Background
Zhang was born and raised in Baotou ‘Deer’ City, Inner Mongolia autonomous region of China.
钢 张
Zhang was born and raised in Baotou ‘Deer’ City, Inner Mongolia autonomous region of China.
Zhang Gang graduated from Bao Gang Technology Institute in 1984.
Zhang began work at the Baotou Iron and Steel Company. After just four years, he left to pursue an independent business career. Zhang made his first foray into entrepreneurship in the clothing business, selling out in 1993. In 1995, Zhang and a partner developed a mobile phone business, importing mobile phones from South China for retail sale in Baotou city and later developed a new venture in the text-messaging sector. Soon after, many new competitors entered the desirable telecommunications sector and Zhang decided to exit this competitive marketplace.
In early 1999, Zhang visited Huhot, the capital city of Inner Mongolia and enjoyed a wonderful hot pot at a small local restaurant. He thought that the business might have potential and bought the restaurant’s formula. Zhang then experimented with improvements to the recipe, relying on friends and family for taste-testing. After numerous experiments, a new recipe was developed one that is still under lock and key to all but a few inside Little Sheep. In August 1999, in Baotou, Inner Mongolia, Zhang co- founded Little Sheep with Chen Hong Kai. By October, Zhang and Chen had opened a second store. Little Sheep customers enjoy a chafing dish of quickly boiled mutton or other meats, seafood, noodles, garden fresh vegetables and seasoning, which contains dozens of ingredients used in Chinese medicine, including dangshen, medlar, longan, chaoguo, and baikou. The need for dipping sauce is eliminated, and salt and fat content reduced.
Zhang anticipated the entry of many potential competitors and decided to develop a stable, high quality supply of lamb meat, rather than buying in the open market. Little Sheep integrated backwards, developing a sheep farm in the pollution-free Zilinguole grasslands of Inner Mongolia. The mission of Little Sheep is to provide delicious, healthy food, develop pasture husbandry in Inner Mongolia, and promote Chinese food culture. The recipe for the soup base remains a secret.
Zhang and Chen sought ways to expand the business. They attracted equity by selling 60 percent of the shares in the company over four rounds of financing. In the first round, Zhang brought senior management on board by offering shares at the original price or by providing stock options. In the second round, private equity was sought to extend the number of branches. In the third round, middle managers were attracted with stockholding plans and the public also invested. In July 2006, Zhang’s Little Sheep received US$25 million from 3i and Prax Capital. Zhang said of the funding, ‘we are delighted to have the 3i-led team as a partner in our business. We value 3i’s flexible and tailored approach to building a long-term relationship, their vast experience and strategic advance and contacts which are beneficial to the development of our business’ (Chinese Venture Capital Association, 2006). The venture capital was used, in part, to buy out franchises and to shut down under-performing franchises. In 2006, the firm had over 5.3 billion yuan in total revenues, ranking it first in the Chinese food/beverage industry. It was also ranked ninety-fifth of the ’500 Most Valuable Chinese Brands’ by the World Brand Lab and World Executive Network in 2006. Little Sheep has also received awards from the state for its efforts to alleviate poverty.