The city of Putian in Fujian province is known for two things: sneakers, because it is where some of the world’s biggest contract manufacturers of branded trainers set up their factories (see WiC540); and healthcare, given the vast majority of China’s private medical groups are led by businessmen from Putian (see WiC276).
But neither of the above has minted the richest man in town: Hong Jie, founder of Skshu Paint, a coating products heavyweight.
Getting started
Born in 1967, Hong began his career in his hometown at a trading firm run by the local government after graduating from a vocational training school. Emboldened by the second wave of China’s reform and opening up in the early 1990s, he gave up his job at the state-owned firm after working there for five years, and started his own chemical materials trading company with two friends. The business helped Hong earn his first fortune, and gave him the capital to invest in other industries, including oil trading.
In 1999 Hong returned to his old trade of chemical materials, producing glues under the brand Hongyang. It became Fujian’s bestselling glue brand in 2002, success that prompted Hong to diversify into coatings, where he saw bigger market potential.
Big break
At the time China’s coating market was still hugely fragmented, with over 8,000 players. The bigger producers were mostly foreign-owned including Japan’s Nippon Paints.
To help his company stand out, Hong renamed it Sankeshu (or Skshu), meaning ‘three trees’ in Mandarin, so as to associate the brand with eco-friendliness. He also focused on building close-knit distribution channels across smaller cities before expanding into more affluent markets. What made Skshu a household name, however, was its various marketing campaigns including ads on popular shows on state television and its sponsorship of Shenzhou 6, the second manned flight of China’s space programme, in 2005.
Since 2007 Skshu saw its growth accelerate due to China’s booming property sector. It has increasingly sold more of its paint to contractors and property developers than direct to individual homeowners. The company went public in Shanghai in 2016. Last year, despite the coronavirus outbreak, Skshu booked a 24% growth in net profit to Rmb501.8 million on a 37% increase in revenue to Rmb8.2 billion. Its sales surged 241% in the first quarter (versus the same period last year) to Rmb1.48 billion ($230 million).
Between January 2020 and now shares in Skshu have gone up nearly four times, pushing the company’s market capitalisation to Rmb63.9 billion. Hong’s net worth has also surged to $6.65 billion, making him the richest man in Putian, thanks to his 67% interest in the company, according to Forbes. The company’s plan to raise Rmb3.7 billion to finance new production capacity will cut Hong’s stake to just over 50%
Need to know
Hong’s name “Jie” means “excellent” representing his parents’ hopes that he would prove to be someone outstanding. Skshu is also going to be the exclusive supplier of coatings for the Beijing 2022 Winter Olympics and Paralympics.
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