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Entrepreneurial Pioneer of Sinochem UK

Date:2012-09-07 Source:Sinochem Group

By Zhao Xuemei, Lin Bai

He is graceful in bearing, learned and refined, and intellectual. The long eyes behind the gold-rimmed glasses look bright with calmness and far-reaching insight, as if telling an overseas business story with ups and downs…. He is Lei Jiazhao, Managing Director of Sinochem (United Kingdom) Ltd. (Sinochem UK for short).

1986 saw Queen Elizabeth II of the UK visit China, which marked British queen’s first visit to China and opened a new era for Sino-British relations. In the same year, China National Chemicals Import and Export Corporation (now known as Sinochem Group) set up a branch in the United Kingdom (i.e. Sinochem UK), which commenced its formal operation in 1987. At that time, the establishment of Sinochem UK was a significant event in the UK for China-invested enterprises.

Lei Jiazhao first came to work in the Sinochem UK in 1989 and returned to China in 1991. In 1999, he came to the UK once again, and since then, he has been Managing Director of Sinochem UK. He recalled, “At that time, companies having branches in the UK were mainly foreign trade ones, such as ChemChina, China Minmetals Corporation, COFCO and China TUHSU, which were all governed by the Ministry of Foreign Trade and Economic Cooperation (MOFTEC). At the onset of its establishment, Sinochem UK was engaged in the export of chemicals, and in early 1990s, it also began to deal in oil trade, as the UK is the global oil trading center, financial trading center and futures trading center. Later with increasing oil business, a branch of Sinochem Oil was founded in the UK.”

Now there are several hundred enterprises located in the UK, but at that time, only few enterprises achieved settlement there despite the said several China-invested enterprises. For this reason, Sinochem UK enjoyed a great advantage in the field of import and export of chemicals in those years, as the only Chinese enterprise of its kind in the UK. As for the great changes between the past and the present, Lei Jiazhao took urea fertilizer as an example to offer a concrete and vivid illustration.

In China, there is a great demand for urea fertilizer, and in early years, satisfaction of the huge demand mainly relied on import. At that time, China National Chemicals Import and Export Corporation monopolized the market. In other words, millions of tons of urea fertilizer was imported to the Chinese market ever year via intermediary trade of the corporation. This situation lasted till the middle of the 1990s. Later, Chinese market was opened, and enterprises with such demand could import from overseas directly. Meanwhile, China also had its production capacity continuously enhanced. In 1996, China imported 6 million tons of urea fertilizer, while in the following year, it announced to stop the import of fertilizer, for China was able to produce sufficient urea fertilizer for its own use. Within several months after the announcement, the price of imported urea fertilizer dropped from USD 200 per ton to USD 60. Later, China completely shifted its role in the urea fertilizer market by exporting urea fertilizer to the world.

We could image the impact of such import and export pattern on Sinochem Group. In those years, Sinochem UK together with the branches in the USA and Hong Kong was able to import more than 10 million tons of chemical fertilizer to China every year; but now, although some products, such as potash fertilizer, still need to be imported in a great quantity, Sinochem Group can no longer dominate the market as it did before.

However, Sinochem UK was not beaten down by the setbacks. After assessing the situation, it strived hard to make self-improvement and development and actively join in the spring tide of market competition. As introduced by Lei Jiazhao, “When I came to the UK for the second time in 1999, China National Chemicals Import and Export Corporation was simply a foreign trade agency company with a total of more than 100 Chinese and foreign employees with its Beijing headquarters and the three branches in the UK, the USA and Hong Kong. Nowadays, the workforce of Sinochem Group includes over 20,000 Chinese and foreign employees.”

“Sinochem Group used to have no sales outlets in China, while now it can perform production and distribution in China with 18 distribution centers and 1,800 sales outlets in China. Moreover, it has developed 14 individual proprietorship and joint-venture production plants with an annual chemical fertilizer output of 14 million tons and the employee number in excess of 10,000. These have brought about the transformation of Sinochem Group from a foreign trade import and export enterprise to an integrated and large enterprise with its businesses covering production, trade and R&D. Sinochem Group has been among Fortune 500 for 20 consecutive times.”

Looking back into the past in the light of the present, Mr. Lei who has worked in the UK for a dozen of years was filled with all sorts of feelings. “Since we used to work in a foreign trade monopolized industry with no competition, it was easier for us to do business; now with greater competition pressure, we have come across many difficulties that did not exist in the past and our business achievements are also not as brilliant as before.”

Now, 25 years has passed. China National Chemicals Import and Export Corporation then has become the current Sinochem Group. With rapid development of the headquarters, great changes have also taken place to Sinochem UK. Lei Jiazhao told us that with China’s reform and opening-up to the outside world, foreign trade companies below the provincial level and in charge of import and export have exited from the stage of history, as in such a highly informationalized age, enterprises have access to various kinds of trade consultation and import directly without intermediary service of foreign trade companies. Therefore, the concept of foreign trade companies has been replaced by the operation and development philosophy that considers China itself as a part of the global market and integrates domestic and foreign markets for production, supply, and sales and marketing.

Lei Jiazhao has been in the UK for 12 years since his second visit to the country, during which the embassy of China to Britain has seen off and welcomed five ambassadors and they are Ji Chaozhu, Ma Zhengang, Zha Peixin, Fu Ying and the current Liu Xiaoming. Therefore, he is absolutely a veteran figure among China-invested enterprises in the UK.

On festive occasions more than ever one thinks of one’s dear ones far away. In those years, there were few China-invested enterprises overseas and thus few employees there. When the Spring Festival came, the homesickness of employees who had not gone home but stayed in Britain could not be eased. Upon that occasion, the warmest thing was to first gather at the commercial department to make Chinese dumplings and have some and then enjoy the made Chinese dumplings and a party celebrating the Spring Festival at the embassy….

Lei Jiazhao has worked with Sinochem Group for about three decades and mainly on fertilizer trade and been in charge of Sinochem UK for more than a decade. He still clearly remembers how he brought a British businessman into contact with Chinese suppliers when he first came to the UK in 1991. Before the end of his term, he helped introduce Chinese product suppliers for that activated carbon businessman and then returned to China. Eight years later when he came to the UK again, he contacted that businessman in particular. The British businessman invited Mr. Lei to the former’s office with great gratitude. Mr. Lei did not expect that with the deepening of China’s reform and opening-up to the outside world, the private British entrepreneur had taken the initiative based on the information provided by him to keep expanding his customer base in Chinese mainland. Lei Jiazhao found in the businessman’s office a Chinese map with many places marked with a red flag, which indicated his “occupied” markets. Lei Jiazhao got shocked by what he learnt in this meeting. As introduced by the British businessman, he focused on domestic trade and exported British activated carbon to the world before his entry into the Chinese market; however, after Lei Jiazhao’s introduction of the Chinese market to him, he found that this emerging market was full of vitality and characterized by excellent quality and reasonable prices, and thus he shifted his business focus to China. Through the marketing channels he had accumulated over years’ trade, he has been selling Chinese activated carbon products to the world and achieved brilliant success.

While continuing to focus on chemical fertilizer business, Lei Jiazhao is also General Manager of Sinochem Europe and Vice Chairman of China Enterprises Association in Britain concurrently. Looking back into a dozen years’ work in Britain in the light of the present, he has much to say, “Since we used to work in a foreign trade monopolized industry with no competition, it was easier for us to do business; now with greater competition pressure, we have come across many difficulties that did not exist in the past and our business achievements are also not as brilliant as before. However, pressure can be turned into motivation, which drives us to refine our work, improve our quality and strengthen our service consciousness. The robust, exquisite and orderly management mode established upon the founding of Sinochem Group and inherited till now, relationships and capital accumulated and invaluable reputation built still push us forward steadily. In this process, earthshaking changes have also taken place in our country, with more competitive enterprises to create more production value for the country and improve product quality as well. As for myself, I sincerely rejoice over the great changes either in Sinochem Group as an individual or in our country as a large family.”