Chairman Ye Jianming’s Speech at the Conference for CEFC China’s Brand and Culture BuildingCEFC China
A real outstanding company designs its own strategy and creates its own culture. It’s not feasible to ask others to design our own strategy. I personally pay much attention to branding, and I’ve set up and led a branding team in the Strategic Decision Committee. I’m not going to elaborate on CEFC China’s strategies because I have repeated them during many other meetings. The rapid growth of CEFC China takes many people by surprise. This growth comes out of our accumulated strength, self-discipline and social commitment based on the experience of twenty years, the same time our people spent in fighting through the War of Liberation to the founding of the People’s Republic of China in 1949. We have seen changes not in one year or several years, but in a week. It’s like putting up a building. Several floors are added only one week after the first floor was built. Many people find it incredible.
We’re now faced with an opportunity for major strategic transformations. We were originally one ship, but now we become a group of aircraft carriers. How can we manage so many companies? Recently, I’ve been doing three things: first, overall strategies design and branding strategies design; second, tactics deployment and implementation; third, adjustment and perfection of mechanisms and systems. The mechanisms and systems must be feasible rather than using others’ theoretic design. Each company has different mechanisms as each company adopts different strategies. If a mechanism cannot serve the strategies, many conflicts will arise when applying the mechanism.
Branding is a combination of strategies and tactics. First of all, we need to understand CEFC China’s strategy. We’re constructing a 100-floor building like the Jin Mao Tower. Some of us are still digging the foundation and the higher the building, the deeper the foundation. Unlike buildings of 3 or 5 floors, the 100-floor building requires a deep and solid foundation downwards, which requires the same or even more effort to build storeys upwards. . Branding is a different things as it should be based on the construction of 100 floors even though we are currently working on the first floor. People may not understand and have doubts on our rapid construction if we do not make it clear why we can build 100 floors with a well-established foundation. So we’re designing a brand with potential assets of 2 trillion yuan, not 100 billion. For example, during China’s War of Liberation in 1949, some guerrilla groups were fighting in the mountain areas not knowing the whole picture. We should see the whole picture, and make it clear to other people what our brand and strategies are.
Like all other companies, CEFC China has its own vision, which serves as the guidance for our development. The core of a company lies in the relationship between its strategies and resources, its culture and systems, and its managers and employees. These three relationships are supposed to be matching with each other. Resources and employees should be deployed according to the strategies. In this sense, all economic operations are about managing people. Marx’s Capital tells us three things. The first thing is about capital, or land and resources, to be more specific, which is the opposite of liabilities. The second is about productive forces and production relations. The reform in each era is the reform of forces and production relations. The third deals with the conflict between surplus value and distribution. Back in the primitive societies where there was no surplus value, distribution was not a problem. After the industrial revolution, the problem of distribution arose since there are more surplus value. Men are selfish and cannot easily get satisfied.. We must address the problems facing us today from the culture perspective as man is the product of his environment. There are macro-environment and micro-environment. In the macro-environment, you will be influenced by nation, politics, culture and religion. In the micro-environment, you will be influenced by family, friends and workplace. As a result, it’s very difficult for people from different environments to follow one common standard.
First I’d like to talk about the relationship between Chinese and western culture. Chinese culture was fostered during the first half of its 5,000-year-long history while the European culture was born out of wars. In this regard, China has accomplished during the Spring and Autumn Period and the Warring States period what Europe is doing now. So why are we learning from the European culture today in turn? Because after the Renaissance and industrial revolution, Europe witnessed a boom in productive forces and improvement in production relations, which led to a growth of surplus value and more importantly, changes in economic forms. They invented the cooperation system that separates economy from politics while making enterprises a bridge between economy and politics. In a word, the West improved its productive forces significantly from the industrial revolution when China was still shackled by feudalism and lagged far behind ever since. At the end of the Qing dynasty, the western culture was considered the best and can rescue China.
Why am I talking about this now? Because I want you to know what kind of culture we create can help us become more international. If we know little about Chinese culture and cannot integrate it into our corporate culture, how can we go out? Since the First Opium War in 1840, the rulers of the Qing dynasty had started to learn from the West and launched the Self-Strengthening Movement that advocated “Chinese learning for essence, Western learning for application”. However, after several naval battles during the First Sino-Japanese War, the Beiyang Fleet, once the most powerful fleet in Asia, was eventually annihilated by Japan. After this, the then rulers of the Qing Dynasty believed it’s no use learning from the West in machine manufacturing and the only way to save China was to discard Chinese culture. As a result, traditional cultures like Confucianism was regarded as backward and was thus repressed. As the reign of the Qing government came to its end, the feudal monarchy, which had ruled China for more than 2,000 years, collapsed. China entered into a new era. But should we, or can we accept everything from the West? No. A lot of conflicts emerged after we discarded Chinese culture.
How we serve the government, conduct business and get along with others all come down to the way we interpret the three teachings, or Confucianism, Buddhism and Taoism. Therefore, the knowledge of the several cultural transformations in the three teachings helps understand how Chinese culture has shaped the personality of Chinese people. Our culture first came in the form of theology, which developed from tribalism and evolved into a great unity in the Zhou dynasty. You may find it difficult to understand the saying that “the fish rising to Jiang Taigong’s hookless and baitless line”, which virtually means a willing victim lets himself be caught. In the mythology, Jiang Taigong, or Jiang Ziya was consecrated as a God. Every tribe at that time was in fact a city-state that worshipped its own God. In Jiang Ziya’s era, it’s necessary to unite the scattered and ungoverned tribes as a hierarchical country, which, in this sense, was the Zhou Dynasty, and the king then became the sole leader that governed territorial states in the hereditary system.
The hereditary system had other impacts on the society, particularly where the aristocrats passed down the title to their descendants, while ordinary people were forever kept at the bottom of the society as slaves with no hope of getting ahead in life, which hindered the social mobility. Human desires were pushed to the extreme by greed and voracity. In the meantime, as the conflicts saw no end between aristocrats, who were always competing for more, the whole society was trapped in dissension and disorder. Therefore, the Spring and Autumn period and Warring States period witnessed the contention of a hundred schools of thought to resolve the chaos. Then the Qin conquered the other six of the Seven Warring States to gain control over the whole China, marking it the first imperial dynasty of Ancient China. Qin’s swift conquests were mainly contributed by its cultural progress. The state adopted Legalism as the central government exercised direct administrative control over the overwhelming majority of the population, which outweighed and included all other powers. And all this came down to its advanced culture.
Emperor Qin Shihuang created an imperial state that’s unified by highly structured political power and a stable economy able to support a large military. This governing mechanism continued in the following 2,000 years in China. Emperor Wu of Western Han dynasty adopted the principles of Confucianism as the state philosophy and code of governance for his empire, uplifting it as the core culture among all other schools of thought. This culture defined a clear boundary between the public and the elites, and the latterwere largely Confucian scholars. As the saying goes, those who excel in learning can be an official. They would then serve the royal family and develop a close partnership with the aristocrats. However, there’s one big issue with the Confucian philosophy after Confucius: moral standards were above everything else. The ordinary people used to be classified into four occupations: scholars, peasants, artisans and merchants, with scholars being the most honorable. A man had to be recognized as a gentleman before being accepted as a member of the scholar class and taking an official post. As it’s not easy to meet the standards of being a gentleman, a great many seeking the privileged title became hypocrites. There’re more than a few in every dynasty in China over the past 2,000 years. They were not born to be bad, but victims of the dross of our traditional culture.
Towards the end of the Eastern Han dynasty, when Confucianism started to tear apart as a result of incessant wars and social unrests, Buddhism was introduced into China, which prevailed over China’s indigenous religions, firstlyTaoism and then Confucianism, in particular in the Tang dynasty. Unlike Taoism and Confucianism, Buddhism provided, for the first time, a philosophical system that gave an explicit explanation of both life and death. Confucius refused to talk about life and death as he believed death should not be discussed when life is not yet clearly thought through. In proposing “Samsara across the six realms”, Buddhism claims that the true essence of life is to build a better self towards the state of Buddha, through sufferings of reincarnation in the six different realms, including the animal realm, the human realm and the ghost realm. In the animal realm, beings are simply living creatures that cannot think, such as a tortoise, which retracts its head into the shell for protection only out of instincts. Buddhism for the first time proposed that a human being, in the human realm, is a combination of two existences: the mental or spiritual existence, and the physical existence. The physical existence, or the animal body, is selfish, brutal, coward and greedy, which in itself represents desires. The invisible yet powerful mental existence, consisting of the body, the phenomenon and functions, is able to transform a person into a Buddha through cultivation. This means one can become a Buddha after undergoing endless cycles of lives through the six realms and abandoning the physical existence. This culture has made a big difference to China. During the war-scarred Northern and Southern Dynasties, China’s population shrank sharply and people were all suffering, which gave rise to lots of bitter poems. Since the introduction of Buddhism, the grievous Chinese began to seek comfort from it, which to some extent helped restore China to its former glory. And that is in the Tang dynasty.
Two dynasties that followed, the Ming and the Qing, had severely damaged the traditional Chinese culture. The founder of the Ming dynasty, who was born to a peasant family, ruled the country the same way he raised livestock. During his reign, peasants were deprived the rights of free movement even during years of famine, except being approved by the local officials. This has contributed significantly to Chinese people’ fear of government officials, who were in turn under the control of Ming emperors. Zhu Di, the third emperor in the Ming dynasty, conducted a massacre of all the blood relations and their spouses, as well as all the students and peers of Fang Xiaoru, an orthodox Confucian scholar. It’s from this time that Chinese people began to lose their dignity and personality. Chinese people’s cowardice and their personality defects were largely due to the ruling in the Ming and Qing dynasty. The Qing dynasty was founded and ruled by an ethnic group, the Manchu. The Yuan dynasty was also ruled by an ethnic group, but lasted only about 90 years. The Manchu bullied the Han people for over two centuries, and treated them like slaves, which made them feel humiliated and diffident. The pride and confidence they had before seemed to be losing, but still in their bones, never disapearing. This is the duality of human nature, which is quite important.
This duality has persisted till now and extended to corporate development. People, as the key factor of a company’s strategies or mechanisms, embody the duality. As we all live in this environment, we cannot get rid of the duality, so we have lots of contradictions. When the Western culture was introduced in the late Qing dynasty, it also conflicted with the Chinese culture. The result was a dual culture, which was reflected in how we serve the government, do business and deal with interpersonal relationship to this day. Therefore, it’s crucial for us to determine a culture for corporate governance. CEFC China proposed a business philosophy of “arising with strength and achieving with goodness”. At first, we put it as “ending with goodness”, which is also good, but not many people understood what it truly means. We just talked about the deification and a typical case, I think, is the Book of Changes. This influential text, the oldest of the Chinese classics, was regarded as the origin of Chinese culture. Many of the proverbs and sayings we now use came from this book. It interprets the whole universe, breaking everything down to yin and yang. After the Big Bang, all things under the sun interrelate in the form of yin and yang: the active and the passive, the changed and the constant, are giving rise to each other as they interrelate to one another. The noumenon, which is the Law, doesn’t change, while the phenomenon and numbers keep altering. Buddhism, Taoism, and other religions all tell the same thing. In terms of the Book of Changes, the law, or the law of noumenon, is the order of nature. All things are changing in their phenomenon, which evolves in line with the number. This is the same with the system of the body, the phenomenon and functions in Buddhism. All changes or consistencies take place in the form of yin and yang. So by “arising with strength”, we mean everything in the universe is born from strength, which begins from the Big Bang. That strength gives rise to attraction, which leads to fighting capacity and in the enterprise, that capacity is manifest as the execution ability. Everything arises with strength and ends with goodness. The concept of “ending” belongs to yin in Chinese philosophy, while “arising” belongs to yang. Yin and yang are complementary and interdependent. By replacing “ending” with “achieving”, there’re two yang forces competing with each other, while in the Book of Changes, yin and yang should be complementary. We made this change basically because there’s a misunderstanding about “ending”, which actually symbolizes the circle of life, just like the sunrise every morning, the 24 hours we have each day, and the week that starts from Sunday and ends with Saturday. For thousands of years, we human beings are also living in a circle. It’s like a play by the male and the female, which also represent yin and yang. That’s why we used the word “ending” to show that life and growth are in an endless circle. I once met a great master of Chinese culture who asked if the business philosophy was proposed by me. I said yes. He was surprised that I dare to use the word “ending”, which may imply something negative and is seldom used. He’s impressed by my courage and said that I have a broad mind and lofty pursuit. He thought highly of “arising with strength and ending with goodness”.
How does our business philosophy, “arising with strength and achieving (ending) with goodness” serve CEFC China, a private collective enterprise? Perhaps many people don’t understand the meaning of “private collective enterprises”, so we should make it clear. A collective ownership first of all adopts society-oriented management. As in many consortia, universities and social organizations in western countries, such entities serve the society instead of one single family. That’s what we mean by society-oriented management. As China is still in the early stage of development after the reform and opening up, and there’s no precedent in this regard, this notion may yet be familiar to many people. And what does the collective ownership mean? If it is the state ownership, we may lack flexibility, and if we work as a private enterprise that works solely for me, it may lead to conflicts in terms of wealth distribution. Therefore, we established our parent company as a collectively owned one that adopts society-oriented management. Then where is the private portion? Our second-tier companies operate in partnerships while our parent company will not be divided.
A friend in culture business in HK once asked me about my life goals and business goals. As he specializes in culture business, I decided to talk a bit deeper about my understanding, and I said, there’s no life goal to speak of, because life is the goal, and those who make a goal for life won’t get ahead in the world. In Chinese culture, everything is in the middle of changing and constant. Earth is constant while Heaven changes. A change in Earth, like a tsunami, will cause significant losses. On the other hand, Heaven is changing each and every day. Therefore, the goal you set for yourself can only be something constant because you have no control over the change. Everything is in the continuum that has change and constant on its ends. However, one thing stays constant, which is your value. In Buddhism, it is called noumenon, and in the Book of Changes it is called Law.
He agreed with some of what I said, but still found it difficult to grasp all. He then asked about my life value. I said, my life value is my business philosophy, “Arising with Strength and Achieving with Goodness”. Goodness means that the way of great learning consists in manifesting one’s bright virtue, in loving the people, and in achieving perfect goodness. The key lies in perfect goodness. In Buddhism, Heaven and Earth are insentient, while human beings are sentient. Human beings’ sentiment is their greatest value, which is the goodness. Human beings live for the realization of their value, which complements Heaven and Earth. Chinese culture is the first of its kind that puts value in the center of our life. What is value? Value is perfect goodness, the greater good. For CEFC, achieving with goodness is its value. The value of an animal farm owner lies in raising hogs, chickens and ducks, and we die of hunger if those who produce food were to stop doing so. Why do we have lives? Because we are valuable. Any life is worthy, as he or she serves for certain values rather than fame, power or wealth. Once you know yourself well and orient yourself towards your value, you find the order in your life. CEFC China also serves for its value.
Out of our values grows our strategy, which is to serve the national strategies. That is why we come up with strategies focusing on international cooperation in the energy sector, which has been made very clear. All staff members realize their own values on this platform, and collectively serve the national strategies. And we serve the national strategies by creating win-win collaboration with outside companies, instead of competing against them. We propose to work to accommodate others’ needs first. As the parent company of CEFC China is a collective enterprise that adopts society-oriented management, we put aside personal gains and focus on common interests. When common interests are compromised, individual interests may be temporarily sacrificed and then to be compensated by the collective. That’s the model of the “organized economic community”: the parent company is collective and society-oriented, and will not be divided, which keeps it growing. Why has CEFC come this far? Because it’s collective and will not be divided. If we divide the company, internal power struggle among shareholders may have caused its bankruptcy long since. As we’re a collective enterprise, everyone, including myself, works for it without self-centered pursuits. When the collective grows stronger, we distribute in a fair and effective way by establishing second-tier partnerships as well as a third-tier legal person and authorization system.
We also have a clear internal mechanism: the parent company is an organized economic community under the leadership of the Board of Directors; the first tier is group companies governed by several committees; investment platforms as the second tier and partnerships in the third tier. We should differentiate the three roles of professional managers, business managers and business owners. Business owners may become partners at second-tier subsidiaries. Our partners could be those who used to be our business managers, or those from financial institutions within the system, as finance is important; or those from the establishment who are skilled at business management and operation.
Why should our partners come from within the system rather than from other channels? In the Tenth Session of the Third Board Meeting of CEFC China, the strategy of long-term and safe development was put in the first place. Chinese private enterprises, still at the initial stage of development, are faced with lots of challenges. When the People’s Republic of China was founded, the public-private joint management mode left little room for private companies. After the Reform and Opening up, there was the household contracting experiment. It was until the 1990s when private companies really began to thrive. Back then there was a huge pool of low-cost labors as well as abundant resources. Thousands of things were waiting to be done. Private enterprises were allowed to do business in first and second-tier cities as well as major coastal cities. They were involved mainly in light industry, serving as “processing factories” for developed countries, while the state-owned enterprises retained the control over the heavy industry and areas related to national interests and people’s livelihood. Those two plus the foreign companies made up the “troika”. However, this system is in a dire situation today, especially for private enterprises. Why? Firstly, the labor cost used to be minimal, like some factories in Vietnam and Cambodia where people work just for food. Things have changed now. New conflicts arise, and the labor cost has increased. Secondly, upstream materials and resources in the energy sector are still under tight control of consortia in European and American countries and Japan, who sell raw materials at high prices. As we have no say in the pricing, the cost of raw materials keeps increasing. Furthermore, after the financial crisis in 2008, the adjustment of fiscal and monetary policies prevented the external depreciation of RMB and opened up financial assets, which attracted 5 trillion yuan of foreign investment generating a profit of at least 3 trillion for the investors. Where did the 3 trillion come from? First, the surplus value from labor, and more importantly, the asset appreciation, which in turn increased investment cost. Therefore, private enterprises in this environment now have a mountain to climb. The government has adjusted its policies, but the adjustments won’t make big changes within a short time. That is why we tend to choose third-tier partners from within the system, as they have a larger talent pool.
Why did we look to Europe and set up our second headquarters in the Czech Republic? Because Czech is the heart of the sixteen Central and Eastern European countries. First of all, we have obtained equities and rights of the upstream oil and gas resources. As countries in Central and Eastern Europe, the Mediterranean and the Black Sea regions need oil and gas from Central Asia and Russia, CEFC has acquired a controlling share in KMG International (KMGI) to make Central Asia and Kazakhstan our pivot points. The bridge we built between the upstream and downstream terminals will benefit all and follows what the Chinese philosopher Wang Yangming means by “probing into the intrinsic”, to find the proper layout among things. Central and Eastern Europe is also an industrial base, and Czech and its neighboring developed countries now face the decline of productivity as a result of shrinking population, but the productivity in China is vigorous. We develop CEFC China as an international investment bank to play the bridging role. Through acquisitions of Czech’s industries and merging them with our domestic industries, we can improve its productivity and expand its consumer market beyond Europe. On the other hand, this interaction between China and Europe, domestic market and international market can facilitate China’s supply-side reform and industrial upgrading. This is in line with the strategies of both China and the European Union, as they now need China’s productivity, and Chinese companies need cooperation with them. This is mutually beneficial. Our “going out” initiative aims not to invade other countries, or to snatch resources. With focuses on finance, industrial equipment and energy, CEFC China, as an international investment bank and an investment group, promotes the economic integration of Africa, Central Asia, the Middle East, Europe and China through the Belt and Road Initiative, making significant progress in many aspects.
CEFC China has also established charity organizations including CEFC Shanghai Charity Fund, China Academy of Culture and China Energy Fund Committee, for philanthropic causes which ultimately contribute to our corporate values. For over a decade, we’ve been building trust through energy diplomacy, and hosted kinds of energy forums which invited a number of experts to carry out studies and publish reports on the energy issue. Those are all part of our efforts to serve the society. On the cultural front, we’ve organized the Forum on World Civilization which invited leaders from different religions to discuss and reach consensus on the core values of the universal ethics as a means to enhance mutual trust. This is also a demonstration of our values. Furthermore, we’ve invested in a Czech football club and a media group, and funded charitable activities, all of which are not for profit. Why did we do all of these, given that we may not gain from them? Because we want to break down cultural barriers and lower the cost of building trust. Chinese and Czech enterprises are complementary, as Czech offers advanced management techniques and capacities while China has a large consumer market and a high-quality work force. What’s more, CEFC China has rights and equities in upstream resources in Central Asia, Africa and the Middle East, and has controlled a bank to secure overseas low-cost capital and facilitate our investment projects. We have put in real efforts with long-term strategies in our minds in order to realize our values, which are universal and based on traditional Chinese culture.
As I just mentioned, human beings should work for their values and be a complement to Heaven and Earth. CEFC China also works for its values: “Arising with Strength and Achieving with Goodness”, and “working to accommodate others’ needs first”. All our strategies also work for our values to achieve the “perfect goodness”. I once said all beings are shaped by their destinies and energy transformations. We meet and get to know each other because of destiny. Getting to know someone, like your teacher, friend, or partner, may change your whole life. This is destiny. A noble person may enable you while an evil person may corrupt you. The changes brought upon you depend on how you change your inner energy. If you know yourself well and find the values you’re dedicated to, then your inner energy can be transformed into strength, and you will reach a level described by Buddhists as thoughts make things come true. All the strength originates from your thoughts. Once the thought changes, everything changes. Once you identify your values, fame, wealth and power will all come along. If not, none of them will follow, or be retained. In the late Eastern Han Dynasty, the whole court was in chaos: the queen killed the mother of the emperor, and the eunuch faction then gained power. Dong Zhuo seized control afterwards and put the whole country into turmoil. After Dong Zhuo, Cao Cao rose to the great power by holding the emperor as his hostage and acting in his name. Liu Bei gathered support along disheartened Han loyalists who objected to Cao Cao’s reign over the emperor. In the name of restoring the former glory of the Han dynasty, Liu Bei succeeded. During his reign of last days, however, he put personal gains above the state interests, and in a revenge for his right-hand man launched a battle against Eastern Wu instead of Cao Cao. In the end, he lost the battle to some young general and died in Baidicheng. He failed because he went against the Law of Nature, and pursued values not in line with the majority. That’s what I mean by doing everything for values. Why should we make the best efforts? Not because we want fame, power, or wealth. They are nothing but tools serving for you, not the other way around. You should be dedicated to your values and not be distracted by anything else. In the story of Journey to the West, when travelling to the Women’s Kingdom, Xuanzang couldn’t help but be attracted to the female ruler who expressed affection to him, but he was committed to his values that he should fetch the Buddhist scriptures back to China to spread Buddhism. At last he continued his journey to the West. Only with this willpower can he succeed. Without it, he may lose his “strength”. Everything has its value, and our branding strategies also serve for our corporate values.
We should promote CEFC’s core values, including its identity as a private collective enterprise, and the three roles of professional managers, business managers and business owners, and the idea of “one company, two systems”. The reason for doing publicity is to show what we’ve done for the society, and the recognition we receive because of that. This is where the value lies and is reflected. Secondly, others may identify with this value and work towards realizing it together with us. The core of branding is not to show off how large your company is just to win others’ envy and worship. That’s totally misguided and has no soul, and is far away from proper branding. The essence of a brand lies in its soul which should strike a chord with and win over people’s heart. That’s what branding strategy is all about.
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