“Learn more” is a frequent message when Che Jianxin addresses his employees. And yet the 46 year-old tycoon dropped out of school at 16 because of poor exam results. Initially Che opted to be a tailor but his family couldn’t afford the sewing machine that he needed, so instead he became a carpenter, making furniture.
Three years later, Che opened his furniture store Red Star in his hometown Changzhou, in Jiangsu province. After several years of careful growth, he founded Red Star Furniture Mall in 1991 with Rmb1 million. Che then expanded fast, opening 24 stores in Jiangsu in five years. Red Star’s sales soared to Rmb150 million by 1995 from Rmb6 million in 1991.
Setbacks and a new approach
Che’s furniture mall model was soon being copied by his business peers, and profits fell as a result of his expansion drive. By the end of 1996, Red Star was losing money at half of its malls and Che started to think about the business model – particularly the rents he was paying. “Red Star would have died if the situation continued,” he recalls. So he took the decision to close all his stores, except the five most profitable ones.
In 1997 Che changed the chain’s name to Red Star Macalline, which sounded (to local ears) more foreign and ambitious. He bought a piece of land in Nanjing, the capital city of Jiangsu, and rather than pay rent, built his own shopping mall and attracted other homecare retailers to move in alongside him. This proved a success, and a housing boom providing increasing numbers of shoppers.
With the latest opening in Tianjin this month, the total number of Red Star Macalline Malls reached 100 nationwide, and more than 2,000 brands and retailers cooperate with Red Star Macalline, which saw its revenues hit Rmb40 billion by the end of 2011. “The land we purchased is worth 20 times what we paid 10 years ago,” Che crowed to 21CN Business Herald last year. “Without counting any other assets, the land we own is worth more than Rmb10 billion.”
After investing $200 million in 2007, PE fund Warburg Pincus recently invested Rmb2.6 billion more. Che says he plans to IPO within a year.
And to relax
Che claims to have read more than 2,000 books and orders his executives to have a book in their bags at all times. He even buys every manager a bookshelf for home use and is even said to pay the salaries of their maids: “Only by liberating them from trifles can they focus on learning new things, for example, from books. It’s good for their work eventually,” Che suggests. According to his assistant, Che takes five books on all his business trips, too.
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