This year’s Hurun’s Rich List saw Qiu Guanghe beat Zhou Houjian to become the richest man in Wenzhou, with a fortune of Rmb33 billion. But back in 1951 when he was born into a poor family in Ouhai, a small town near Wenzhou, Qiu’s prospects looked bleak. With a blind father, he had to drop out of school at 14 to work in the fields. Aged 16, he joined the army but returned home after finishing his military service at 20. For the next 10 years he worked for a company owned by the village, rising to become boss before he resigned. He told a reporter from Wenzhou Daily, that with his salary of just Rmb40 a month, he couldn’t make life any easier for his family.
Ouhai Household Appliance was the first company Qiu created himself – it was launched in 1988. It grew quickly to become the largest distributor of home appliances in the Wenzhou area, and sales reached Rmb100 million in 1993. Then the business was hit by a natural disaster – a typhoon which swept away all of his stock.
Qiu then changed course, picking the casual wear market as his next business target. His hunch was that garment styles from Western markets would soon spread to China. In 1996 with capital of Rmb88 million accumulated from his first business, Qiu started out Semir Group, aimed at fashion-conscious youngsters aged 16 to 25.
With similar designs and prices to thousands of domestic competitors, Semir struggled to stand out. Business was difficult but Semir survived and in 2002 Qiu started to consider the childrens clothing market too, which he thought was being ignored by most players.
Semir then launched Balabala, providing “free and unrestrained” casual clothes to kids between the ages of 3 and 12. The range included clothes, accessories and shoes, and by 2008 Balabala was China’s leading childrens-wear brand in terms of revenue share.
By the first half of 2011, Semir Group had revenues of Rmb3 billion, up 37%, of which Balabala contributed Rmb757 million, up 57% year-on-year.
Qiu also developed an asset-light model later adopted by other Wenzhou companies – outsourcing production and focusing on the design, logistics and supply chain management. By 2010 Semir had expanded to more than 4,300 directly-owned or franchised shops across China, and Qiu’s plan is to open 700 to 800 more shops a year.
Semir Group went public in March this year, in a Rmb4.5 billion IPO. Over 80% of Semir shares are still held within the Qiu family.
Need to know
Zhang Ruimin at Haier famously smashed a fridge with a sledgehammer to warn employees to pay attention to product quality.
Qiu did something similar shortly after establishing Semir, torching 50,000 pairs of trousers due to a minor quality problem. He lost Rmb300,000 but began to build Semir’s reputation in the process.
© ChinTell Ltd. All rights reserved.
Exclusively sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.