wars, cultural revolutions and famine. The company is still headquartered on the same site in Qingdao, in Shandong province.

Last year, Ms Yuan became the first Chinese to be recognised by an international company secretary organisation with an award. She is married with a daughter.

Tsingtao Brewery was the first H share listed in Hong Kong and you helped with the listing. What were the challenges and difficulties?

It was very difficult because we did not know what it meant to be a listed company. We had little idea about the capital market and we had to learn from bankers, lawyers and accountants in Hong Kong.

To turn a state-owned company into a listed one is not easy. We have different accounting systems and different operating models. Before the listing, we did not have a board of directors and the factory head gave all the orders. Now, we have a board and annual shareholder meetings. Major transactions need shareholder approval, and we have to disclose our business plans and financial statement regularly.

Before, under the planned economy, we asked the government for money and it was the government which decided how many bottles of beer we produced. Under the market economy, we produce according to market demand.

What were the benefits of listing in Hong Kong?

The listing in Hong Kong and Shanghai brought in 1.6 billion yuan for the company's development. It also helped the brand. Before the listing, there were three factories using the Tsingtao Brewery brands with different management and products. This created confusion in the market. The listing led to the factories coming under one management.

Listing in Hong Kong also helped increase international awareness of the Tsingtao brand in the United States, Europe and Southeast Asia and hence boost sales.

Shanghai Petrochemical was original chosen to be the first to list in Hong Kong. How did Tsingtao Brewery beat it?

Due to the brewery's simple business nature and company structure, we were able to list first. Another reason was the brand was well known internationally. The Hong Kong and mainland regulators wanted the first China company listing in Hong Kong to be successful. And it was. We had a 110-times oversubscription.

Is it difficult to follow the listing rules and corporate governance measures in Hong Kong? Tsingtao Brewery also listed its A shares in the mainland in August 1993. Is it hard being a dual-listed firm?

We have to prepare two sets of accounting standards, according to mainland and Hong Kong rules. Our principle is to follow the tougher of the two rules. It is better today as the gap in the accounting and listing rules are getting narrower.

You are in charge of investor relations at the firm. What are the keys to making sure the relationship works?

We need to be honest with investors. We also need to follow all rules and regulations.

What are the most common questions from international and domestic investors?

Foreign investors have a longer-term view. They ask about forward-looking plans, such as the long-term development of the company and the macro-view about the industry.

Foreign investors are usually concerned about the next major development and challenges to be faced by the company.

Mainland investors are more interested in dividends.

US beer giant Anheuser-Busch holds 27 per cent of the company. Why did you make such a deal and do you worry the mainland's oldest brewery brand may one day be controlled by a foreign company?

The alliance with Anheuser-Busch was intended to strengthen Tsingtao Brewery's capacity when the mainland entered the World Trade Organisation, and we had to cope with more competition.

We had to improve ourselves as overseas beer makers could well make 10 million tonnes of beer per year, and we had a much lower production capacity. The alliance helped improve our technology and international distribution.

Our agreement says that unless the government decides to give up ownership, Anheuser-Busch cannot become the largest shareholder.

Will you have other partners in future? Do you worry about a dispute like the one Wahaha is having with French partner Danone?

No. Our relationship with Anheuser-Busch has been good. It has sent directors to join our board and provides a lot of staff exchanges and training. It is important that we have clearly written rules on all aspects of our co-operation. This reduces the chance for disputes.

Why did you join Tsingtao Brewery and how do you like the company?

After graduating from high school in Qingdao in 1975, we had four career choices - the brewery, the watch maker, the sewing machine manufacturer or the bicycle firm. I joined Tsingtao as it was the most well known. I made the right choice as the other three firms no longer exist.

What has been the highlight of your career?

I have been at the Tsingtao Brewery for 32 years and witnessed big changes. I also was involved in turning it from a state-owned enterprise to a listed company. It was a painful experience. Before, we only needed to produce the quantity as told and when we ran out of money we asked the government for help. Now, market forces dictate everything.

As a woman, is it difficult to build a career in the mainland?

No. Marriage and having a baby did not affect my work. I took a university course when my daughter was a year old.

In China, we have six months' maternity leave compared to Hong Kong's 10 weeks. I took only two months off after giving birth as nobody was taking care of my work at that time.

I know many Hong Kong women who are outstanding and successful but they are single. I think it is different in China as many women have both family and career.

Half of Tsingtao Brewery's middle management are women.

In the mainland, as long as you are capable and hard working, there will be opportunities for women to be promoted to senior positions.

Any advice for the young?

Choose the career you like, and don't go for a job you do not like.

Be prepared to sacrifice your time and effort to the industry and acquire new knowledge. Then you can grow with your company.