【Epoch Times News, July 13, 2024】”Jinhua’s richest man,” Shao Qinxiang, the founder of Huayuan Group, has revealed that even cutting-edge enterprises on the mainland are caught up in intense competition.
Huayuan is one of the world’s largest suppliers of Vitamin D and also provides textiles, construction materials, and owns a mature copper processing factory. According to the 2024 Hurun Global Rich List, Shao Qinxiang ranks 1577th globally with a wealth of 16.5 billion USD, earning the titles of “Jinhua’s richest man” or “Dongyang’s richest man.”
His son-in-law, Pan Jianfeng, serves as the chairman of Zhejiang Huayuan New Energy Co., Ltd., a company established with a 200 million yuan investment in 2017 by Huayuan.
In a recent interview with Bloomberg, Pan Jianfeng mentioned that the competition has been fierce in the past two years. The company he manages is a medium-sized copper processing company that has transitioned from being primarily a copper processing plant to specializing in high-performance copper foil production.
Pan Jianfeng, who once worked as a journalist for the China Daily and later studied business in the United States, returned to China after obtaining his MBA and advised Shao Qinxiang to shift from traditional copper products to producing the foil materials needed by tech companies.
His advice proved to be successful as the company quickly became a supplier to BYD electric vehicles and Contemporary Amperex Technology Co. Limited (CATL). However, they were surprised to find that other companies began imitating their strategies and products.
“Many companies enter a continuously growing industry. At some point, a significant filtering occurs, and only the strong can survive,” he told Bloomberg.
As more companies followed suit in the same business, the entire industry faced oversupply issues, leading to significant losses for many enterprises and forcing a ruthless market reshuffle.
In theory, Chinese demand for copper is expected to see a substantial increase in the future, which should benefit copper factories. However, Pan Jianfeng’s experience suggests that the repercussions of economic imbalances are profound, affecting even companies at the forefront or close to it.
“This market is relatively small but growing rapidly,” he remarked.
Excess production capacity forced his company to strive for attention in Beijing while trying to avoid becoming a victim of the Chinese Communist Party’s “new productivity” campaign. This dynamic of overcapacity is also evident in other sectors selected by the CCP for development.
Pan Jianfeng emphasized the need to ensure the company’s survival and differentiate it from others.
Jay Shambaugh, the Deputy Assistant Secretary for International Affairs at the U.S. Treasury, mentioned “China’s impact” during a public lecture at a think tank in New York on Wednesday, July 10. He cited the heavy development of solar panel manufacturing in China from 2008 to 2013, causing an 80% price drop globally and resulting in bankruptcies and closures of businesses. Yet, China’s solar production continued to expand under the support of low-interest loans from the Chinese government.
Such policies harm overseas while intensifying internal consolidation of Chinese enterprises.
Currently, the ratio of loss-making industrial enterprises in China is at its highest level in recent years, with the total number of such enterprises at its highest point since the 1990s. Furthermore, the capital efficiency indicators of all industries with data subcategories have declined over the past decade.
“These situations wouldn’t occur in a normal market economy,” Shambaugh stated. “What we see is a fundamental distortion driven by (CCP) government policies.”
The official argued that China’s vast economic imbalances create spillover effects, but the non-market policies and practices of the CCP will further distort the market, weaken fair competition, and concentrate spillover effects in certain industries, exacerbating these effects.