The village that built a huge business empire

HANGHAI BUND
By CHOW HOW BAN

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[size=85]Proud of their achievements: A giant sign saying No. 1 Village of the World seen at the entrance of Huaxi Village in Jiangsu province.[/size]

A miracle may be the most apt description for Huaxi Village, Chinas richest village, where the modern socialist system shines and helps bring prosperity to every resident.

China’s No. 1 Village

I REMEMBER seeing rubbish strewn in an unkempt and stagnant river behind a villa during a visit to Chinas richest village, Huaxi in Jiangsu province, last July.
Proud of their achievements: A giant sign saying No. 1 Village of the World seen at the entrance of Huaxi Village in Jiangsu province.

Thats the first impression I had of the village whose residents have at least a bungalow and a car each as well as savings of more than a million yuan (RM458,000).

The host showed a group of us from Malaysia her beautiful house with simple decorations. Its the villager custom to share their road to success with anyone.

The lack of civic-mindedness among the Huaxi villagers, too, is something they dont hide.

Thats true and this shows that the villagers level of awareness on environment protection is still relatively low, Huaxi Village communist party secretary Wu Xieen said in an interview last Sunday.

We distribute pamphlets to every household to educate them to keep their compound clean. We still need to improve on this.

Economically, the village is enjoying a good run. But, they hope to produce first-class villagers who are as good as they are in their entrepreneurship inclination.

A miracle may be the most apt description for Huaxi Village, where the modern socialist system shines and helps bring prosperity to every villager.

How does the system work? Every worker of the companies under the village-owned Huaxi Group receives only 30% of his salary every month for living expenses.

The remaining 70% is left within the company as liquid capital and the worker will get his year-end bonus, which is three times more than his wage.

The person cannot take out his bonus but is offered shares in the company instead. The following year, he will get his share dividends from profits the company makes.

Zhang Qilong, who moved to the village from Huaian to work at Jiangyin Huaxi Steel Co Ltd as an assistant chief, gets a monthly salary of 1,500 yuan (RM690), most of which is tied to shares in his company.

I only get a few hundred (yuan) every month but the company provides us with free accommodation and gives us shares and many social benefits, he said.

Wu said: We practise the prosperity for all concept. While our (Huaxi-born) villagers who venture into the group of companies reap profits from their investment, workers also have the same opportunity.

Besides salary and dividend, they also enjoy various benefits such as free education, medical and health examination, and rice and cooking oil allowances.

A senior journalist of Xinhua news agency, Yuan Yanghe, said at a ceremony held in the village recently that the unique reward policy of the village had made a deep impression on him.

If a senior citizen lives until 100 years old, each of his family members will be awarded 10,000 yuan (RM4,600). A few years ago, when an elderly man celebrated his centennial birthday, 37 members of his family receivedthe award, he said.

By having villagers and workers chip into Huaxi Group, the funds snowball, providing Huaxi Group the cash flow to operate and grow its businesses.

The Huaxi Group, now with more than 60 companies under its umbrella and a listing on the Shenzhen Stock Exchange, first ventured into business in 1961. It has a wide range of businesses, including those in steel-making, textile and tourism.

In 1975, the village used the profits from its hardware business to build a five-storey building for a childcare centre and primary and secondary schools that locals proudly regard as their education building.

Under the leadership of its previous secretary and Wus father Renbao, the village then ventured into the manufacturing of nylon fabric. At that time, Renbao estimated the start-up capital at 190,000 yuan (RM87,000) but the villages coffers was 60,000 yuan (27,500)short.

The ex-secretary and several leaders of the village dug into their personal savings and banded with other villagers to build the factory.

Can you all tighten your belts temporarily, take less dividends this year and turn the money saved into shares? the ex-secretary asked the villagers.

That was Renbaos maiden effort to unify the villages resources and create a business empire fully belonging to the people.

Within a year, the nylon business soared to a sales volume of 1.19 million yuan (RM545,000), making a profit of 380,000 yuan (RM174,000).

Over the decades, the Huaxi Group grew by leaps and bounds and hit a sales volume of 45 billion yuan (RM20.6bil)and contributed over 800 million yuan (RM366.2mil) in taxes.

Yang Yongchang, a native from a nearby village who moved to Huaxi to set up his own business in 1997, believes in the collective economy and prosperity for all system.

I operated my business for about five years before buying a residential account in this village and incorporating the business with the Huaxi Group.

I have since been given the task to head Jiangyin Huaxi Steel Co Ltd, he said.

I agreed with the ex-secretarys economy model. Before joining the Huaxi Group, I always thought of my own interest first but now I want to shoulder the social responsibility and contribute my worth to society.

The villagers wealth can be seen in the hundreds of rows of bungalows, but Zhang pointed out that many workers below the executive level have a hill to climb to feel the full effect of the system.

Prosperity for all doesnt mean equal distribution of wealth. Company workers still earn less than others, and its still very much performance-based, he said.

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