Moderator: Could you please tell us your name?

Interviewee: Li Yuguan

Moderator: What is the name of the company you work for?

Interviewee: Zhejiang Hongma Foundry Co. Ltd

Moderator: What is your position in the company?

Interviewee: Chairman

Moderator: About how many employees are in your company?

Interviewee: 300 persons

Moderator: Hongma Foundry is the pillar enterprise in Majiu County, and Hongma Foundry pays wages to employees of about 8 million Yuan, which is the main source of income in this village. For you, the profits of the enterprise are directly related to the villagers‘income, is there any additional pressure?

Interviewee: Yes. Our wages, far more than the villagers‘farming income. The whole village has more than 200 households in Hongma Foundry, and it can be said we are inseparable.

Moderator: You served as the Chief of the village, for more than 9 years, and you led the villagers to get rich. Now having done this business, by providing jobs for villagers to improve life, are there any differences and similarities between these two identities?

Interviewee: When I served as the Chief, the collective enterprises took the major apart. Most concerns were given to how to develop village enterprises, and increase the incomes of the villagers. Now in spite of restructuring of the enterprises, I still regard the enterprise as ours. At the beginning of the conversion in 1999, I just had more than 30 employees and the annual sales income was less than 2 million Yuan. While last year the output value reached 130 million Yuan. The enterprises development ultimately benefits the villagers. It reflects on the income of the staffs. At the beginning of the transformation, the per capita was less than 1000 yuan, and last year reached 30 thousand yuan. I said, every employee's income increased by 25%. And that is also my commitment to villagers.

Moderator: Your employees now are also the villagers. Many of them are your neighbors, relatives, friends. After becoming the chairman, is there any difference in management compared to the Chief? Any embarrassment in daily life?

Interviewee: After transformation, the property rights are clear which is different from the original collective enterprises. Previously, the villagers would feel they should be given priority in the recruitment, and the allocation in that they held shares. That led to uneven qualities of the staffs. After the conversion, the employing mechanism was made clear. We recruit them according to their abilities and virtues. Of course, we should consider relationship. I don’t care whether you are a native or not. There is no exception.

Moderator: Now, what do the villagers call you “Secretary Lee”, or “Boss Lee”?

Interviewee: After the restructuring, the corporate staff call me Boss Lee. I‘m not used to it. Instead I am willing to be called Lao Li. When I was the Chief, they called me Lao Li. Now, despite the change of identity, I’m still Lao Li. My enterprises still need to make more contribution to the society, for the villagers‘ consideration. So, now I’m Lao Li, and my son is Xiao Li.

Moderator: Why did you name your enterprise "Red Horse"?

Interviewee: Our village's name is Majiu, and the name descends from the period in Spring and Autumn and Warring States. When the transformation of the enterprise took place for the enterprise name, I considered that the business was started in Majiu and I must take Majiuinto my company. I hope this horse dashes forward into the country, into the world.

At that time, I thought Majiu was not so good. After thinking it over and over again, my enterprise still belongs to our town. In history the horse is white or dark, under the leadership of the Communist Party the horse of course is red. So in 2002, the company name was officially changed to “Red Horse”.

Moderator: There is a golden rule in terms of investment that when the economical environment is not good, then contract it for winter. Under the background of the global financial crisis this year, Hongma Foundry has invested 58 million Yuan for the building factory and the introduction of equipments. Why do you have such confidence?

Interviewee: At Hongma Foundry the development is relatively stable. Last year great efforts were taken to deepen market and we had comparatively stable customers. In 2005, the China Foundry Association named us as a "National Engineering casting key enterprises” which explained our influence in the national mining machinery industry. As long as there are mines, we have the Pinghu "red horse" products. So this year we have been spared from the financial crisis.

Increasing the investment shows our confidence in this industry. A few years ago, restricted by land, upgrading products, and industrial extension, we mainly speed up the development in the industry promotion, finishing and assembly. The financial crisis is a crisis and an opportunity. Grasp the development during low tide when the market recovery, then seize the opportunity.

Moderator: When you started business in 1985, you began from scratch. In 1993, the country had a promulgated policy that shut down plants, so how did you come up with the idea of alloy steel plant?

Interviewee: We switched in 1993, Pinghu changed the line of production and became an enterprise with an annual output value of 5 million yuan and annual tax of half a million yuan. I considered that the basis of the construction of our country was still relatively under-developed and the foundry industry had great potential. Moreover, the foundry industry technical threshold is not high. The rural people can do it.

I just bought business management books, in which they talked about Japan‘s Konosuke Matsushita. There is a rule in the time of development of the enterprise: I’m going to do when others do not, others convert while I nurture it, when others shut down while I develop. I was greatly inspired by that. At that time the domestic foundry industry and also the state-owned enterprises are basically shut down. I thought that it‘s time to enter this industry. The ultimate outcome proved that I made a right choice.

Moderator: After the conversion into alloy steel, you suddenly were transferred to another carton factory as its vice manager. After two months, due to the alloy steel facing closure, you still did not hesitated to submit a resignation and go back there. Why did you make such a strange choice?

Interviewee: This enterprise was launched by me and the villagers ten years ago. Originally, I conceived the collective enterprise as my own, and now it is ours. When I was transferred to the carton factory, I was unwilling. I think, since the enterprise was founded, I must run it well. If the enterprise closes down, the Majiu County economy may collapse and I shoulder the responsibility of the villagers' happiness. So I submitted the resignation.

In 1999, when the two enterprises invited public bidding and auction, I was going to bid just as a common villager. At that time, I did not have the money, even though I was the factory director for 15 yeas. I borrowed 200000 Yuan from friends, a owner of private-owned enterprise. Actually I have never seen so much money at that time. 200000 Yuan is not a small number.

Moderator: After the restructuring of the enterprise, you led the enterprise from bankruptcy, and gradually step it into a healthy development track. In this process, what do you think played a vital role in your success?

Interviewee: I carried out technological transformation at that time, and trained a batch of youth. They also slowly changed from farmers into skilled workers. Now this group of people is the biggest wealth of our enterprises.

Moderator: As far as I know, there are "two many" in your enterprise and one is that many are disabled, another is that many are released prisoners. Why do you absorb these people into the enterprise?

Interviewee: First of all, we are an welfare enterprise. We arrange so that the disabled can have a job, an income, but also solve the difficulties in the village. In accordance with the provisions, as long as the proportion of the disabled accounts for 25%, the enterprises can be regarded as welfare enterprises. That is to say we need only accept 50 people. And in fact we now have 125 employees with disabilities. Moreover we have former prisoners. These people are not intrinsically bad, so after their release I give them the opportunity to try again.

Moderator: What is the official website of the company? Please tell our Web site or on the Internet know more about your company.

Interviewee: http://www.phzg.com/

Address: Pinghu city, Zhejiang Province town of stables