The Sun king

The 38-year-old entrepreneur Sun Guangxin is a dominant force in a diverse range of businesses in the remote Xinjiang region and he has ambitious plans to expand into other sectors over the coming decade.

The Sun king


The 38-year-old entrepreneur Sun Guangxin is a dominant force in a diverse range of businesses in the remote Xinjiang region and he has ambitious plans to expand into other sectors over the coming decade.

Sun Guangxin, chief executive of Guanghui Group, has condensed many of life's experiences into his 38 years. Having seen active military service in the 1979 China-Vietnam border war, he opened the first seafood restaurant in Urumqi, capital of China's far-west region of Xinjiang, a city that is further from the sea than any other in the world. He made his first fortune by trading with the USSR. Today, he employs more than 20,000 workers in Urumqi, where he is the undisputed king of real estate and granite.

"China is like a university student just about to graduate," says Sun. "The student knows much of what needs to be done and is preparing to go out into the world. The Olympics and WTO will have a stimulant effect on China's economy, driving people to become more competitive. No competition, no progress."

Diverse interests
Guanghui has interests in real estate, granite, heating equipment, tractors and hotels. Founded in 1993, it listed a subsidiary on the Shanghai stock exchange in 2000 and boasted consolidated profits of US$120m on turnover of US$510m in 2000. In 2001 it expected turnover to grow a further 50 percent.

Sun appears to revel in competition. At military college, he ran 400 metres in 48.83 seconds, one of the 10 fastest times in China at that time, and he has a passion for hunting and large motorcycles. "Hunting is a man's world, the ultimate pitting of man against beast," he says. "As in business, there are always winners and losers."

His army training and admiration for the tiger, his Chinese star sign, are evident in the Guanghui logo - an image of an F16 fighter jet with a leaping tiger. 'Always going forward' is his motto.

Sun represents some of the opportunities open to the ambitious in China today. Just over a decade ago, he was one of many ex-soldiers armed only with a demob fee. The outlook was not bright, Xinjiang being one of the poorest areas of China.

Competition to get to the China-Vietnam border war had been tough in the Anhui military school that Sun attended. There were only 10 places for the 144 students in his year. In an effort to show his commitment to the army, Sun bit off the tip of each of his fingers and wrote slogans in his own blood. Needless to say, he was chosen. By the time he left the army, Sun commanded 300 men and had won a medal that allowed him to draw an army allowance for the rest of his life. He never claimed it.

At the age of just 26, Sun set up Urumqi's first seafood restaurant, 4,000 miles from the nearest coast. Capital was the biggest difficulty for every entrepreneur in those days but he was fortunate to know a Japanese cotton trader who lent him the princely sum of US$50,000. "Three months later," Sun says with pride, "I paid him back US$75,000."

Apart from the restaurant's novelty value, the demographics of Urumqi were changing in Sun's favour. Ever since the Cultural Revolution there had been a steady increase of Han Chinese, China's dominant ethnic race, in the province. Moving out to Urumqi was often seen as a hardship for these people, who were only too glad to pay the high prices demanded for fresh fish and entertainment.

From there, Sun went on to build the city's first dance hall, bowling alley, karaoke bar and swimming pool. It is hard for the visitor to Urumqi today to think that just 10 years ago none of these facilities existed.

Abundant oil reserves
Xinjiang is rich in natural resources, especially oil and natural gas. Although oil had been discovered as early as the 1960s, it lay at 7,000 metres below the surface, making it expensive to extract. With the collapse of the Soviet Union in 1990, Sun saw the opportunity to buy oil equipment cheaply and sell it on to the Chinese government.

He arranged to import two oil pumps via Kazakhstan at a total cost of US$800,000, and doubled his money in a matter of months. Other bold entrepreneurs did not fare so well. Mou Qizhong, for example, succeeded in trading Chinese tinned food for two Russian aircraft but was later arrested for tax fraud. "We are each our own greatest competitor," says Sun, suggesting that only the bold will rule the world.

By 1993 Sun had established himself and to show it built a 100-metre high office tower, the tallest building in Urumqi. This was the beginning of his foray into real estate. Today a remarkable one-quarter of Urumqi's 2m residents live in Guanghui-built homes, and this proportion is growing at a rate of 5 percent a year. The size of these projects is staggering: homes for 100,000 people at a time. Most of the income is expected to come from management fees and rentals. Some 37 percent of the group's turnover in 2000 came from real estate.

China's largest stone company
Also in 1993 Sun branched out into the granite business. His own research revealed that stone was the biggest single expense in the construction industry and that Xinjiang had good quality granite resources. Importing the world's best stone-cutting equipment from Italy, he set out to create Guanghui Stone Co, which was eventually listed in 2000.

Today Guanghui is the largest of China's 27,000 stone companies, having outgrown all its state-owned rivals. It has taken a 20 percent market share in China and was the key supplier for 220,000 sq metres of stone for Pudong International Airport in Shanghai. It recorded net sales of Yn1,127m in the first half of 2001 and a net income of Yn205m.

Beijing recognises the importance of people like Sun. During his visit to Xinjiang earlier this year, Vice-President Hu Jintao toured the Guanghui factory. Hu is widely tipped to take over from President Jiang Zemin after next year's leadership change.

Sun believes intangibles are the most important factors in setting up a business in China: "It is all about building up good business relations with the government, media and customers," he says.

Managerial talent is crucial and Sun offers large incentives to his senior managers. He already pays 28 of them an annual salary of more than Yn800,000 each, a staggering sum in a country where the average income is less than Yn8,000. Later this year he plans to hand over 25 percent of the group to these senior managers in a stock distribution plan. Their average age is 37.8 years, fractionally younger than Sun himself.

Sun's next big project is to develop Xinjiang's natural gas resources and he is preparing to invest up to US$10bn over the next five to eight years to achieve this. Natural gas in Xinjiang is surprisingly cheap to extract, he says. After that, he might move into finance, but not before the Chinese market matures. At just 38, he can afford to be patient.