SHANGHAI — Most state-owned enterprises in China are perceived as sinking ships. But not if they have a captain like Ge Wenyao.
For 15 years, Ge has steered China's largest cosmetics company through the turbulence of market reform, from near shipwreck to a symbol of national pride.
His philosophy is simple: Chinese enterprises don't have to be failures.
About two-thirds of China's state-owned companies are losing money, hemorrhaging jobs and becoming liabilities to a nation desperate to make its concept of a socialist market economy work. Foreign companies already have their foot in the door, and China's expected entry into the World Trade Organization will only make competition more fierce.
But how Ge has successfully led the state-run Jahwa cosmetics concern by instituting such bedrock market-driven initiatives as reliable customer service and capital investment could serve as a wake-up call to overseas investors who may have underestimated Chinese companies' tenacity for competing on their home turf.
"In every Chinese industry we've looked at, there are two or three companies that have reinvented themselves quite substantially to show they are not a pushover for foreign companies," said Paul Woodward, a marketing specialist with Business Strategies Group, a research firm based in Hong Kong.
"But they are dependent almost entirely on the quality of their senior executives--who are willing to make the change and break away from the bureaucratic background most of them come from."
At 52, Ge is the same age as Communist China and the fate of the tall, soft-spoken man with large spectacles has risen and fallen with that of his motherland.
Ge, whose father was an architect, excelled in his studies and in basketball, and earned a scholarship to study in France in 1966. But the Cultural Revolution dashed that dream and prevented him from going. He and a generation of youth were shipped off to the countryside to "fix the earth." There he saw poverty and hardship unimaginable in his native Shanghai. A fire in his belly began to burn for change.
At age 29, he was sent back to Shanghai. But like most returnees, he was without useful skills or proper education. The only jobs he could find were temporary--collecting garbage and utility bills, apprenticing at a match factory.
Eventually, he finished night school and earned the equivalent of a business degree. Jahwa, which means family chemicals, hired him. With so few qualified candidates, Ge quickly moved up from planning department deputy to general manager.
"He has enormous personal charisma and a strong sense of mission," said Xia Dawei, head of the Shanghai National Accounting Institute, who was once Ge's teacher. "His staff members follow him because they are confident he won't lead them astray."
When Ge became boss in 1985, Jahwa was a shambles.
"The mayor brought a group of foreign dignitaries to visit and he was appalled," said Ge, recalling the time when broken windows, bottles and debris from shoddy construction littered the factory grounds, damaging morale and productivity. "I told him I would turn things around. But I had been on the job only seven days."
Today, that embarrassing old factory building has been replaced by a skyscraper overlooking Shanghai's fabled waterfront.
The cosmetics industry was one of the crown jewels of old Shanghai. Jahwa's pre-Communist incarnation, Kwong Sang Hong Ltd., is considered here to be China's first home-grown cosmetics company, formed 102 years ago to give foreign companies a run for their money.
When Europeans first brought their perfumes and powders to the Middle Kingdom by the shipload, China had no domestic personal-care industry to speak of.
But domestic cosmetics makers came of age in the 1930s. Even in cosmopolitan Shanghai, where foreign goods were must-have status symbols, companies like Kwong Sang Hong made impressive inroads. They seized on the country's growing nationalism and offered their countrymen a quality alternative at a lower price.
But the golden age of Chinese cosmetics ended with the Communist takeover in 1949. Hundreds of products were reduced to a few cold creams deemed appropriate for the working class.
During the extreme political radicalism of the 1970s, the make-up company was transformed into a hardware factory.
The 1980s saw a renaissance in personal-care products. After decades of neglecting their skin and hair, Chinese women starving for a make-over snatched up everything on the market. Jahwa's first makeup sets sold out instantly at a Shanghai department store. Foreign brands were not yet available. Jahwa had a near monopoly.
