Former navy man turns start-up into green giant

PUBLISHED : Monday, 19 November, 2007, 12:00am
UPDATED : Monday, 19 November, 2007, 12:00am

When Zhang Jianhong left the navy in 1987, he had no money but had a dream to build his own business that would make profit while contributing to society.

Twenty years on, his dream has come true. Dongyue Group, the company Mr Zhang founded in his hometown Zibo in Shandong province, has grown into the mainland's largest environmentally friendly refrigerant maker, employing a staff of 3,400 and producing 300,000 tonnes annually.

The 46-year-old ex-navy man is now chairman and chief executive of the refrigerant maker which, according to market sources, is now poised to raise as much as US$220 million to expand its production capacity in an initial public offering of 520 million new shares, 25 per cent of its enlarged share capital, in Hong Kong.

The company today will hold a roadshow to promote an international placement of its shares and hold an initial public offering for Hong Kong retail investors from November 26 to 29.

The shares will be priced on November 30 and begin trading on December 10. US investment bank Citigroup is arranging the deal.

Dongyue makes refrigerants for energy-saving refrigerators and air-conditioners. The company also makes chemical products such as polytetrafluoroethylene, used in nonstick pans and other household appliances as well as in the medical, vehicle and space industries.

'I was 26 years old when I set up the company at a time when the country was undergoing economic reform. I teamed up with a relative who had just retired from the chemical industry,' Mr Zhang said.

'I was a penniless retired naval man, so I could borrow only HK$300,000 to buy a small machine to make the products. It was hard as there were only three of us - I, my relative and a friend - and we had to do everything ourselves.'

The start-up had to compete with other large refrigerant makers that were state-owned but Mr Zhang relied on his military background to overcome these challenges.

'I was trained by the military to have courage to cope with a tough environment. In addition, the military has the best skill in the country to manage people and resources,' he said.

'I adopted the same management style to ensure the company was run with the same high level of efficiency and that the products were up to the highest quality.'

Since pollution was now a big problem in the mainland and the government was keen to find solutions, environmentally friendly products would have further growth opportunities, said Mr Zhang.

'But you can build up a reputation only if you can produce the best-quality products,' he said. 'We do numerous tests and impose controls to make sure our products are safe and up to the highest standards.'

Meanwhile, rapid economic growth in the country would ensure increased demand for refrigerants and silicon products, said Mr Zhang.

'The people's increased awareness of environmental protection will ensure our environmentally friendly chemical products have golden opportunities,' he said.

What worries him, though, is a possible economic recession in some overseas markets.

'The uncertainties of the international markets are a concern. But fortunately we do not rely only on overseas markets but also on domestic demand,' Mr Zhang said.