---
title: "How Vinda Turned a Sheet of Paper into 8 Billion Yuan in Annual Sales"
description: "This article, originally published by Hua Shang Tao Lue, tells the story of Vinda, a Chinese tissue paper company that achieved over 8.1 billion yuan in annual revenue by focusing on high-quality household paper products. Led by Li Chaowang, Vinda grew from a small factory to a market leader through strategic expansion, brand building, and innovative sales channels."
author: "迟玉德"
publisher: "New Distribution"
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published: "2016-12-26"
language: "en"
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# How Vinda Turned a Sheet of Paper into 8 Billion Yuan in Annual Sales

> This article, originally published by Hua Shang Tao Lue, tells the story of Vinda, a Chinese tissue paper company that achieved over 8.1 billion yuan in annual revenue by focusing on high-quality household paper products. Led by Li Chaowang, Vinda grew from a small factory to a market leader through strategic expansion, brand building, and innovative sales channels.

**This article is originally from Hua Shang Tao Lue and first published on WeChat public account: Hua Shang Tao Lue (id: hstl8888)**

In Donghou Industrial Zone, Xinhui, Guangdong, there is an office building built in the 1990s, densely packed with staff, including directors, presidents, and the chairman. This is not a struggling company forced to work in an old building due to lack of funds; on the contrary, it is a very profitable enterprise that mainly produces household paper. McDonald's napkins are produced here, and it is also the number one brand of toilet paper nationwide. In Yiwu, from high-end hotels to public toilets on the streets, its products include pocket tissues, napkins, and toilet paper. In 2015, its annual revenue exceeded 8.1 billion yuan, with a gross margin of 30.5%.

This highly profitable company, whose executives work in an old building, is called Vinda, and its leader is Li Chaowang. **Over the past 30 years, Li Chaowang has led Vinda to do almost one thing: let Chinese families enjoy high-quality household paper.**

**A Toilet Paper Can Also Be Listed**

Li Chaowang's life and career started from a low point. He says he is not that smart and not very capable, but it is such a person who rewrote the history of China's paper industry.

In 1958, Li Chaowang was born in Jiangmen, Guangdong. His family was poor, with five children. His mother was sick but couldn't afford medicine. His elder sister dropped out of primary school to earn money. He himself also suspended his studies to work, and later barely finished high school. After graduation, he participated in the "Up to the Mountains and Down to the Villages" movement and became a farmer on a farm.

**Li Chaowang was competitive from a young age. He was always class monitor in middle school. When he became a farmer, he also wanted to be a leader and became the "deputy team leader" of the farm. After returning to the city, he entered Xinhui Henan Paper Products Factory and still became a leader, eventually becoming the factory director.**

Xinhui Henan Paper Products Factory mainly produced paper money, ingots, and other incineration products, all for export, and the business was profitable. In early 1985, under the leadership of the local government, this factory and another packaging factory producing straw paper and cartons were merged into Xinhui Daily Necessities Factory, the predecessor of Vinda. The reason for this merger was that the latter two factories had been losing money for years, owing banks over 300,000 yuan, and couldn't pay wages. Xinhui Daily Necessities Factory was a poverty-relief unit, with more than half of its employees being disabled, enjoying tax reductions, while Xinhui Henan Paper Products Factory was very profitable. So the government appointed Li Chaowang as the director of the merged factory (hereinafter referred to as "Vinda").

Li Chaowang was 27 years old at the time and was very excited about the new appointment, deciding to make a big push.

The first decision was what to do. Li Chaowang felt that Vinda was at a critical juncture and couldn't be scattered; it had to concentrate resources on **a project that would hit the mark in one go, achieving "scale production."** His original paper products factory had such a project—small-packaged tissues.

At that time, this was an undeveloped field. When eating or going out, people generally used handkerchiefs. Only hotels had some facial tissues, and the quality was poor. Li Chaowang discovered this product while accompanying clients to dinner in Hong Kong, thought it was good, and decided to do it. Later, he found that Shanghai Limin Paper Mill produced such tissues under the brand "Snowflake," with 80% exported, and they didn't pay much attention to the domestic market. So he applied to be the agent for this brand in Guangdong. The agency business was doing very well and thriving. From 1985 to 1992, this was an important business for Vinda.

In addition to agency, Li Chaowang also found some OEM projects, buying a few second-hand folding machines from Hong Kong to make small-packaged tissues from cut base paper.

A year later, Li Chaowang decided to develop his own brand and sent people to Shanghai to learn design, production, and marketing knowledge. **In 1987, they launched their first facial tissue, named "Wei Pai," priced at 0.1 yuan per pack, which was relatively high-end. This was also the first high-end boxed facial tissue in mainland China.** They also developed a roll paper business, commonly known as "toilet paper," also taking the high-end route—high starting point, high quality, high price.

The key to this business was base paper, and base paper manufacturers were all in the north at that time, and they were state-owned paper mills that had no worries about sales. Obtaining base paper was not easy. Northerners liked to drink when doing business, **one cup of liquor for one ton of paper.** To ensure Vinda didn't stop production, Li Chaowang, who couldn't drink, trained himself to "drink a whole bottle of foreign liquor or a bottle of 50-60 degree baijiu."

But drinking like this wasn't a long-term solution, and Li Chaowang felt that the quality of base paper from northern mills wasn't good enough, mainly because they used less virgin wood pulp, mostly using cotton pulp, bamboo pulp, straw pulp, or sugarcane pulp. Good manufacturers would mix in some wood pulp, which greatly affected the quality of the finished product. He felt that only by building his own paper mill could he solve this problem. So in 1993, he built a first-class paper mill in China at the time—Vinda Paper City—with equipment ordered from the international industry giant, Japan's Kawanoe Zoki, costing over 30 million yuan, with an annual capacity of 10,000 tons, named **"Vinda No. 1."** That year, Vinda's annual revenue exceeded 100 million yuan.

At the end of the following year, Vinda completed and put into operation "Vinda No. 2," with annual capacity rising to 24,000 tons, higher than those state-owned mills that required drinking, and with better quality. **By the late 1990s, Vinda had firmly held the throne of "Paper King."**

In 1998, Li Chaowang decided to lead Vinda to list in Hong Kong to raise funds for further expansion. Before that, Vinda first underwent a shareholding change. The original two major shareholders, the government and the bank, cashed out and exited, and the shares were taken over by a "foreign company" established by Vinda people overseas.

The listing was going smoothly, but unexpectedly, the China Securities Regulatory Commission issued a new policy requiring mainland companies listing in Hong Kong to obtain its approval and file with the Ministry of Commerce. The whole process would take 15 days. For Vinda, getting that approval would miss the listing deadline, requiring them to go through the listing process again and spend millions more. After much consideration, Li Chaowang decided to give up this listing, but he didn't give up the idea. After the Spring Festival in 2007, he restarted the listing process and finally succeeded.

On July 10, 2007, Vinda officially listed on the Hong Kong Stock Exchange. The stock price rose 39% that day, with about 115 times oversubscription, raising nearly HK$1.3 billion. That day, a pharmacy owner in Hong Kong said in an interview, "A toilet paper can also be listed."

**How Was 657,000 Tons of Capacity Built?**

In the 1990s, with economic takeoff, people's demand for high-quality household paper suddenly increased, providing Vinda with a huge market space and posing a major challenge to its capacity.

In the early stages of development, Li Chaowang faced a problem: after the merged factory became profitable, the government canceled subsidies and extracted profits, leaving insufficient funds to purchase equipment and build factories. To change this situation, **in 1993, Li Chaowang actively responded to the national call and promoted Vinda's shareholding reform, turning the local government into a non-controlling single major shareholder, while bringing in two "financial groups," the Industrial and Commercial Bank and the Rural Credit Cooperative, as shareholders.** Subsequently, it purchased "Vinda No. 1" and "Vinda No. 2" from Japan and established Vinda Paper City.

Household paper is bulky, low in unit price, and high in transportation costs, making it unsuitable for sale far from the factory. This industry characteristic determined that Vinda must adopt a **"factory first"** strategy, meaning wherever the factory is built, the market is laid out there.

The first out-of-province factory was chosen in Hubei, radiating to the central market. At the end of 1996, Li Chaowang set his sights on a state-owned paper mill in Hubei and wanted to acquire it, but didn't have enough money. So he persuaded the local government to accept a **"lease cooperation"** model. Simply put, Vinda first established a branch company in Hubei, and then this branch paid rent to the state-owned enterprise to lease its production lines and workers. The workers had to re-sign labor contracts with the state-owned enterprise, but were managed uniformly by Vinda's branch. The local government accepted Li Chaowang's proposal, and the two sides maintained a pleasant cooperation.

After taking over the Wuhan factory, Vinda quickly expanded to Shanghai, acquiring Shanghai Limin Paper Mill in 1997, the same state-owned factory it had been an agent for the "Snowflake" brand. This state-owned enterprise was in trouble due to untimely reforms, losing millions of yuan a year, and workers had no livelihood, which gave the Shanghai government a headache. **The Shanghai government proactively approached Vinda, hoping Vinda would acquire the factory at zero price, only asking Vinda to inherit the original factory's debts and employees.** Li Chaowang readily agreed. After taking over, he didn't make a big change but "used Shanghai people to do Shanghai things," leading with marketing, turning the factory profitable in just over a year, and later making it a leader in the industry.

In addition to acquiring factories, Vinda also actively purchased equipment with larger capacity. In 1997, Li Chaowang targeted a set of the world's fastest automated equipment developed by American company BELOIT, with an annual capacity of 35,000 tons, higher than the combined capacity of "Vinda No. 1" and "Vinda No. 2." However, the price was too high, over $10 million, while Vinda's total working capital was only a little over $1 million.

Although short on money, Li Chaowang didn't give up. He waited two years before making a move. In mid-1999, he signed a purchase agreement with Beloit, paying a 10% deposit with working capital, and the balance was to be paid by issuing a letter of credit before September 4. After that, Li Chaowang tried to borrow money everywhere, but banks dared not lend to him because the amount was too large, and the Asian financial crisis wasn't over yet. Vinda faced the risk of losing the deposit.

The turning point came at the last moment. Li Chaowang successfully persuaded his strategic partner, Yangcheng Advertising, to pay the money. He said to the boss of Yangcheng Advertising, **"You have a lot of idle money sitting in the bank earning little. Give it to me, and when I grow bigger, I'll give you more advertising fees. Also, the money you give me counts as my wood pulp business (a more profitable trading project), and I'll give you all the profits from this business."**

In this way, Vinda bought the equipment, and its capacity reached a new height. Li Chaowang named the new equipment "Vinda No. 3" and called this move "the leap of the century."

After the new century began, Vinda continued to expand capacity vigorously, extending factories to Beijing, Sichuan, Zhejiang, Liaoning, and other places, forming a "rice-shaped" layout. By the time of listing, annual capacity had reached 240,000 tons, and it doubled again in the following five years. **In 2013, Li Chaowang invested 2.36 billion yuan in Baimiao Industrial Zone, Sanjiang Town, Xinhui, to build a "third-generation paper mill" that is the most advanced in China, with an annual capacity of 260,000 tons.**

Currently, these factories are basically running at full capacity. In 2015, Vinda sold a total of 657,000 tons of household paper.

**Building a Brand Requires Courage, Insight, and Vision**

Vinda expanded capacity aggressively, and it was also serious about brand building, with courage, insight, and vision.

In 1987, Vinda launched its first brand, "Wei Pai." In 1990, it registered the "Vinda" trademark, which was very forward-thinking among domestic peers. In addition, it was among the first in the industry to run TV commercials, inserting them into Hong Kong and Taiwan dramas that Guangdong people loved most at the time. The slogan was also very "Cantonese"—"Tian Tian Sik Jyu Nei" (Sik means "cherish" or "love" in Cantonese). But TV ads were very expensive then, and ordinary companies were reluctant to do them. Li Chaowang, however, said: **"Even if I have to sell my underpants, I will advertise."**

Another example is developing the Hong Kong market. **In 2005, Vinda spent over 6 million yuan to hire Hong Kong's beloved Lydia Shum ("Fei Fei") as spokesperson. This advertising fee was the total profit Vinda earned from the Hong Kong market the previous year.** This gamble succeeded. Vinda's sales doubled that year, and the brand became famous throughout Hong Kong. It still holds about 30% of the roll paper market share.

In addition to TV ads, Vinda also sponsored many sports events. Data shows: Vinda sponsored the National Football League A in 1996; exclusively sponsored the first National Bowling Championship in 1998 and continued for 9 years; the same year, it spent 20 million yuan to get the naming rights for the National Women's Volleyball League for 1998-1999; in 2001, it became a sponsor of the Chinese Sports Delegation for the 19th Winter Olympics; in 2008, it established a partnership with the NBA in the US, getting permission to use images of Yao Ming and others on packaging.

With good marketing, there must also be good products. Vinda has always adhered to a high-end positioning, using 100% virgin wood pulp, making products soft, smooth, and with excellent feel. However, in the late 1990s, Vinda's marketing department was puzzled about how to package roll paper (toilet paper).

At that time, consumers generally chose toilet paper by volume, picking whichever was bigger. To cater to this preference, most manufacturers chose to make the packaging volume larger without increasing weight, or even reducing weight. Moreover, because these manufacturers mostly used domestic paper machines and rarely used virgin wood pulp, their products were naturally loose and appeared larger. Additionally, they added a double-layer embossing process to make single-layer tissue thicker, making the overall volume even larger.

In this competitive landscape, should Vinda follow the trend? Vinda's senior management decided not to follow, **"because this is a deceptive behavior that cheats consumers."** Their strategy was not to compete on volume but on weight, increasing the original 130g product to 180g, using three layers, without embossing, and naming this product **"Blue Classic."**

"Blue Classic" was launched in 2000 and quickly became popular. Later, consumers discovered the industry trick of inflated toilet paper volume, which made "Blue Classic" even more sought after, leaving competitors far behind. Today, "Blue Classic" is still the best-selling toilet paper brand in supermarkets, placed in the most prominent positions.

"Blue Classic" achieved great success, but Vinda subsequently fell behind in brand marketing. In 2009, Vinda hired the world-renowned research firm Nielsen to evaluate its brand status. The evaluation result was: **the brand showed signs of aging, with older consumers and a lack of appeal to young people.** During this period, the entire marketing ecosystem also underwent tremendous changes. Celebrity TV ads gradually declined, replaced by cross-border integration.

After the report came out, Vinda's marketing department decided to keep up with the times and move toward the younger generation. In August 2009, it obtained the four-year brand license for **"Pleasant Goat"** from the hit animated series "Pleasant Goat and Big Big Wolf," and subsequently launched a series of pocket tissues, soft packs, box tissues, and roll paper. This series sold 300 million yuan in 2010. In 2011, Vinda used the same approach, launching **"Kung Fu Panda"** cartoon series products when "Kung Fu Panda 2" was released; in 2013, it launched **"Ice Age" series and "SpongeBob"** series products.

In addition to suggesting Vinda turn to young people, Nielsen also suggested Vinda vigorously expand the soft pack category. Before this, Vinda had soft packs, but they weren't taken seriously, with a monthly capacity of only 10,000 boxes, and the user experience was poor—it was hard to pull out, like pulling toilet paper. Vinda accepted Nielsen's suggestion and elevated it to the level of "whoever gets soft packs gets the world," because it found that **in Taiwan, soft packs accounted for as much as 70-80% of total household paper consumption.**

The new soft pack was named "Super Tough," still using three layers, produced with improved new technology, with strong water absorption and not easy to break. To promote the new product, Vinda hired the "most powerful" international advertising company for packaging design and advertising creativity. This product was officially launched in April 2012 and led the market for the following two years, with monthly sales rising to 1.5 million boxes.

In terms of marketing, from 2013 to 2014, Vinda launched **"Super Tough National Witness China Tour,"** designing a **"Super Tough Bus"** that toured 27 cities across the country, interacting with young mothers through talks, touching, and games. At the same time, it also engaged in intimate interactions with potential consumers on mother-and-baby websites like **Mommy.com and Babytree,** completing an integrated marketing campaign.

In addition, Vinda has been holding the "Tissue Wedding Dress" activity since 2014, where models wear wedding dresses made of Super Tough tissue for display. This year, the event was held at the end of July, named "Happiness in Paper," with the dress designed by internationally renowned designer Lan Yu, and one of the models was "National Goddess" Lin Chiling.

**Lin Chiling said after the show that it was her first time wearing a tissue wedding dress, and it felt soft and tough, and she didn't expect ordinary tissue to be so resilient.**

**How to Sell 8 Billion Yuan of Products?**

Vinda has such high capacity and such powerful marketing, but it only has **4,000 salespeople.** So how does it sell **over 8 billion yuan of products?**

The first channel is, of course, distributors. In the early days, Vinda products were particularly popular due to their good quality. For example, in Hainan, as soon as goods arrived at the port, they were snatched up by distributors. To stabilize supply, distributors usually tried to get close to the relevant personnel. For example, Yiwu distributor Yang Xingtuan once gave deer antler to Li Chaowang and others who came to inspect the market in 1995, but Li Chaowang and others didn't accept it. In dealing with distributors, Li Chaowang insisted on transparency, openness, and following the system, while providing maximum convenience, thus stabilizing the entire distributor team and giving later entrants opportunities.

The largest distributor in Guangdong is Pearl River Trade, which only started distributing Vinda in 2008. Its boss, Fang Yaohui, said, **"China doesn't lack money now; it lacks good products." He highly appreciates Vinda's work style: "If there are difficulties, we communicate; other times, we don't need to talk every day. For projects, we go straight to the point and finish in a few sentences." "Usually, an application report gets a reply within a day, at most two days. They are very efficient."** This light cooperation made his business grow rapidly, at an average annual rate of 20%, reaching over 200 million yuan in sales by 2014. He said, "I hope to keep distributing Vinda."

Yiwu distributor Yang Xingtuan shares the same feeling as Fang Yaohui. He has been distributing Vinda products since 1990, making Vinda "unify Yiwu." It is reported that in Yiwu, it's hard to find other brands of household paper. A boss of a paper company personally went to Yiwu to discuss cooperation with Yang Xingtuan, and he replied: **"I'm already distributing Vinda brand; I can't do others."** More importantly, his son Yang Jianqing, who has taken over, also only recognizes Vinda, saying, "Seeing customers buy Vinda tissue gives me a special feeling, while other products have none."

In addition to distributor channels, Vinda has also vigorously expanded the KA channel since 2010. **KA is the abbreviation for Key-Account, meaning "key accounts," specifically referring to large supermarkets.** In the first decade of the new century, large supermarkets like Walmart rose rapidly in mainland China, with huge shipment volumes and the ability to enhance brand awareness. However, in 2008, Vinda only sold a few million yuan of products through the KA channel, being left behind by many competitors.

Li Chaowang felt this couldn't continue and that they must catch up. So he established a KA department to focus on national large supermarkets. After that, Vinda established cooperative relationships with **Walmart, Carrefour, Metro, RT-Mart, China Resources Vanguard, Watsons,** and others, setting up one-on-one liaison teams, each consisting of a customer manager and several specialists. Each specialist had their own duties—some responsible for promotions, some for orders, some for logistics, some for settlement—with extremely fast response. This move made Vinda's KA performance soar, with sales jumping to 40 million yuan that year, and reaching over 1 billion yuan by 2014, accounting for about one-fifth of total revenue.

After the rise of the KA channel, traditional distributors began to face increasing pressure. To enhance these distributors' marketing capabilities, Vinda proposed a "manufacturer-distributor integration" strategy.

**The so-called "manufacturer-distributor integration" means Vinda requires distributors to establish a "Vinda exclusive sales team" within their organizations. This team belongs to the distributor in terms of personnel, but Vinda pays the base salary, and daily management and performance are also Vinda's responsibility. The distributor is only responsible for issuing bonuses.** This cooperation plan is voluntary and essentially exports management to distributors, turning them into a part of Vinda. Distributors are also willing to accept such cooperation because business has clearly improved. One distributor lamented, "Previously, I worried about orders all day; now I worry about not being able to ship goods out. This kind of booming scene hasn't appeared for many years."

In addition to distributor and KA channels, Vinda has also been vigorously expanding e-commerce channels since 2011. In January 2011, Vinda first strengthened its connection with No. 1 Store, enhancing both management and delivery, and in just one year, sales went from 1 million yuan to 10 million yuan. But with the performance improvement came troubles, mainly because consumers were too scattered, orders were small, procedures were many, and logistics were expensive. Although it could boost performance, it didn't make much money and increased labor costs.

To solve this problem, Vinda proposed a new cooperation model to large e-commerce platforms such as No. 1 Store, JD.com, Tmall, and Suning.com: **Vinda sells goods to major e-commerce platforms at wholesale prices, and how they sell is up to them.** In this way, Vinda turned major e-commerce platforms into "online KAs." In fact, e-commerce platforms don't make much money from this either; they just use Vinda's products to enhance user stickiness and then profit from other goods. In 2015, Vinda's e-commerce channel revenue exceeded 1 billion yuan, accounting for nearly 13% of total revenue.

In addition to the B2C market, Vinda also does B2B business, which is the commercial market, mainly including star-rated hotels and chain fast-food restaurants.

In fact, as early as the 1990s, Vinda began to develop star-rated hotels. At that time, there were few star-rated hotels in China, and business wasn't as booming as now. The demand for household paper was not large, but the requirements were high. Not only did they require good quality, but they also required the hotel logo to be printed on the paper. No mainland manufacturer was willing to take this business, nor could they. These hotels had to order from Hong Kong, which was costly. When Vinda approached these hotels, their managers were overjoyed and sighed: Finally, you've come!

**In 2000, Vinda also won an order from McDonald's to supply napkins for its stores in China. This news even appeared in the People's Daily.**

Currently, commercial orders account for 12% of Vinda's total revenue, and Vinda has a high market share in commercial paper products, reaching over 70% in Guangdong Province.

With this layout, Vinda successfully sold 8 billion yuan of household paper to millions of households, which also became the foundation for its future.

**He Only Focuses on Key Points, Not Others**

How does Li Chaowang manage such a large company? Vinda Technology President Dong Yiping summarized: "He usually doesn't manage; he only focuses on key points, not others."

The so-called "doesn't manage" means **Li Chaowang dares to delegate authority to subordinates, especially to young people.** Here's a summary:

Tang Haitang graduated from South China University of Technology in 1994 and joined Vinda in August 1995. In June 1997, he was sent to Shanghai to serve as the marketing general manager of the newly acquired Limin Paper Mill. He was only 27 years old at the time and looked like a gentle scholar. Due to his excellent performance, in 1999, Li Chaowang transferred him back to headquarters and directly made him vice president, in charge of market work.

Hu Yongjin was even more aggressive than Tang Haitang. In 1998, at the age of 25, he was sent to the Wuhan branch to cooperate with the state-owned factory under "lease cooperation" and develop the central China market. At that time, Li Chaowang told him, **"Follow your own thinking and ideas; do whatever you want."** Hu Yongjin lived up to expectations. In that era of "product thinking," he was the first to propose "marketing thinking," advocating learning from Suning and Gome models, setting up display areas in stores, and equipping them with promoters, **"investing all the extra money to grow the business."**

In the following three years, Hu Yongjin increased Hubei's sales by 100 times, later pushing marketing revenue to 100 million yuan. This process wasn't smooth. Many people opposed appointing Hu Yongjin because he didn't bring much profit to headquarters. At this time, Li Chaowang stood firm against the criticism and supported Hu Yongjin, saying Vinda needed Hu Yongjin's spirit of daring. Today, Hu Yongjin has become Vinda's sales president.

Li Chaowang has always been "carefree" in delegation. In August 2004, after signing an investment and factory construction agreement with the Deyang government in Sichuan, he introduced his colleague Chen Jiemin to local officials, then handed the agreement to Chen Jiemin, said **"You handle it,"** and left. Later, Chen Jiemin ran around alone and turned that agreement into a factory in one year.

In fact, Li Chaowang's bold use of people wasn't entirely due to a good attitude, but because he had no choice. He once said, **"In the entrepreneurial period, people are talents; there aren't so many formalities. As long as everyone shares the same goals and has drive, they can take positions, and then gradually explore, summarize, and improve."**

Facts have proven that "letting young people take charge" is right. They always create miracles because they cherish this kind of training, which they wouldn't get in other companies.

To let young people take charge, Li Chaowang even proactively persuaded some founding veterans to step down, including his brother Li Chaobing. In 2009, he found Li Chaobing, who had fought alongside him from the beginning, and said: **"Brother, the company is listed now, and the requirements for all aspects are higher. We need younger talent. Sales are not like before; we need innovative approaches, and young people are better at these trendy sales methods."** After that, Li Chaobing stepped back to the second line.

After the older generation stepped aside, those who came up were around 30 years old. They have now grown into Vinda's middle-level backbone and are very stable. Their stability, in turn, stabilizes various channel partners.

But Li Chaowang doesn't just delegate without constraints. His main method of restraint is establishing sound systems.

First, he established a comprehensive system covering production, finance, personnel, management, etc., especially after listing, **corporate governance is very standardized.**

Second, he focuses on the procurement department, requiring any purchase to provide quotes from three suppliers, and requiring the head of the procurement department and bidding suppliers to sign an **"anti-commercial bribery agreement"** with Vinda, stipulating that if the former two violate the agreement, Vinda will pursue the other party's responsibility. This way, suppliers lose the incentive to bribe the procurement head because they themselves would also be held accountable.

Finally, he established an **internal control and supervision center** independent of other departments, which reports directly to the CEO and is accountable to the board of directors. The internal control and supervision team is very busy, with people on business trips every month to inspect factories everywhere. In addition to internal supervision, Li Chaowang has also hired professional audit institutions to conduct external audits of Vinda since 1998, ensuring the company always develops in a healthy direction.

While doing the most comprehensive prevention, Li Chaowang also shows maximum trust and tolerance to his subordinates. Some executives say that **his greatest charm is "being relatively tolerant of people."**

From 2001 to 2002, some branch managers sold at low prices in violation of regulations to boost performance, causing losses of hundreds of thousands of yuan to the company. Assistant to the President Li Peilan was responsible for this, but when she apologized to Li Chaowang, he didn't criticize her much but said: **"You already know you were wrong. The loss is a loss. You are still young; just take it as buying a lesson."**

Similar situations are countless. Li Chaowang often tells his team, **"Who is born knowing everything? Who can do things right the first time? Just treat it as paying tuition."** His only requirement is not to fall in the same place twice or to do things obviously below standard. Once such things happen, he is not lenient. For example, in 2000, then General Manager Dong Yiping failed to meet profit targets, which was below his usual standard, and the next year he was "demoted" to be responsible for overseas business.

**Li Chaowang doesn't speak easily at meetings and doesn't easily express his stance, but subordinates are afraid of him, not knowing what he's thinking.** They only know that when Chairman Li speaks, it's a big deal, and he will directly point to the crux of the problem.

In addition, within Vinda, there is no phenomenon of "one dominant force" or "factional rivalry." The various forces are relatively balanced. Even a strong executive doesn't have the power to affect the overall situation and must rely on Li Chaowang's support to get things done.

Today, this team works in that old building from over 20 years ago. **Two vice presidents share one office, and directors sit in their own cubicles like ordinary clerks in other companies.** Li Chaowang said in an interview that having this team is his proudest achievement in life.

**"I Live Carefully Every Day, as if Walking on Thin Ice"**

Vinda is the largest private enterprise in Jiangmen and a source of local pride. Local businessmen generally are content with small wealth, but Li Chaowang is an exception. However, when the media interviewed him and asked how he evaluated those small bosses, he said he envied them because they could combine material life with enjoying life very well. "I live carefully every day, as if walking on thin ice."

Li Chaowang's statement is not pretentious, as if he were being modest after gaining an advantage; it's actually true.

Over the past 30 years, Li Chaowang has led Vinda people to focus on the household paper industry, reaching the top of the industry. **From 2007 to 2014, in the field of household paper, Vinda ranked first in sales for 8 consecutive years, a symbol of high quality, and its toilet paper is the industry's number one brand.** However, since its founding, it has been plagued by capital shortages.

As mentioned earlier, in 1993, he promoted Vinda's shareholding reform, introducing two local financial institutions as shareholders, mainly to solve financing difficulties. In 1997, he used the "lease cooperation" model to acquire a state-owned paper mill in Hubei. This move looked clever but was actually helpless—Vinda didn't have enough money. When it had money, it still chose to buy land and build factories itself. In 1999, buying "Vinda No. 3" from Beloit was even more risky. If Yangcheng Advertising hadn't lent him money at the last moment, the over $1 million deposit would have been lost.

At that time, the Asian financial crisis wasn't over, and funds were still tight in the market. Asia's largest household paper group, APP (Asia Pulp & Paper), also ordered multiple high-speed paper machines from Beloit but gave up the deposit because it couldn't pay the balance, directly leading to Beloit's bankruptcy.

In the eyes of Vinda people, Vinda will never go bankrupt because **the boss is always full of confidence and often tells them that there is no problem that can't be solved; it's just that the solution hasn't been found yet.** However, how many people know the truth behind this? When Li Chaowang smiles at employees, his heart may be on the edge of an abyss. In Vinda's history, there was a crisis where wages almost couldn't be paid. The reason Li Chaowang established the internal control and supervision center and hired professional institutions for external audits was also to prevent major financial problems. He knows that **any major problem is enough to destroy decades of foundation.**

In addition, Li Chaowang **must maintain a hardworking and simple style within Vinda,** making the executive team work in that old building from over 20 years ago. He has to do this. His biggest domestic competitor—entrepreneur and Hengan International Chairman Xu Lianjie—is also very "stingy." His office hasn't been renovated since 1998, he doesn't provide cars for the executive team, and he doesn't even allow KTV.

For Li Chaowang, funds are always in short supply. Even if there are funds, they must be prioritized for purchasing virgin wood pulp and equipment because Vinda's competitors—Hengan International and APP—will do the same. Moreover, the current situation is unfavorable for Vinda: both Vinda and Hengan International are Hong Kong-listed companies. Hengan International's market value is as high as HK$66 billion, while Vinda's is only over HK$16 billion. In the household paper field, although Hengan International started later than Vinda and can't match Vinda in the high-end market, its base paper capacity has surpassed Vinda, reaching 1.02 million tons in 2015.

An important reason Hengan International developed faster than Vinda is that it listed in Hong Kong as early as December 1998, while Vinda didn't list until July 2007.

In addition to funding issues, Li Chaowang also has to ensure the supply of virgin wood pulp, which is Vinda's core competitiveness. The best virgin wood pulp comes from abroad, such as Chile, Russia, and Germany. **To ensure the supply of virgin wood pulp, Li Chaowang even brought Russian virgin wood pulp suppliers and German peer SCA (Essity) as shareholders, with Essity being Vinda's largest shareholder.** Why give Essity so many shares? Because Essity is the largest forest owner in Europe, with 2.6 million hectares of forest.

Bringing Essity in as the largest shareholder was in December 2013. Li Chaowang led the board to make this decision with another consideration: to expand into other categories and promote Vinda's entry into the international market.

For a long time, household paper has been Vinda's absolute main business, but with market saturation, the growth space for this business is getting smaller. To ensure Vinda's long-term development, it must expand into related categories, entering fields such as sanitary napkins, diapers, and adult incontinence products, and the latter's profit margins are much higher than household paper. Hengan International is a big winner in this field, with brands including "An'erle," "Space 7," and "An'erle" (baby diapers), which are also the main part of its revenue, over two-thirds. Only 31.4% comes from household paper ("Xin Xiang Yin"), and Hengan's overall gross margin is 47.6%, significantly higher than Vinda's 30.5%.

To develop this high-profit market, Vinda could choose two paths: one is to start from scratch, and the other is to acquire mature brands. Li Chaowang chose the latter. **In September 2014, Vinda acquired Essity's household products brands in mainland China, Hong Kong, and Macau, covering home care, baby care, feminine care, and elderly care products, all high-end brands that sell well overseas. In December 2015, Vinda then acquired Essity's related brands in Taiwan, Southeast Asia, and South Korea.** In other words, Essity transferred the production and operation rights in these regions to Vinda. Vinda's current CEO is also a former Essity executive, Johann Christoph MICHALSKI (in office since October 1, 2015), while Li Chaowang serves as Chairman of the Board.

Financial reports show that after this layout, this business's share of Vinda's overall revenue rose from 1.4% in 2014 to 3.5% in 2015. While the results are commendable, there is still a huge gap compared to peers. Clearly, Vinda people still have a long way to go.

Facing the current situation, Li Chaowang, despite immense pressure, still shows determination and confidence. He said: **"Enterprise competition is a long-distance race, not a sprint. You can't always be first. In a long-distance race, sometimes you go slower, sometimes faster; that's normal. As for when to go slower or faster, it depends on your own time, ability, and situation. The key is who can ultimately finish first."**

**References:**
"The Resilient Go Far: Vinda's 30-Year Journey and Dream" by Duan Chuanmin and Xu Jun, Beijing Times Chinese Press, January 2015.

This article is reprinted from Hua Shang Tao Lue (ID: hstl8888). Unauthorized reprinting is prohibited. For reprinting, please contact Hua Shang Tao Lue for authorization.

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