Identifier
Created
Classification
Origin
07SHANGHAI45
2007-01-23 08:14:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Consulate Shanghai
Cable title:  

WENZHOU'S CHINT - A MODEL ENTERPRISE

Tags:  PGOV EINV PINR KIPR ELAB CH 
pdf how-to read a cable
VZCZCXRO5362
RR RUEHCN RUEHGH
DE RUEHGH #0045/01 0230814
ZNR UUUUU ZZH
R 230814Z JAN 07
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 5458
INFO RUEHBJ/AMEMBASSY BEIJING 0759
RUEHCN/AMCONSUL CHENGDU 0403
RUEHHK/AMCONSUL HONG KONG 0499
RUEHSH/AMCONSUL SHENYANG 0408
RUEHGZ/AMCONSUL GUANGZHOU 0385
RUEHIN/AIT TAIPEI 0342
RHEHAAA/NSC WASHINGTON DC
RUEHGH/AMCONSUL SHANGHAI 5808
UNCLAS SECTION 01 OF 02 SHANGHAI 000045 

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR EAP/CM AND INR/EAP
STATE PASS USTR FOR STRATFORD, WINTER, MCCARTIN, ALTBACH

E.O. 12958: N/A
TAGS: PGOV EINV PINR KIPR ELAB CH
SUBJECT: WENZHOU'S CHINT - A MODEL ENTERPRISE

REF: SHANGHAI 44

(U) Sensitive but unclassified. Not for dissemination
outside USG channels; not for Internet distribution.

UNCLAS SECTION 01 OF 02 SHANGHAI 000045

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR EAP/CM AND INR/EAP
STATE PASS USTR FOR STRATFORD, WINTER, MCCARTIN, ALTBACH

E.O. 12958: N/A
TAGS: PGOV EINV PINR KIPR ELAB CH
SUBJECT: WENZHOU'S CHINT - A MODEL ENTERPRISE

REF: SHANGHAI 44

(U) Sensitive but unclassified. Not for dissemination
outside USG channels; not for Internet distribution.


1. (SBU) Summary: During a visit to Wenzhou on December 14-15,
Congenoffs' toured the CHINT company, one of Wenzhou's leading
enterprises. According to CHINT executives, the company's
success was due to its President's leadership and its close
relations with the local government. CHINT is the third largest
producer of electrical goods in the world and one of the leading
enterprises of Wenzhou. Executives appeared intent on meeting
quality standards and claimed that they provided employees with
training and healthcare. The company was also interested in
social issues and company President Nan Cunhui has given
approximately 100 USD million RMB to various charities in the
past two years. Wenzhou's economic development and migrant
labor practices were reported reftel. Wenzhou's religious
situation will be reported septel. End Summary.

Nan Cunhui: A True Rags-To-Riches Story
--------------


2. (SBU) Congenoffs toured the CHINT factory and headquarters
in Wenzhou on December 15 with CHINT Vice President Lin Kefu and
Fred Hong, one of CHINT's legal advisors. Congenoffs also met
with CHINT Chairman Nan Cunhui on December 5 and at a dinner on
December 14. Lin and Hong were also present at the December 14
dinner. Nan is a true rags-to-riches story. A former shoe
cobbler, Nan founded CHINT in 1984 with a 6,000 USD investment.
Nan was ranked 58th in Forbes "China's Top 100 Richest
Entrepreneurs in 2002" and is often asked by the Chinese
government to represent entrepreneurs at governmental meetings.
During the December 5 lunch, Nan showed Congenoffs pictures of
him with former President George Bush, Former Chinese President
Jiang Zemin, former President Bill Clinton and Henry Kissinger.
He had also just returned from Stanford University where he
participated in an exchange on high technology.


3. (SBU) According to Lin, Nan was the driving force behind

CHINT's success. Lin compared him to Bill Gates and said
although Nan had never gone to college, he was constantly
learning and had spoken at universities such as Harvard and
Stanford. Nan was also very good with people and knew how to
unite people towards a common goal. Lin added that CHINT was
also successful because of the local government's support. Lin
also served as the Secretary of CHINT's Party Committee and
added that the communist party's role was to help companies such
as CHINT to grow stronger. He noted that Nan was not a member
of the communist party and, although he could join the party,
there was no need for him to be a party member.

Factory Conditions
--------------


4. (SBU) CHINT is the third largest producer of industrial
electrical equipment in the world behind Siemens and ABB. It
had 15,400 employees and factories in Shanghai, Hangzhou, and
Wenzhou. Its Wenzhou factory produced low voltage electrical
goods, while its Shanghai factory produced middle to high
voltage goods and had a research and development center. The
Hangzhou factory produced industrial automatic control systems.
Its headquarters are located in Wenzhou. According to its
promotional materials, it was involved in electrical projects in
Italy and Pakistan and also had projects with the Three Gorges
Dam project, Baosteel and Chinese Central Television (CCTV). It
also had a joint venture with General Electric in Wenzhou.
CHINT executives appeared intent on making the company operate
at world-class standards and have implemented plans regarding
Six Sigma (quality control program) and RoHS (restriction of
hazardous substances). The company had also installed an ERM
(enterprise resource management) software system for managing
company-wide resources.


5. (SBU) According to Hong, Nan was considering listing the
company on the London, Hong Kong or U.S. stock exchanges. He
was not interested in obtaining more capital, but believed that
listing the company on an international market would help it get
more recognition and compete with ABB and Siemens. He noted
that Sarbanes-Oxley accounting constraints might limit interest
in CHINT's listing on an U.S. stock exchange, however, there was
still prestige in being one of the first homegrown Chinese
companies to do so. One of Nan's goals for the future is to
make CHINT the leading supplier of industrial electrical goods.

SHANGHAI 00000045 002 OF 002





6. (SBU) During Congenoffs tour of the factory, the factory
appeared clean, heated, and well-lit. However, there were fumes
in the air that might have indicated poor ventilation. Most of
the factory workers appeared to be stressed. Few looked up from
their work and most appeared to be working as fast as possible.
According to CHINT Vice Director Zhang Xinghua, workers were
paid by the number of pieces they assembled. A worker could
make up to 1,600 RMB (206 USD) per month and the lowest paid
workers had a salary of 1,200 RMB (155 USD) per month. Workers
were required to meet production quotas, but he did not provide
details on what this meant. The factory's working hours were
from 8:00 to 4:30 and there were two shifts for lunch. Workers
worked an average of five and a half days a week. One week they
worked five days and the next they worked six days. Most of the
workers were from other towns and lived in dormitory-style
housing at the factory. Factory workers lived in four-person
rooms, engineers were provided with their own rooms and
high-level managers were provided with an apartment. Workers
had to pay an average of 30 RMB a month to live in the dorms.
Those who were from Wenzhou and lived outside of the factory
were provided with a small stipend for housing.


7. (SBU) According to Zhang, most of the workers at this
factory were females between 20-25 years of age. The turnover
rate was only five percent per year, although this did not
include the people the factory let go. (Comment: It is
difficult to believe that the turnover rate was only five
percent given the young age of the workers and the fast pace in
which they were working. End comment.) Zhang claimed that CHINT
valued its employees and took measures to improve their lives.
The factory had a gym, ping-pong and basketball equipment as
well as a library and karaoke facilities. It also provided
medical check-ups to its workers for free. Nan said in the
December 5 meeting that the factory also provided training for
workers and was one of the first companies to provide employees
with insurance and healthcare. Truly outstanding workers were
given stocks in the company to increase their loyalty.

Giving Back to the Community
--------------


8. (SBU) CHINT officials also stressed that CHINT was a
productive part of the community and interested in improving
life in China. Lin said Nan wanted to improve society and had
contributed nearly 100 million RMB in two years to various
charities. He donated money to the Red Cross for a HIV/AIDs
project and to a HIV/AIDS village in Henan. After the district
government of Yueqing complained that Nan only gave his money to
outsiders, Nan donated 20 million RMB (2.6 million USD) to the
Yueqing district charity fund. Nan is from Yueqing and his
factory is located in the district. Nan noted in his
conversation with Congenoffs that he was concerned about the
environment and made sure that his factory recycled. Lin told
Congenoffs that CHINT was very strict about the environment and
treated all of the water near the factory. Lin added that Nan
was typical of many entrepreneurs. When he first began his
company, Nan was not very cultured or educated. But as he
became more successful, he became more socially aware and was
not interested in broader issues, such as the environment.
JARRETT