Exclusive Interview With Cao Dewang, Chairman Of Fuyao Glass: Dividends Are The Interests Of Shareholders

Fuyao Glass (600660. SH, 03606. HK), which "only makes one piece of glass", has been listed on A-share market for 27 years. With such stock age, we have enough qualifications to be brothers with the Shanghai and Shenzhen Stock Exchanges.

"Fuyao Glass issued shares in 1991 and was officially listed in 1993. To be honest, I thought the company was too small at that time, and it was also a listed company to earn tens of millions a year?" Cao Dewang, the actual controller and chairman of Fuyao Glass, told the 21st Century Economic News reporter.

But times have changed. Now Fuyao Glass has grown into the world leader in the automotive glass industry. In 2019, the revenue reached 21.104 billion yuan, accounting for 25% of the global market. It has production bases or service institutions in 11 countries and regions, including the United States, Russia, Germany, Japan, South Korea, and 16 provinces in China.

As the founder and helmsman of Fuyao Glass, Cao Dewang, now 74 years old, is still energetic and keeps his sharpness and profundity in the face of 21st century economic reporters.

"Since I made glass in 1976, the oldest old glass man in China is me, and no one in China has made glass for more than 40 years now." Cao Dewang seemed to laugh at himself, but he was more proud.

Fuyao Glass is not only the first private enterprise listed in Fujian and the first listed company in the domestic glass industry, but also the first private enterprise in China to introduce the independent director system, employ international accounting firms, and promote professional managers. It also won the first anti-dumping case in North America after China's accession to the WTO.

Cao Dewang is also the first philanthropist in China, and has created the first equity donation in China. So far, he has donated nearly 50% of his personal assets, about 12 billion yuan, to charity. Since its listing, Fuyao Glass has also been generous in cash dividends, with a total cash dividend of more than 15.6 billion yuan so far.

Standardize international behavior

21st Century: How did you think of introducing the independent director system more than 20 years ago? What are the advantages and disadvantages of Fuyao Glass in introducing independent directors first?

Cao Dewang: After the listing of Fuyao Glass, I felt a great responsibility. I am determined to say that even if I cannot become a pillar of the country, I should not become a burden to the country and society. Since the government approved the listing of Fuyao Glass (note: the listing of enterprises at that time was quota system), I should do a good job of this listed company.

Since the day of listing, I have launched a transformation aimed at improving myself, and I want to make Fuyao Glass a real listed company. I began to conduct research on corporate governance, development direction and other aspects internationally, and found the international independent director system, which I think is very good.

Independent directors have two functions in enterprises. First, as the name implies, independent directors must be independent and not be influenced by rich people and major shareholders. They represent minority shareholders to supervise the board of directors; Second, independent directors are generally highly knowledgeable and also think tanks of enterprises. Supervising enterprises can also help enterprises.

When an enterprise introduces independent directors, it should make good use of them. They should have the absolute right to exercise their powers independently, at least in this way, it can be effective. Being able to do this will greatly help the development of the enterprise. Chinese enterprises may further strengthen their understanding of independent directors.

At that time, the chairman of Fuyao Glass was Wang Baoguang, not a major shareholder, but a representative of a small shareholder. We choose him as the chairman of the board of directors, which is to select influential and capable people, rather than who is the major shareholder.

21st Century: Fuyao Glass has also been in line with international standards in accounting and auditing for a long time?

Cao Dewang. Fuyao Glass is the first Chinese enterprise audited by five major international accounting firms, and it is critical to employ well-known international accounting firms.

Fuyao Glass introduced independent directors in 1995 and passed the audit of five international institutes in 1996.

21st Century: What impact will the introduction of the independent director system and the appointment of five international institutes as audit institutions have on Fuyao Glass?

Cao Dewang: It is very important to standardize our international behavior and lay a foundation for our internationalization. To be internationalized, first of all, the behavior must be internationalized.

Cooperation with Saint Gobain "no gains and no losses"

21st Century: In the process of internationalization, what happened between Fuyao Glass and international giant Saint Gobain from close cooperation to separation?

Cao Dewang: Saint Gobain was a big company in the world at that time, just like Fuyao Glass now. When Volkswagen and Audi entered China, Saint Gobain was the supplier to follow.

When Saint Gobain followed in, he found Chinese enterprises to cooperate and obtained the controlling shares of Fuyao Glass through joint venture. Saint Gobain wanted to invest heavily in China at that time and spent billions of dollars. Fuyao Glass was just one of their projects.

I worked very hard. When Saint Gobain came in, I thought he would take over and stop working. I could retire. I didn't want to continue working.

When Saint Gobain retreated from Fuyao Glass strategically and took the initiative to withdraw from Fuyao Glass, I bought back the equity without premium and signed a non competition agreement. Within five years, Saint Gobain will no longer enter China to invest in the establishment of factories similar to Fuyao Glass.

In the joint venture with Saint Gobain, I have been the general manager of Fuyao Glass for three years, but the investment must be approved by Saint Gobain. The people in Saint Gobain are very gentlemanly. They never get angry at meetings, but nothing can be solved after a few hours or days of meetings with you.

We worked with Saint Gobain and got nothing and lost nothing. Saint Gobain is a huge bureaucracy. Now I understand. Now I approve the projects reported very quickly, but the following people can understand that it is not easy for them to find a job.

21st Century: Fuyao Glass once introduced professional managers as general managers twice, but eventually left because of "acclimatization". What do you think of professional managers?

Cao Dewang: Because the professional managers hired from outside are not familiar with the enterprise culture after they come in. Based on our experience over the years, enterprise professional managers should be trained from grass-roots positions, so that they can have influence in this group. If the "airborne" professional manager is the general manager and the old employee is the deputy general manager, the professional manager doesn't understand anything, how can you persuade (the team)?

What does financing come in for?

21st Century: Fuyao Glass's profitability and dividend ratio have always been high. Why not use the advantages of the domestic capital market to refinance and expand the industrial scale?

Cao Dewang: At present, the debt ratio of Fuyao Glass is very low. Although the debt ratio on the statement is more than 40% (note: 47.61% by the end of the first quarter of 2020), the bank deposits are more than 10 billion. If the deposit is offset against the debt, there is no debt.

I believe that as an enterprise and entrepreneur, we must be fair. Large and small shareholders have the same rights and interests. Don't be so clever. What do you mean by financing? Why do we need so much money?

In the original design of the domestic capital market, the capital market was divided into the tertiary industry, serving the primary and secondary industries. A country's primary industry is developed and needs advanced technology support from the secondary industry; To do well in the second industry, the third industry is needed to support. Everyone is in his place. In the spirit of healthy development, the country will be very prosperous if it turns like a machine. As an entrepreneur, I should enter my own role.

To truly achieve the development balance between the industry and the capital market, every employee needs to do it selflessly, and the market will be healthy. I am very proud that my decades of hard work has not been in vain. I have done it. I have taken good care of all aspects, including the country, shareholders, employees and customers.

21st Century: What are your principles or goals for achieving these goals?

Cao Dewang: One ability, one virtue of a team. They said that Fuyao Glass is a family enterprise, but I said it has nothing to do with that. Ford, Toyota and Goldman Sachs are also family enterprises, and the key lies in the mind, realm and character of the leader.

21st Century: Why does Fuyao Glass want to go to Hong Kong for financing?

Cao Dewang: Hong Kong's listing and financing is to cooperate with Fuyao Glass's investment and internationalization in Europe and the United States. Fuyao Glass will only issue H-shares once because it will spend more than one billion yuan to invest in the United States.

21st Century: Since Fuyao Glass has so many dividends, can we use less money to invest?

Cao Dewang: Dividends are the interests of shareholders. How can you harm their interests?

There is no contradiction between charity and enterprise

21st Century: You donated 300 million shares of Fuyao Glass to establish the Heren Foundation, setting a precedent for equity donation in China and promoting the system construction. Have you achieved your original intention and goals?

Cao Dewang: It should be said that the foundation is my practice. It is my need to do charity, and the need of society is limited, because charity pursues good. Without compassion, good can not be good. We should cultivate this heart. Especially when you donate such a large amount of shares, it will hurt if you cut it with a knife. It is not your own pain, but the whole family's. At its peak, the stock was worth more than 10 billion yuan.

I have only 700 million shares in total (holding Fuyao Glass) and originally wanted to donate 400 million shares to the Heren Foundation. They didn't believe that I would donate, so I sold 100 million shares and donated 1.1 billion yuan. It was approved by the State Council when Cao Dewang really donated. There was no precedent for equity donation before.

I wanted to motivate some people, but why didn't they donate? I don't know. Can't you give it away or can't you give it up?

I think the foundation was successfully established. I just honed myself to be able to cut into it, and I did it. It is precisely because of this mind to do this thing, will have such good benefits. I'm very fair and won't take advantage of you. If you do something harmful to others, the result will definitely not be good.

21st Century: How to balance philanthropy and enterprise management?

Cao Dewang: There is no balance. The ambition of entrepreneurs is not for two pieces of money.

Entrepreneur's ambition I wrote in my book (note: Cao Dewang's autobiographical work Heart Like Bodhi), "The country will be strong because of you, the society will progress because of you, and the people will be rich because of you. This is what you do".

Charity is a good cause. What's the contradiction between pursuing good and beauty and doing business? We should promote philanthropy as enterprises do. Only when the society is harmonious and stable can you do business; The society is not harmonious and stable. What business do you have? There is no contradiction between charity and enterprise.

Four Conditions for Enterprise Success

21st Century: What role does the capital market play in promoting the development of Fuyao Glass, and what enlightenment does the success of Fuyao Glass bring to the capital market?

Cao Dewang: It is unrealistic to say that there is no big one. For example, Saint Gobain came in and exited through the Chinese stock market. Saint Gobain came in and needed Fuyao Glass very much, but if Saint Gobain did not go out, Fuyao Glass could not do it. Now I am very good friends with Saint Gobain.

The most valuable thing is that we adhere to internationalization, standardization and standardization in enterprise management, and we can consider how to balance the relationship between the country, society and individuals in the distribution of wealth.

《 21st Century: What role do you think the personal charm of the founder and the helmsman plays in the development of the enterprise?

Cao Dewang: Of course, it plays the role of soul.

I am the chairman of Fuyao Glass. I always feel that the enterprise must have confidence to succeed.

The first is cultural self-confidence. There should be faith. We should cultivate compassion, compassion and kindness. Faith can bring a lot of knowledge and wisdom; Have enough experience; Must have profound knowledge, whether financial accounting or purchase and sales.

The second is political self-confidence. All people have to pay attention to politics in everything they do. The politics of entrepreneurs is to respect heaven and love others. To respect heaven is to abide by laws and regulations and pay taxes; Love is to love employees, suppliers, customers and shareholders, and protect their interests. People will respect you if you do so. The third is behavioral self-confidence. Be brave, be grateful, and dare to challenge.

The other is self-confidence. Ability should be enough to support decision-making management, which is what Laotse said about moral coordination. The ability must also be greater than the position, so as to succeed. I am very rude to say that, of course, I have these conditions.

Face the reality of global economic recession

21st Century: This year, the central government proposed "six guarantees", one of which is to "ensure the stability of the industrial chain and supply chain". How do you think about China's industrial chain and supply chain problems?

Cao Dewang. I think it is more feasible to correctly evaluate the environment and think about and formulate practices based on the enterprise's own conditions.

The global development of the epidemic is still going around in circles and needs a process. Now it is easy for enterprises to resume work, but difficult for them to resume production. The resumption of production involves the problem of capital chain, logistics chain and supply chain. Many enterprises are facing this problem, not for a few months, but for several years.

We can save a penny. Now we are faced with the problem that tens of thousands of employees cannot be dismissed. Dismissal equals disintegration. How easy is it to cultivate a team?

I suggest that the state help, can we reduce the burden of five insurances and one fund for enterprises like us? Five insurances and one fund account for one third of our employees' salaries. There is also VAT, which also needs to be paid at a loss, which puts great pressure on enterprises. If the enterprise collapses, it will be difficult to get up again.

21st Century: Are you worried about the global economic recession, how to avoid the retrogression of globalization, can you avoid it, or what is a better path to globalization?

Cao Dewang: The epidemic situation is there. Different systems and cultures in different countries can only face this matter cautiously.

We are under great pressure. We have invested a lot in foreign countries. All foreign factories have stopped before, and now they have gradually recovered. However, thousands of employees are abroad, and of course the basic salary will still be paid.

Global economic regression is inevitable. A recession of 20% - 30% is normal and will also affect China. As their purchasing power weakens, our exports will certainly weaken.

I think everyone living in this global village should face these things.