Background
Wang Linxiang was born in 1951 in Baotou, Inner Mongolia, Wang Linxiang was a teenager during the Cultural Revolution.
林祥 王
Wang Linxiang was born in 1951 in Baotou, Inner Mongolia, Wang Linxiang was a teenager during the Cultural Revolution.
Wang Linxiang was educated locally.
Because of his family background, Wang was refused work 11 times. Finally he started work at the age of 19 but four years later he was thrown into prison because he uttered the words that ‘the Cultural Revolution is a disaster.’ In 1978 he went back to work. Two years later, Yike Zhao League Cashmere Clothing Factory introduced new equipment for the processing of cashmere, and the 29-year-old Wang Linxiang was appointed as the deputy general director in the installation department where he demonstrated his talent and achieved his first success. A year later, Wang became the deputy director of the factory, which subsequently became the Eerduosi Cashmere Products Co. Ltd.
At the end of 1983, Wang was appointed as director and began to transform the state-owned enterprise through implementing new managerial practices, including the association between compensation and performance, the abolition of the cadre system of life-long employment, the establishment of employment contracts and so on. In 1991, the Eerduosi Cashmere Group was established, and eight years later it was turned into a state-owned shareholding limited corporation with employee ownership participation. The A shares of Eerduosi were listed on the Shanghai Stock Exchange in 2002. One year later, a management buy-out acquired the equity of the state and the company became privatized, with Wang holding about 10 percent of stock. In 2006, Eerduosi’s annual sales reached 4 billion yuan, with 350 million yuan gross profits and 204 million yuan net profit.
Since the early 1980s, Wang Linxiang has led Eerduosi into the international market. In 1988, Eerduosi received a license for direct export, and 95 percent of its products were exported as raw materials. However a price war among Chinese cashmere enterprises in the late 1980s greatly trimmed the profit margin. Wang decided to explore the domestic market instead, and to turn the company from a raw material provider to a manufacturer of cashmere clothes. Currently, the ‘Eerduosi’ brand is valued at 3.416 billion yuan. Eerduosi has six stores in America and two in England. In France, Eerduosi purchased 20 percent shares of 14 stores and sells products under its own brand name. Wang has the ambition to turn Eerduosi into an internationally-recognized brand in the coming seven to ten years. Although the profit margin in the cashmere industry is considerable, the room for further expansion is limited. The total quantity of cashmere worldwide is about 12 000 tons, of which China contributes 8000 tons, already a lion’s share.
Wang’s ambitions for expansion eventually led to the diversification of the group. After the failure of pharmaceutical and high-tech projects to the cost of 100 million yuan in the late 1990s, Wang refocused on those industries that have regional comparative advantages in Inner Mongolia. In 2003, Wang initiated his second career through the new strategy of ‘continuing to consolidate the cashmere industry and developing the coal power, metallurgy and chemicals industry.’ Those new businesses were expected to con- tribute the same level of profit as the cashmere business by the end of 2007. The goal of the group is to reach a sales volume of 20 billion yuan by 2010, generating 250 million yuan profits and an annual 10 percent salary increase for employees. The ambition is to build the group as a global player in the ferroalloy industry in five years, making the Eerduosi Group a world-class company.