The son-in-law of Shao Qinxiang, founder of the Huayuan Group, known as the “richest man in Jinhua,” stated that mainland China’s leading enterprises are also facing intense competition.
Huayuan Group is one of the world’s largest suppliers of Vitamin D, as well as a provider of textiles, construction materials, and a mature copper processing plant. According to the 2024 Hurun Global Rich List, Shao Qinxiang ranks 1577th globally with assets of 16.5 billion, earning him the titles of “richest man in Jinhua” or “richest man in Dongyang.”
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 from Huayuan in 2017.
In a recent interview with Bloomberg, Pan Jianfeng mentioned that the competition had been overly intense in the past two years. The company he manages is a medium-sized copper processing company that has shifted its focus from traditional copper processing to producing high-performance copper foil.
Pan previously worked as a journalist for China Daily and later pursued his studies in the United States. Upon returning to China with a Master of Business Administration degree, he advised Shao Qinxiang to shift from traditional copper products to producing foil materials essential for technology companies.
His recommendation proved successful as the company quickly became a supplier to BYD electric vehicles and CATL battery company. However, he did not anticipate that other companies would quickly emulate their approach and products.
“Many companies enter a constantly evolving industry. At some point, there will be significant filtering, and only the strong will survive,” he told Bloomberg.
As other companies followed suit in the same business, the industry faced oversupply issues, leading to significant losses for many enterprises and forcing them into a tough market reshuffle.
In theory, China’s demand for copper is expected to significantly increase in the future, benefiting copper factories. However, Pan Jianfeng’s experience shows that the impacts of economic imbalance extend even to pioneering or near-frontier enterprises.
“The market is relatively small, but the growth is very rapid,” he noted.
The excess capacity forced his company to strive to attract attention in Beijing while aiming to avoid becoming a casualty of the Communist Party’s so-called “new productive forces” campaign. Similar dynamics of excess capacity have appeared in other industries selected by the CCP leadership.
Pan Jianfeng concluded that the key is to find ways for the company to survive and differentiate itself from other businesses.
Jay Shambaugh, Deputy Secretary for International Affairs at the U.S. Treasury Department, mentioned the impact of China during a public speech in New York on July 10. He cited an example from 2008 to 2013 when China aggressively developed solar panel manufacturing, leading to an 80% decline in international prices and bankruptcies. Despite this, China’s solar production continues to expand with low-interest loans supported by the Communist government.
Such policies harm overseas markets and also intensify the internal competition among Chinese businesses.
Currently, the proportion of loss-making industrial enterprises in China is at its highest level in recent years, with the total number of such enterprises reaching the highest point since the 1990s. Additionally, all efficiency indicators for sub-industries with data have declined in the past decade.
“These situations wouldn’t occur in a normal market economy,” Shambaugh said. “What we see is a fundamental distortion driven by government policies.”
The official pointed out that China’s significant economic imbalances lead to spillover effects, but the non-market policies and practices of the CCP further distort the market, weaken fair competition, concentrate spillover effects in certain industries, and amplify these impacts.