The past few weeks have marked two significant milestones for Robert S. Xu, founder, chairman and CEO of Kingdee International Software.
On July 20, the company completed its share-listing shift, from Hong Kong stock exchange’s Growth Enterprise Market (GEM) to the main board, and then Monday the company celebrated its 12th anniversary.
The company has come a long way since its humble beginnings in 1993, when Kingdee was a small latecomer to the ERP software market. But thanks to Xu’s abilities as a manager and strategist, Kingdee has grown by leaps and bounds to become a major local and emerging regional player.
Kingdee's success in the past two decades has been firmly rooted in the China market. The first stage in the company’s success was its capturing of a large market share for its Windows-based financial software in 1995, in competition against Beijing-based UFSoft, then China’s leading management software provider. This development in China’s enterprise software market led industry insiders to refer to Kingdee as No. 1 in the south, and UFSoft as No. 1 in the north.
After establishing itself as a major China player, Kingdee then went on to make itself the China leader in the late 1990s, with its financial software now having been adopted by more than half of the Fortune top 100 Chinese companies.
Kingdee's growing sales drew the attention of IDG, which invested a large sum of money in the company and helped improve its management with international ideas and practices.
By sustaining the fast pace of business growth, Xu was then able to list Kingdee on the GEM in 2001. Since then Kingdee's net profit has been soaring. Revenue reached 294.5 million yuan (US$ 36 million) in 2002, and jumped to 445.9 million yuan by 2004.
Convinced by the company’s outstanding sales growth and surging profits, the company’s shareholders finally gave their approval July 11, 2005 to move the company to the main board.
At the listing ceremony, Xu outlined his new strategy for Kingdee: "We'll make use of our new platform to enhance Kingdee's profile ... leverage on the capital markets to build our future, be dedicated to our mission of 'Enable Customer Success,' ... with an aim to become No. 1 ERP vendor for SMEs in the Asia Pacific region."
Xu was born in Yuanjiang City, Hunan Province in 1963. After graduating from the Computer Technology Department of Southeast University in 1983, Xu continued his studies at the Finance Research Institute of the Ministry of Finance, where he was tutored by professor Yang Jiwan, a prestigious accounting theory scholar.
After receiving his masters' degree in 1988, Xu was given a job by Shandong Province's Taxation Bureau — though he only stayed two months. What caused his departure was a phone call from a former classmate who was then in Shenzhen.
"This is a bustling and hustling boom city. I just bought some second-hand appliances and clothes. You feel like you are in the United States when you are here," his classmate chattered over the phone.
Itching to get himself a piece of the action, Xu asked his tutor Yang to help him with the decision: "Go to Shenzhen. It’s a heaven for young people."
On arriving in Shenzhen, he found work with an accounting firm for three years. It was not until 1991 that he plunged himself into the "sea of business," a Chinese term which refers to giving up government jobs and starting businesses.
At the age of 28, Xu started his first business with a loan of 5,000 yuan — Aipu Computer Technology. The company's primary business was selling PCs, although this early business experience was to prove a bitter experience when his first big deal turned sour.
Xu was trying to sell 40 computers to a company in Hainan Province, but the company secured other deals when Xu brought the computers there. As he had no signed contract to fall back on he could do nothing but swallow his loss — an unsettling episode which he says has given him painful stomach trouble ever since. But despite this setback, Xu ploughed on, and fortunately he found another buyer with the help of a friend and made his first 100,000 yuan.
"The final result was not bad, but I paid a high price," said Xu, reminiscing about the experience. "I learned from this experience that credit is very important to a businessman."
Just two years after starting his first business, Xu founded Kingdee International Software on Aug. 8 1993 with joint stock from foreign investors. At that time, a fistful of other financial software developers had carved up the China market, including both big multinationals and homegrown players such as UFSoft, Wangneng and Anyi.
But despite being a latecomer, Xu believed innovation would bring Kingdee fame and fortune. Just two years into Kingdee's history, the company released its first Windows-based financial software, winning the company widespread market recognition as a new industry challenger. It was a good start for Kingdee.
In December, 2000, Kingdee launched its flagship product: Apusic Application Server version 1.0, a kind of middleware which provides an effective and highly reliable platform for customers to run, implement and develop distributed applications when constructing new business systems.
The product has since evolved and now been adopted by many large corporations and State-owned organizations such as the People's Bank of China and Beijing Highway Bureau.
Kingdee floated on Hong Kong stock exchange's GEM on Feb. 15 2001. Although this listing raised just 90 million yuan, Xu looks back at the move as a significant step for the company, which was far more than just about fund-aising.
"It was a right decision to float Kingdee so soon," Xu said. "It made overseas investors get to know Kingdee and it also brought greater vision to the company."
In 2002, Kingdee's sales reached 3180 million yuan and in the same year the company acquired Beijing-based competitor Kaisi.
Despite having created a multi-million dollar company, Xu felt the need to broaden his understanding of business. So he decided to go back to school and learn by starting EMBA classes in July 2002 at the China Europe International Business School, from where he graduated last year.
"I went there to proof my business notions and learn from others' experience," said Xu.
But study didn't distract Xu from his Kingdee responsibility. With his hard work and flair for managing growth, Kingdee's sales had climbed by 270 percent from 2000 to 2004 with a growth in post-tax profit of 250 percent, and earnings per share have risen 190 percent since the listing. During the same period the business's operating cash flow grew from 13 million to 1170 million yuan.
Steering through the wake of bankruptcies that have befallen many of the early ERP software market leaders, Xu has navigated Kingdee into clearer waters where the company now finds itself one of the top two ERP developers. It's far from plain sailing from here, as Kingdee now faces fiercer struggles ahead as the company competes with much larger and more competitive rivals from both home and abroad.
But Xu believes he may have found a new course to charter for continued growth: service.
"Service in the IT industry is not as good as in other areas because there hasn’t much competition," said Xu. "Now our earnings from service only account for 26 percent of total revenue but we hope to increase it to 35 percent in the following years."
Asked what is most important to Kingdee's success, Xu's quick reply is his 3,000 employees.
"Every one of them is equipped with technology and management knowledge," said Xu. "If they take initiative and work hard, Kingdee will grow even more rapidly. So my top priority is to help and motivate them to work hard."
The company has an informal approach for a China company — Xu asks all his employees to avoid using his title and to simply call him Robert, and when he speaks to his staff he uses their English or Chinese given names.
To motivate Kingdee employees to give the company their all, Xu has adopted a "five-item" strategy for rewarding his employees and satisfying their needs, so they can focus themselves on the job. The five items are Houses, money, cars, spouses and children.
Millionaires are not a rare breed at all within the company, with some key employees having been awarded as many as 50 million shares since the company's 2001 listing.
Xu believes financial rewards are just part of the equation for a happy workforce, however. He defines the Kingdee culture as "love, credit and innovation." "The reason I put 'love' before the others is that the company should sincerely care about its employees, then they will have the motivation to contribute and innovate."
Mentioning the internationalization of Chinese companies, Xu compared it to climbing mountains.
"Wang Shi, Vanke's chairman, once told me he only climbed seven to eight hundred meters every day when he went climbing, while many other people climbed a lot higher than that," Xu said. "However, Wang later conquered the roof of the world — which many others have yet to do. That's because it takes time to be able to climb high — one needs to persevere. So Chinese companies should persevere and gradually strengthen themselves before they go global."
If you haven't already guessed, Xu's allusion to climbing mountains is a dead giveaway as to how he likes to spend his time when he's not tied to his work — the Kingdee chairman and CEO is a sports lover, with a penchant for golf, mountain climbing, swimming and basketball.
He also professes a weakness for motivational and business books, citing two favorite recent reads as "From good to great" and "Create Values for Customers."
But Xu admits that as a busy man he rarely spends time with his family, although he is able to reconcile this with his belief in the importance of family — and he said he would try to make it up to his family. But maybe not quite yet: "I want to work and enjoy life in full swing," Xu said. "Though I'm a middle-aged man, I still want to live an energetic and distinctive life."
(Shenzhen Daily August 9, 2005)
