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SCMP Reporter

IF there is anything to epitomise the success of patriarch Deng Xiaoping's economic reforms, it is the growing wealth of the Liu brothers.

  Just 13 years ago, Liu Yonghao earned only 38.5 yuan a month after graduating from university. Now, with his three elder brothers, he owns an 85 per cent stake in Hope Group, whose net assets are worth one billion yuan (about HK$929 million).

  'I was dissatisfied at that time, first with my salary, which I thought should be more,' said Mr Liu, 44, Hope's president.

  The other thing was that he was disappointed at the backwardness of China's farmers, which he knew well during the Cultural Revolution when, as one of the literate youngsters, he was sent to remote villages as a zhi qing for learning.

  'In China, every 300 farmers could only grow enough for one person, but in the US, every three farmers could feed 1,000 people,' Mr Liu said.

  Dissatisfaction led the then young men to sell watches and bicycles and raise 1,000 yuan to start the business which began from raising chickens and pigs.

  By 1989, the Liu brothers had put together 10 million yuan to venture into the animal-feed business, in which they found big potential.

  'Along with rising living standards, people will have a higher demand for breeding poultry and livestock, of which 60 per cent of the cost comes from animal-feed,' he said.

  With the blessing of economic reforms, Hope, with headquarters in Sichuan's Chengdu, has become China's largest private enterprise with 48 plants across the nation. The group's output was worth 1.7 billion yuan last year and expects to reach 3.5 billion yuan this year.

  The Liu brothers were also ranked by the US magazine Forbes as China's richest men last year.

  Mr Liu did not like to boast about his wealth and said he still drove a locally produced Santana, but he praised economic reforms.

  'If it were not for economic reform, we would not have dared to think about having our own business,' Mr Liu said.

  'During the Cultural Revolution, if farmers raised 10 chickens, it was capitalism. But if you had only nine, that was fine, it was socialism,' he said.

  Private enterprises have become increasingly important to China's economy, which had been dominated by the state sector.

  Even during the austerity programme, private enterprises find more room for expansion.

  'The more difficult it is, the faster we develop because we don't depend on government funding. So when other state-owned participants are squeezed by the credit crunch, we capture the room they leave,' Mr Liu said.

  Apart from absorbing idle workers from ailing state-owned enterprises, private enterprises have breathed fresh air into the mainland's antiquated management system, which has suppressed employee efficiency.

  Mr Liu said Hope managed its employees with both discipline and care.

   The group lists human resources as its wealth. It pays a wage 50 to 100 per cent higher than the state sector for ordinary workers. For senior management, the pay is usually five and even 10 times higher.

  Mr Liu said Hope also would delegate power to each level of management, providing them opportunities to apply their experience and expertise.

  The Chongqing plant was opened in 1992 and managed by the general manager Xiong Changxue. But in the past three years, Mr Liu has visited the plant only four times.

  'If you find they've done a good job, just let them do it. That will boost their confidence,' Mr Liu said.

  'I will also provide them with better salaries and even a house. Coupled with the respect paid by the community because of their work [for farmers], they will work hard.'   Hope also has a market-orientated strategy to cater for customers. Its factories are open around the year, so customers can buy the feed whenever they need it. 'We treat our customers like God,' he said.

  China's growing demand for good-quality pork has propelled Hope's growth as well as drawn many foreign investors.

  Compared with foreign competitors, domestic plants lack the capital and technology. But Mr Liu was not afraid of the challenge, saying that the trump card was their knowledge of the Chinese market.

  'The market economy with Chinese characteristics is like an ocean, in which we have been swimming for more than 10 years. So we are most familiar with it,' he said.

  To lay the foundation for growth, Hope plans to have a total of 100 factories across the country by 2000, with a production value of 15 billion yuan.

  In addition to the core animal feed operations, the group is involved in food processing, property development, construction and engineering.

  Mr Liu said the animal-feed business, which was of lower risk and profitability, would make up half of the business by the end of the century.



Lius reap Deng's dividend