Companies

Longda president has the world on his plate

By Du Juan (China Daily)
Updated: 2010-11-02 15:05

Gong Xuebin

BEIJING - Since his first job as a rural bricklayer more than 50 years ago, Gong Xuebin has built an international food empire with a huge stake in the Japanese market and others across the world.

However, in recent years Gong has turned his sights on his home market, because "Chinese people have enough money to buy expensive, high-quality food now", he said.

Gong Xuebin, a 73-year-old farmer-turned entrepreneur from Laiyang, Shandong province, is president of Longda Foodstuff Group.

"It is very hard to continue to increase our Japanese market share now, and so we need to focus on China more," Gong said. "It is all about strategic management."

According to Longda, the group's profit increased by 1.3 billion yuan ($196 million) in 2010 compared with the same period last year, thanks to demand from the domestic market.

In order to expand its market share in China, Gong initiated a strategy that saw Longda change from a manufacturing group to a brand-oriented company.

It has opened 2,000 meat retail stores in Shandong and started to promote Longda peanut oil nationally in 20 provinces and cities, including Beijing, Hebei, Henan, Guangdong and Fujian.

As the head of a company in the agricultural industry, Gong said he has learned a lot from Japanese principles.

"Japanese people are extremely strict about the quality of their food products," Gong said. "So, we need to meet their standards if we want them to buy our goods."

In 2004, Central China Television reported that a glass noodle brand called Longkou contained carcinogens. Longda was one of the producers of the brand.

After many domestic and Japanese retailers refused to sell the noodles, Longda's cash flow became severely restricted.

However, following official tests which declared the news reports to be incorrect, Japanese companies that had stopped importing Longda's food products apologized publicly to the Chinese manufacturer.

"I was touched by their apology," Gong said. After that, the Japanese market became a staple of his overseas business, accounting for 8 percent of the company's exported products.

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Longda made $204 million through exports in 2009 with a growth rate of 5 percent compared to $194 million in 2008.

"We provide food to a number of countries, but Japan is likely to remain Longda's biggest foreign customer," Gong said. "US companies ordered our green soy beans because the simple processing procedure means that the price is relatively low.

"Americans cannot afford higher prices due to the financial crisis," he joked.

Gong also diversified, setting up a furniture company, Longda Group Wood Processing Co Ltd, in early 1992. Eighteen years later, its foreign-exchange earnings have reached 30 million yuan per annum. It is now one of the biggest manufacturers for the Swedish furniture company Ikea.

When Ingvar Kamprad, the Swedish business magnate and founder of Ikea, came to China in the summer of 2009, Longda was one of the companies he visited.

Gong Xuebin met his partner in his wood-processing factory instead of the more traditional office setting.

The 84-year-old Kamprad and Gong, aged 73, squatted on their heels, and spent an enjoyable 30 minutes assembling furniture together.

Gong believes that hard work is the natural path to success for farmer-businessmen in modern China. During the meeting with Kamprad, Gong told him in Chinese: "I am so encouraged to see that you are still working at your age."