Great Helmsman Read PDF
Shipbuilding maverick Chen Qiang (CEIBS EMBA 2000), president of Rongsheng Heavy Industry, has made a career of setting - and achieving - daredevil goals for himself and his company. This month, Chen shares with TheLINK how he is breaking world records and otherwise shaking up China's shipbuilding industry.
By Audrey Wu
On April 28, 2007, Rongshen Heavy Industry broke the global shipbuilding record for constructing a 75,500-ton Ice Navigation Ship hull - from laying the first piling to lowering the completed and water-tight ship body into the docks - in just six months. The previous global record, set by a Japanese firm, was eight months.
Only one person in the international shipbuilding world was not surprised by the record: 46-year-old engineer-cum-executive Chen Qiang. After all, the unassuming but determined Chen has built a career on achieving seemingly impossible goals in the high stakes, high risk industry of shipbuilding. In fact, Chen had also set an international record for speed in 1997, when he oversaw the construction of Shanghai Waigaoqiao Shipyard, from greenfield to successful completion of the first ship, in just 3.5 years - one-third the time the industry standard then allotted for such a project in China.
Although Chen himself is low-key about such accomplishments, a glance at his resume shows that he has kept his career moving forward at a breakneck pace. Beginning two decades ago as an entry-level technician in the state-owned Jiangnan Shipyard, China’s first and oldest shipbuilder, Chen quickly began gaining skills and recognition. In 1994, at the age of 33, he was promoted to Jiangnan’s Assistant General Manager, making him the youngest shipbuilding professional in China to enter the industry’s top management tier. Three years later, he was appointed as Director of the Preparation Committee to construct Waigaoqiao Shipyard, then China’s largest shipyard.
FORWARD THINKER - Having built Rongsheng Heavy Industries into China’s largest shipbuilder, Chen Qiang is now determined to expand the company into one of the world’s top players. Here, posing before the largest 900-ton crane in China.
Chen is also shaking up China’s shipbuilding industry by introducing innovative and even daring new strategies for improving efficiency. In overseeing the Waigaoqiao Shipyard project, he successfully tested his own theories in water conservation to build the facility’s “cofferdam” (a temporary barrier built against water during the initial stage of shipyard construction) using earth instead of the traditional steel construction. This bold and controversial move saved RMB70 million in construction fees, cutting two-thirds of the project budget.
Under Chen’s direction, the Waigaoqiao Shipyard got off to a stunning start. While industry insiders publicly predicted that the new shipyard would be at least four months late in delivering its first vessel, the boat - a 150,000-deadweight-ton Floating Production Storage and Offloading Unit - was actually delivered 10 days in advance of the deadline.
For the Waigaoqiao Shipyard’s second ship, Chen made an even bigger splash when he bid to build a controversial new 175,000-deadweight ton “Green Capesize” bulk carrier. The decision was fiercely criticized by domestic shipbuilding experts as “technically impossible to build” in China. Again Chen proved the naysayers wrong; the Green Capesize type developed by his team eventually became the most popular, and profitable, vessel model at Waigaoqiao Shipyard. The type has even been dubbed within the global shipbuilding industry as the “Waigaoqiao Type.”
Such daring initiatives have built Chen’s international reputation as one of the most ambitious and successful executives in shipbuilding. In fact, Chen’s leadership abilities caught the eye of the Chinese government and, several years ago, he was listed by the central government among potential candidates for future ministerial positions.
But Chen declined the chance to pursue a political career in order to stick with his first love: ships. After seven years at the helm of Waigaoqiao Shipyard, it was time for him to branch into private shipbuilding. In 2005, he joined Rongsheng Heavy Industries to help the conglomerate launch a shipbuilding subsidiary. Today, Chen is realizing his dream of running a private company. Already, two-year-old Rongsheng has accepted orders for 85 vessels, or 1,300 tons of vessels, attracting sales revenue of US$6.5 billion dollars, making it the leading shipbuilder in China. Rongsheng also enjoys a strong reputation in Europe and Asia. Chen’s long-term goal is to build Rongsheng into one of the world’s biggest shipmakers.
Last month, TheLINK visited Rongsheng Shipyard for a frank chat with Chen Qiang. Dressed in a plain blue sports jacket, and surrounded by gigantic hulls in the bustling shipyard, Chen shared insights and strategic tips with the CEIBS community.
TheLINK: Rongsheng secured its first shipbuilding contract less than four months after breaking ground for the shipyard. After just two years of operation, the company has achieved a solid reputation in Europe and Asia, and now holds the lion’s share of the global market for Suezmax oil tankers. How have you developed the company at such a remarkable pace?
CHEN QING: First, my personal reputation plays a certain role.
Second, we use key account strategy - establishing a good reputation among the best ship owners. Once we have their recognition, the other ship owners will naturally follow. Our first [client] was the Norwegian tanker company Frontline. They asked me to deliver the ship in June, 2008, but we will deliver before Spring Festival (February 2008). Our speed and quality impressed them and built up our credibility. Altogether, Frontline has ordered 16 ships from us.
Third, the first ship is critical. During my visit to Hyundai Heavy Industries, the largest shipbuilding company in the world several years back, I found that they took Waigaoqiao as the No. 1 Chinese competitor. I was confused: what are they afraid of? We are such a young company. The average age of employees is 20-something. They told me, ‘Everybody thought you would delay the delivery of the first ship to four months, but you delivered ten days before the deadline. Your speed is amazing. As a young ship maker, you have had such great achievements that your future is unimaginable.’
CHEN QIANG TIP: To build your brand, use a ‘key account strategy’ - attract the best clients and your reputation will spread.
WORLD RECORD - Chen Qiang receives congratulations last April for cutting the existing speed record for largescale ship construction time by two months.
TheLINK: The international shipping industry is booming, and this means fierce competition. What are Rongsheng’s advantages against local and international competitors?
CHEN QIANG: We avoided direct competition with major state-owned companies by entering a “blue ocean” field where there is no competition yet. We are focusing on two types of ships. First, the 75,500-deadweight-ton Ice Strengthened Bulk Carrier; we are building the first of this kind in China. Second, the 156,000-deadweight-ton Suezmax oil tanker, the first ship of this model in China to meet the [international standard] Common Structural Rules. At the beginning, people didn’t think the Suezmax oil tanker would be popular, but we are now the No. 1 seller of this ship worldwide, with nearly 40 orders for this ship.
We also emphasize R&D and innovation. In general, we make our profit by improving efficiency and producing high value-added ships.
Capital is especially important to a fast-developing company like Rongsheng. We began planning to go public in the capital market even before our shipyard was completed and our first ship delivered. Our plan has already received a positive response from international capital markets. But I always think people need to think early and far ahead.
Chen Qiang Tip: You can move forward fast using the power of international capital. First, we have earned a high-tech image by making high-value ships. Second, we are preparing for an IPO in the international capital market.
TheLINK: Rongsheng now employs 7,000 people. What is your management style and strategy?
CHEN QIANG: First, I take advantage of three kinds of talent hired from abroad, as well as from Shanghai and Jiangsu. I have hired several South Korean experts for our R&D team from Daewoo Group, the second-largest ship maker in the world. Next, we will hire European experts. These foreign talents can improve the overall technology level and lower the cost. I was criticized by many at first; they asked, ‘Why do we pay so much to hire them?’ The fact is these foreign talents can help the 300 Chinese college graduates in our company to grow into first-class engineers. In that sense, the cost of hiring these foreign employees is very low. I also have a high-level research team, most of them from shipbuilding companies in Shanghai. These people help to improve the efficiency of thousands of workers.
Second, corporate culture is very important. People from different places have their own cultural norms. Here at Rongsheng, we encourage people to think of themselves as "Rongshengers.” We have signed a long-term contract with the Korean employees and I have told them, if they work hard here, they can work to retirement in China. This has made them feel quite at ease to work in Rongsheng.
Third, being people-oriented. Many migrant workers lack a sense of belonging when working in the city. We make them feel at home. We have built a Rongsheng Garden, a home for employees. Also, I talk with blue-collar employees regularly. My goal is to make my people feel cared for, inspiring their thinking and giving them training.
Fourth, we should be innovative and always strive for excellence. I am the first in China to introduce an IT system for shipbuilding. Also, we learned accuracy management from Japanese companies and place a heavy emphasis on optimizing working flow. When I was overseeing Waigaoqiao Shipyard, the planned production goal was 1.05 million ton of ships each year. I raised the number to 3.5 million tons. I think a company needs to revolutionize and improve itself all the time in order to grow higher and better.
CHEN QIANG TIP: To successfully manage a large-scale company, take advantage of talent from different places; build a cohesive corporate culture; remain people-oriented and innovative.
TheLINK: You achieved many breakthroughs in the Waigaoqiao Shipyard by lowering costs and improving efficiency. You coined the phrase "smart working." How do you continue your smart working concept in Rongsheng?
CHEN QIANG: You cannot work well without thinking and researching. In fact, Rongsheng’s equipment is no better or maybe even worse than those used in the SOEs. But we have made sure that the core tools - the IT system, the dock and 900-ton gantry crane - are all the largest and best quality in China.
Not everything needs to be so advanced. For example, our factories are of different sizes, unlike the uniformly large-scale factories of SOEs. We think different sized factories can supply different parts of a ship, allowing resources to more efficiently be used. My managers must not only finish their assignments perfectly, but also use money efficiently.
CHEN QIANG TIP: “Work smart” by improving efficiency; for critical equipment, use only top-of-the line technology and products
TheLINK: Under your leadership, Waigaoqiao and Rongsheng became leading companies within very few years. How did you achieve this?
CHEN QIANG: By thinking ahead. Currently, 84 percent of the ships in the world are built in Asia - mostly in China, South Korea and Japan. South Korean and Japanese companies are already producing high value-added ships. I must be the first one to dare think of building high value-added ships in China.
Big international companies set the consuming trends and new markets. Most [domestic] companies don’t have this mindset. One reason is that they are too small-scale; second, they are just followers. Third, “make what the customers need” is an important concept. But sometimes, the customers don’t know what they need. Then, we must be able to predict the future. We should be able to tell customers that the new products I provide you with will make you more profitable. If you want to be a true leader, you must think ahead of your customers.
CHEN QIANG TIP: A true leader thinks ahead of his customers.
