Creating a Sea of Change in China’s Aquaculture Industry

Chen Dan (APEX-C MBA 2002)

 

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He is an outstanding alumnus of  NUS Business School APEX-C MBA 2002 and a member of the Southern China Alumni Network. He initially set up a trading company with 16 employees and about RMB 1 million. Twelve years on, he runs a large private corporation with annual production exceeding RMB 6 billion and over 10,000 employees across the industry chain. From the field to the table, he covers the complete value chain in the aquaculture industry. He was listed in New Fortune 500 in 2010. Meet Chen Dan, Chairman of Guangdong Evergreen Group Co Ltd.

Q: Within just one decade after graduation, you were established as a leader and role model in your industry. How did you transform your company, Evergreen, from a pioneer in agricultural industrialization into an industry leader?

A: In 1988, I graduated from University and found a job in Shenzhen. But I was always ambitious, so I went into the trading business. The shift from just feed trading to the feed industry occured in 1993, when I started working feed producer “Shaungfeng Feed” in Shenyang under the Shenyang Administration of Grain. In 1995, I returned to Zhanjiang, my hometown, and founded the first feed plant there, using all my savings and leveraging on my experience in Shenyang. Then I invited some professors from Renmin University of China to provide lectures on business growth planning and marketing. Those professors gave me the advice that was my launching pad. They told me that I would never get to the top of the pork feed industry; but if I turned to sea aquaculture, I would become the industry leader in three to five years, quite simply because Zhanjiang has a long coastline.

Based on their advice, the company embraced a transformation in 1997 and started to produce feed for sea shrimps. The professors’ prediction came true. In three years, Evergreen emerged as the largest shrimp feed producer in China. Currently, though Evergreen is only ranked 6th among the Top 10 Agricultural Companies in China, the performance of our aquaculture feed products has been number one for nine years in a row.

Q: What are your innovations in the industry?

A: Evergreen Group has led changes in the aquaculture business. We have worked with Guangdong Ocean University to come up with innovations which changed the industry landscape, and initiated the technology of offshore shrimp cultivation. Moreover, we pay close attention to genetic engineering and bio-engineering researches in aquaculture by collaborating with Tokyo University and Canada, and by introducing many new microbe species.

We are proud to have covered a few industry gaps in China, including the manual technique to facilitate grouper fish reproduction, patenting the manual technique to facilitate yellow croaker reproduction, and cultivating sea shrimp in freshwater. When we traveled to promote our technology in Shanghai and the Pearl River Delta, the industry players initially found our revelations to be unbelievable because they couldn’t figure out how we could cultivate sea shrimps in freshwater. In order to prove our innovation, we rented a pond there to cultivate ocean shrimps, all in freshwater. That ultimately convinced them. Today, this technology is widely used across the Yangtze River Delta and the Pearl River Delta. What’s more, Evergreen Group has drafted and developed 13 national codes in relation to aquaculture industry.

Now we are focusing on the national initiative for “the Standards of Food Safety Industrialization”.

Q: What are the critical strategies that have been instrumental in Evergreen’s growth?

A: Evergreen Group follows the model of “corporation + base + culturists + standards”, At present, the group has over 4,200 contractors and culturists, involving more than 100,000 farmers. The group provides fries, feeds and technologies, while the culturists arrange for the fields. We source for, process and export their products, creating a complete value change in agricultural industrialization. So the farming population keeps growing because we help them profit and create profitable partnerships. I am more heartened by my ability to bring wealth to the farmers, much more than my own profitability.

In terms of investment, my theory is “market development first, followed by production base”. For instance, if I plan to sell my product lines in Shanghai, I will make all efforts to develop the market there first and determine the market size before building up a feed plant in Shanghai. Therefore, ever since Evergreen started its production in 1995, this division has been thriving substantially. We take seven months to build a production plant, and then make it profitable within one year.

As early as 1998, I defined the values of the corporation as “stability, optimization and strength prior to scale”. I believe that Guangdong Evergreen Group’s constant and consistent focus should be on agriculture. I was born in the countryside and we shall make our contributions to our hometowns. Although we make lower margins in agriculture, it is an industry that will continue to grow and last because it is our lifeline.

Q: Does Evergreen face any challenges today?

A: Sure. Feed production is our core business, but our upstream and downstream businesses, i.e. frying and processing, are relatively weak. According to our growth strategy, wherever there is an Evergreen feed plant, we will also have to build frying facilities and a processing plant, which will create the entire industry chain.

In addition, even though Evergreen is a major exporter, our domestic marketing and branding needs to be vastly improved. Those within the industry here know us, but we are unknown in the broader community. As we have had sufficient cash flow, our management team had not seen the need for an IPO. But having realised that we have weak brand awareness, we now believe that a public offering will greatly benefit our branding strategy. So that has been the focus of my recent efforts.

Q: You are in a hi-tech industry with low labor intensity. What’s your insight on human resources in the industry?

A: The aquaculture industry is characterized by high technology and barriers to entry, because it has strict requirements with regards to technologies and systems. In general, though talent can be recruited, it is difficult to duplicate the entire system and professional team. In the world of aquaculture, Evergreen is recognized “Huangpu Military School”, because other players have poached many of our well-trained talents. Therefore, in recent years I have developed our technical roadmap to prevent over-emphasis on learning, experience and expertise. That way, the loss of a few technicians will do no harm.

My philosophy is to maintain a low profile in both business and life. I look for a sound foundation. I always tell my people that it’s better to be a star than a meteor. We will climb up step by step and ultimately reach the peak, based on the key elements of manageability, strength and stability.

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