Dragon Lady

  • September 6, 2010
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A century ago Chinese wives were known as neiren, "women who didn't leave the home." Education opportunities were poor, and women were subjected to painful foot-binding, which hindered their mobility, especially if they had ideas of going far from home.

If nothing else, the rule of Chairman Mao ended that dark practice by enshrining the idea that men and women are equal. Today that same ethos, combined with an era of tremendous economic opportunity, is producing a generation of powerful women, including entrepreneurs. The ranks of our China Top 40 this year are dotted with businesses where wives and female founders play crucial roles.

Among these women is a quiet new billionaire, Chu Lam Yih, No. 13 on our list. But the most celebrated such woman this year is Yan Cheung, chairman of Nine Dragons Paper. Ranked at No. 5, Cheung made a splash in financial markets in March, when the manufacturer that she cofounded with her husband and her younger brother raised $480 million in an initial public offering in Hong Kong. In a "placement to corporate investors" in connection with the listing, Cheung's company attracted funds connected to Asian business tycoons such as Robert Kuok, Cheng Yu-tung and Lee Shau Kee. Its share price has since nearly tripled, and Cheung's 27% stake (approximated by the company) is worth $1.35 billion.

In person Cheung, 49, is candid and unpretentious, welcoming guests with a cold drink from a mini-refrigerator in an office at the company's headquarters in Dongguan, a manufacturing hub in southern China. New openings for women in China? She believes they've been there for a while. "The issue of men and women as equals has been solved for a long time," and this is increasingly evident amid the country's great economic boom, Cheung says. How far a woman goes depends on the role that she herself wants to play in life--and, she adds, on her communicating well with supportive family members.

Her greatest passion is clearly Nine Dragons and its future. The company has plans to invest $800 million, to more than double production capacity by 2009. That would make the company Asia's number one maker of packaging paper by next year, surpassing Oji Paper of Japan, and number one globally in production capacity by 2009.

Yet Cheung is looking even further ahead. "It isn't enough to be in China," she says. She wants the company to expand globally to lock in supplies of a key resource, pulp. But there's a broader goal: to gain Nine Dragons worldwide respect.

Cheung has had to earn her own stripes. The daughter of an army officer, she was born the eldest of eight children in China's southern Guangdong Province. She moved to Shenzhen, a center of China's early 1980s economic reforms, taking a finance job at a foreign paper-products trading company, where she built up ties with paper producers.

By 1985 she had a business idea of her own: importing waste paper into China. She set up a company in Hong Kong, using $4,000 in savings. "At that time people in China didn't have name cards, and I carried around an introduction letter," she recalls.

She may have been early in the game, but her timing was good. Hong Kong's economy was booming, generating supply, and China was awakening as an exporter.

Growth was limited, though, by Hong Kong's relatively small size. Cheung in 1990 packed her bags for Los Angeles. "The U.S. had rich resources, and if I stayed in Hong Kong I couldn't satisfy demand in China. At the time most of China's paper was imported, and the market potential was vast." In L.A., she and her husband, Ming Chung Liu, a Taiwan-born Brazilian national trained as a dentist, set up America Chung Nam as a paper recycler exporting to China on huge ships.

Looking back, she says getting started in the U.S. wasn't easy because of her limited language skills. But the style of doing business in the U.S., which emphasizes discipline, professional standards and reputation, matched her own. "The U.S. left me with a wonderful impression," she says. She overcame poor English skills. The family company has ranked as the number one U.S. exporter of waste paper since 2001 and contributes roughly 10% to Cheung's fortune.

In the meantime China's insatiable appetite for paper convinced her to open a paper plant back home. "The domestic paper-and-packaging industry at that time was not developed, and almost everything was imported," she says. Nine Dragons, whose name implies "highest fortune," was founded with a bank loan in 1995, in expectation of ever-rising demand for packaging for exports.

Cheung handles much of the strategizing at the company, her husband is the CEO and focuses on manufacturing technology and international development and Zhang Cheng Fei (Cheung's brother, who ranks No. 17 on this year's list) is involved in general management. (Forbes treats these fortunes separately because all of the owners are active in running the business. We left out Liu because he's not from mainland China. Another recent ranking lumped all into Cheung's total and had her as the richest person in China.)

Nine Dragons' vast headquarters in Dongguan reflects a family with an unusual international background. The buildings are clearly Chinese-style, with slogans urging hard work tacked to the outside. Yet flags hanging in front speak to the founders: China's flag is in the middle, surrounded by those of Brazil, Liu's homeland, and the U.S., where Cheung holds a green card and where their elder son is attending graduate school. Inside, in a conference room for guests, a photo of Cheung and her husband with George W. Bush hangs alongside shots of prominent Chinese politicians.

Nine Dragons doesn't have China's packaging-paper market to itself. Lee & Man of Hong Kong, with a market capitalization of $1.9 billion, is a healthy competitor. Nine Dragons, however, is bigger, and new capacity is adding muscle. In the 12 months to June 30, net income jumped by 3.5 times to $176 million on sales of $1.03 billion. Expansion, partly funded by the company's IPO, will allow the company to reach into China's growing volume of packaging paper for domestic sales. A new HQ is going up, replacing today's five-story building, which lacks an elevator.

Cheung says she is proud that in its first decade Nine Dragons, unlike many family businesses in Asia, hasn't overdiversified. "When you look at Nine Dragons' history, you can see that we are specialized in paper materials and the paper market. We don't do anything else."

Cheung is also critical of heavy-handed family-style management. "We're not a company where the family boss manages every detail. I don't approve of this kind of system, at all. I approve of how multinational companies are run. Although my company is small, I use this kind of management ideal." Nine Dragons has three general managers who are responsible for all aspects of the business; none are family members.

But she hopes that Nine Dragons will stay in family hands for a long time to come. Already 24-year-old Lau Chun Shun, the son in grad school, is a nonexecutive director. Reflecting on the world's most venerable paper producers, Cheung says many are family owned. "I hope that Nine Dragons can stay in the family for 100 years, too."

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