A journalist-turned chairman

　　Newman HuoJULY 29 was a special day for Qiu Xudong.

　　It was the day he took over his new office as chairman of the Royalstar Group, a well-known Chinese home electric appliance company headquartered in Hefei, Anhui Province.The 49-year-old Qiu replaced the group’s former leader, Chen Rongzhen, who had resigned at the shareholders’ congress and board meeting.In a subsequent interview with the press, he said: “Yesterday I was still a journalist, but today I have become the boss of the Royalstar Group.”According to Xinhua News Agency, it is the first time in China that a journalist has been appointed the leader of a large-scale company.The significance of Qiu’s story lies in that it has put forward an acute question in the sensitive area of Chinese manufacturing enterprises. That is, in the power transition of an enterprise, what role should the government play? What should an enterprise do? Royalstar has introduced an important trial that will have far-reaching influence on other enterprises encountering the same problem.

　　Even in the eyes of Qiu himself, everything happened suddenly. In less than a week, the board of trustees of the Royalstar Group unanimously approved the nomination of the former editor-in-chief of the Hefei Evening News, as chairman of the group and went through all the judicial procedures of making the appointment. “I felt somewhat surprised when I first heard the news,” Qiu said.“Everything has turned out satisfactory,” said Tian Xianbin, deputy CEO in charge of the group’s marketing and sales. He just went through all the personnel controversies and conflicts between the enterprise and the local government. For him, all were gone like yesterday’s nightmare. For a large-scale enterprise like Royalstar, it is a huge task to make the power transition smoothly and successfully. Most of the Royalstar people believed the appointment of Qiu was the right thing to do.“This is the correct choice for Royalstar,” said Chen Rongzhen, founder and “spiritual leader” of the Royalstar Group.The 64-year-old founder’ greatest quest had long been to find a successor. Since Chen retired, he hasn’t had to worry about company affairs but he had enough free time to think over what happened over the last 20 days in July.The three weeks are destined to become the most significant time in Royalstar’s history. The future Chinese home electric appliance companies can draw valuable lessons from Royalstar’s story.From his background, we can see Qiu really is a Royalstar man. Before he was transferred to the Hefei Evening News, he had been working for Royalstar for eighteen years, participating in the establishment of the Royalstar brand.

　　For Royalstar, from July 7 to July 27, there were three most important events. July 7 witnessed the announcement of Chen’s retirement. July 17 witnessed the board of trustees’ veto of the nomination of Zhang Changju as successor. July 27 witnessed the appointment of Qiu as the new chairman for Royalstar.At 9 o’clock on the morning of July 7, a group of officials from the Organization Department of Hefei Municipal Committee of the CPC announced suddenly that Chen had retired. This confirmed a rumor circulating some days earlier, although it was still a shock to most people in the company.“Chen proposed the choice of successor years ago, but with the changes of the domestic market and the frustration of the joint ventures, Royalstar stepped into a tough time, and the takeover of power was delayed,” Tian said. He was puzzled at the government’s announcement.Chen had been looking for a suitable successor over the past few years and had two prerequisites for his successor. Firstly, he must be a master of home electrical appliance management. Secondly, the successor would have to be capable of passing on Royalstar’s conviction and core values with the ability to fulfil Chen’s uncompleted tasks.It had been a very time-consuming task for a large company to seek such a successor, and Chen had always been on the lookout for a perfect takeover.The local government’s move didn’t fit in with Royalstar’s plans, even disturbing Chen’s plan for the succession. The local government pushed another figure Zhang Changju onto the stage.The government’s proposal of Zhang as successor aroused opposition from within the company. Zhang was an official with the economy commission of Hefei Municipal Government.People within the company said Zhang did not have any experience in the home electric appliance industry, and they believed his nomination was “too dramatic”.The company, which was in the process of adopting share-holding system, began to question whether the government’s proposal was legal.

　　The July 17 board meeting was really Zhang’s Waterloo. His nomination as successor was rejected by the majority. For a large home electric appliance manufacturer that has been through a special history of development, it was unimaginable to accept as leader someone who had no experience at all in the industry.Qiu showed up when relations between the local government and the company seemed to have become a little awkward.Qiu was already a heavyweight in both political and economic circles in Anhui Province.During recent years, while working for the Hefei Evening News, he increased the total assets of the newspaper by eight to nine times.In 1993 when he was staying with Royalstar, he proposed the image-building idea of “the Royalstar, the trend of today” and the quality control management concept of “zero defect awareness” for the company. His past experiences and contributions became the intangible assets for his nomination.July 27, the board of trustees approved with a unanimous vote the nomination of Qiu as the legal successor.“This is a decision made totally by the company’s will, and not the result of the government’s interference,” Qiu said.These words confirmed another saying that Loyalstar’s right of choice for successor is under the control of the company.The conflict between the government and enterprises has been a historical problem over past decades in China. In essence, many internal conflicts have resulted from the unclear definition of property rights of an enterprise. Only when the enterprise’s property rights are fully clarified can the dynamics of a market economy be activated and maintained.

　　Qiu’s accession is satisfactory at all levels in Hefei and, having returned to his former company, he is a successor Chen can rely on. “This time, the transition for me is smaller than when I left for the newspaper in 1994,” said Qiu, who seemed to be feeling more comfortable with his role.“But the situation with Royalstar, in enterprise scale, market share and product makeup, is no longer the same thing it was eight years ago,” Qiu said.When Qiu left Royalstar, the Chinese home electric appliance industry was in its heyday. But today, the industry has entered an era of lower profits. And with China’s accession into the WTO, many foreign companies are already at the door.Qiu knows clearly there are many challenges ahead. “Yesterday, I was still looking at full-page proofs, but today I have to do the business in home electric appliances,” said Qiu, who is reorienting himself in the new position.