Breaking News! The entrepreneurship experience of Lou Zhongping from SOTON was recorded in The Path of Entrepreneurship—The Success Practice of 30 Businessmen in Zhejiang with pages as 11 long.
It is known that this book not only records the growth paths of the representing entrepreneurs of various walks of life in Zhejiang but also reflects the development path of the economy of Zhejiang. How could his entrepreneurship experience be written in The Path of Entrepreneurship? Let’s take a look together!
Lou Zhongping: Grow into a Global Staw King within 25 Years
People, once being middle-aged, could easily become a guardian for the old world. The 54-year-old man, Lou Zhongping, seems to have no interest in it. He could easily become one of the users of Weibo, Douyin, and young people. He likes reading, Drucker Management, Adam Smith, and The Crowd. You could find The Wealth of Nations on the bookshelf is weary with the many reading notes that he made.
People call him “The King of Staws”. It is 26 years of work that build him into a miracle of the traditional manufacturing industry.
For now, as one of the professional biodegradable products companies, SOTON could produce over 7,000 tons of straws annually, with an annual output of nearly 200 million Yuan. It owns 2/3 patents of the straw industry of the world and has laid all criteria for the straw industry around the globe.
“Never regard me as a president. I perhaps would let down the ones who come here to listen to entrepreneurship stories, ‘cause I’m not here to tell those stories. I have not too many hairs left on my head though, I’m younger than you, as the society no only define a person with physical age”. These are opening speeches of Lou Zhongping in almost each of his speeches.
Lou Zhongping is more of a scholar-type entrepreneur than an industrialist. He has been thinking of how to get his company to live when others are figuring how to develop rapidly.
The Birth of “The King of Straws”
As people like to call Lou Zhongping the global “King of Straws”, it seems destined that he would do straws business for life long. Lou Zhongping himself has never thought that, after engaging in over 20 businesses as a long-way business, breading industry and clothing industry by walking over almost half of China, he could do the straw business into No.1 globally within 25 years, from the year 1994.
With rattles in hands and shoulder pole on shoulders, walking door to door for animal furs and bones to earn little money, the “Gang for Sugar” of Yiwu are still in the memory of the people in Southern China. Chen Jianghe, the hero in the popular TV drama The Chicken Feather Flying up to Heaven, is (partially) a reflection of Lou Zhongping in this period.
Prior to the Reform and Opening-up, Yiwu has been witnessing “Chicken Fur for Sugar” for a long time, which was the earliest business in Yiwu. Lou Zhongping was born in a poor family in Yiwu. To make a living, he quitted school at the age of 14 and followed his father around the country for the “Chicken Fur for Sugar” business.
However, 15 years of hard work didn't get Lou Zhongping's life quality better. At the same time, Yiwu, his hometown, has undergone great changes.
At the end of 1990, Yiwu has become the largest wholesale market for small commodities in China. In 1991, the turnover of the Yiwu market broke 1000 million Yuan. In the same year, Lou Zhongping returned to Yiwu and rented a half stall at the Wangjiang Building Market of the 3rd-generation Small-commodity Market of Yiwu, to sell the daily-use commodities at that time, for instance, the plastic cups, disposable chopsticks, disposable paper cup, and straws. His way of selling small commodities was launched like this.
At that time, to earn 0.5 Yuan, he could ride the tricycle for 6 km for delivery. With the quick development of the small commodities industry, more and more Yiwuers joined in this business. The competition became fiercer and it became harder to earn money. This got Lou Zhongping to realize that no matter for “Chicken Fur for Sugar” business or stalls, one could make money by constant thinking and innovation.
At the end of 1993 when a businessman of straws wants to sell his machines of straws, it got Lou Zhongping to think, why couldn’t I make the production myself? So Lou Zhongping quitted his wholesale business to produce the plastic straws he once sold. His factory became one of the first batch companies of “The Joint Collaboration of Trade and Production” in Yiwu.
Lou Zhongping grasped luckily the first chance granted by Chinese Reform and Opening up to the civil-run businesses. With his hard work and wisdom, he runs quickly in the golden age for the Chinese Manufacturing Industry.
In the beginning, nobody cares about the straws with little profits. With the low threshold, low technological contents, and profits, straws could be known as products that are difficult and not worthwhile to produce in all the small commodities in Yiwu. But as Lou Zhongping’s factory has witnessed rapid development, many businessmen in Yiwu followed his steps to run factories. Overnight, the numbers of straw factories grew by multiple times. At that time, none of these straw products own official brands and logos, not to mention people’s consciousness of product rights protection. They were just using a package uniformly with one man, one woman, and two children.
Lou Zhongping realized the opportunities underlying.
In Aug. 1995, with this package, Lou Zhongping went to the Industrial and Commercial Bureau of Yiwu, asking whether this pattern could be a logo and whether it has been registered? He was answered as: This must be a logo, and someone has registered it for sure. Lou Zhongping, however, insisted to inquire about the Logo System with RMB 300. It turned out that it hasn’t been registered. So Lou Zhongping registered this logo with RMB 2,000.
Just like this, the SOTON Straw came into being.
By 2002, in 7 years, Lou Zhongping had developed SOTON Straws into No.1 globally and has been keeping it since.
Death is the Fate of Companies, But Company Could Live against Death
Over a decade ago, Nokia and Motorola were taken as successful examples by various business schools. But nobody would imagine that they could fell into a dilemma of operation and merged just a few years ago.
In 1987, in the book Entropy: A New Outlook on World, the author pointed out a new opinion: All organizations would go to vain, including the universe. Influenced by this view deeply, Lou Zhongping has been keeping alert in the business operation. He has been thinking about how to get the company to live when others are figuring how to develop their companies quickly. How to live longer has been an issue of concern for SOTON Straws.
Companies, to live longer, have to build a culture of reform.
In 2002, SOTON became the largest straws manufacturer globally, and the big names as Walmart and Dollar Tree became its clients.
However, dangers underlie the glamorous data of export. Big names would bully small names. SOTON found itself helpless against this situation, and its profits were quite low. “Why couldn’t I find 10 small names for business? Since we could consult each other with small clients while we couldn’t do anything in front of the big companies”. Lou Zhongping proposed a theory—Small Client Theory in 2003, which has been taken as a teaching example by MBA.
SOTON quitted Walmart and the American market with low profits. At the same time, it laid its eyesight on Japan, where underlies greater profits. However, in front of the Japanese with strict requirements on sanitation, Lou Zhongping was frustrated for the first export.
The clients in Japan found a hair in the containers, so the procurer required a comprehensive check. But the fees for the comprehensive checks were higher than the straws. Lou Zhongping had no choice but to agree to destroy these straws in Japan and paid a Destruction Fee amounting to USD 17,000 additionally.
After that, Lou Zhongping transported the two containers that have yet left the port from Ningbo Port to SOTON, and burned all these products in front of all the employees of SOTON.
In the over 10 years after that, none of the orders exported to Japan by SOTON have received any quality complaints.
Under the leadership of Lou Zhongping, in 10 years, SOTON has maintained all the rights of discourse and rules-formulating rights, from the industry standards to the national standards, to the ISO international standard, hence breaking the monopoly of the western countries in formulating the product's rules, and maintains 2/3 patents of plastic straws globally. It becomes an absolute leading brand in the industry.
During 2006 and 2007, Lou Zhongping has been dedicating to researches and innovations and has applied for patents. On Nov. 17, 2009, 37 patents were approved.
For instance, the “love-shaped straw” used on the wedding ceremony was sold for 8 Yuan each. The heart-shaped structure of the straw is equipped with a non-return valve and filtering device, and the non-return valve only owns 4 independent intellectual property rights.
As the leader of the straws industry globally, Yiwu SOTON Daily Use Commodities Co., Ltd. has been undertaking the drafting and compilation work for China Light Industry Standard for Polylactic Acid Cold Drink Straws, National Standard for Polypropylene Drinking Straws, and ISO Standard for Polypropylene Drinking Straws. The relevant organizational requirements, production process, rules acceptance, and basis judgment for the global straws industry are mostly originated by Yiwu SOTON Daily Use Commodities Co., Ltd.
The Thoughts Conversion Brought by a Straw
There is no fault for little profits for more business. But if it is the choice for all manufacturers, it will be a dead-end when millions of same-natured products choose to go on the same path.
“Why could the straw only be sold at this price? Why must the straws be plastics? Why must they be disposable? Why could straws only be used to drink beverages?” These are the questions of Lou Zhongping’s concern.
So Lou Zhongping decides to quit the simplest “low profits for more trades” and starts to seek new directions. Lou Zhongping has his own understandings of the word “New”. In his opinion, “New” means to quit old things and to pursue new things. This is why people like new things. Therefore, innovation is an always-true law.
By jumping out of the thinking mode of the traditional manufacturing industry, keeping the concept of “changing the company with persistence and innovation”, and with the dedication, innovation, and down-to-earth spirits, SOTON has formed a SIMONTON-mode thought for itself, getting itself out of the coarse operation of “low profits for more trades” and getting itself a sustainable development path of refined management, ecology and growing together with employees, hence changing totally changed the people’s traditional knowledge of low, small and weak for the straw industry.
Furthermore, Lou Zhongping built a museum for straws, which not only gives detailed introductions of the development history of straws but also demonstrates various straws that are developed by SOTON: the cartoon-style ones, the rotating ones, animal-type ones, the ones that help the aged and the patients to drink, bird-like ones, party ones, steel-made ones and the ones degradable. The colorful and diverse patterns get people to believe that only a straw can be made into so many patterns.
The product itself is the core basis forming the product process, while the commodity is the “demonstration of value” of products, which would break the limitations of the products and construct the “product-thinking model” of new cognition. “We found that there could be many selling points for a straw, in its cultural nature, spiritual nature and emotional nature, to the fun nature, etc. How to achieve the recognition of the audience, to achieve the mouth-to-mouth transmission are the things that SOTON has been making”, said Lou Zhongping.
As early as in Sep. 2006 when the white pollution had yet been realized by the public, SOTON had developed the biodegradable straws in the solution for the white-garbage pollution.
He said frankly that: we realize that straws, as plastic products, would produce white pollution issues for their bad recyclability. We know that plastic products will come into the public’s concern one day in the future. So we decided to seek a material to replace it, a material that guarantees the functions and can be degraded.
In the year 2018, the world witnessed a campaign refusing plastic products. In July, Starbucks declared that its 28,000 stores will quit plastic straws prior to the year 2020. In Sep., McDonald’s within the UK terminated using plastic straws. Hilton Group also declared that its 650 hotels will stop using plastic straws by 2018. Germany also declared that nearly 6000 supermarkets and shopping malls in Germany will stop selling plastic straws.
The degradable straws of SOTON became a “top-seller” overnight.
At the Yiwu Expo in 2019, the “Starch Straw” that could be eaten like noodles attracted the attention of merchants from around the world. This is another breakthrough made by SOTON in solving the White Pollution issue through technological innovation.
You Need to Know that You are a Man of Guilt
Lou Zhongping has been maintaining a special point of view: Companies keep a permanent law, that is, the relations with the entire ecology. A Company, in its nature, would pose harm to society, to the ecology, to the environment, and to others. “Let us put the contributions aside. A company, to grow stronger, needs to consume social resources, which is scarce. You need to know that you are a man of guilt”.
Be kind to the employees, be honest to the cooperators, meet the clients’ needs from their perspectives, and protect the environment as much as possible. All these would make up for the so-called “guilt” during the entrepreneurship.
To Lou Zhongping, things are comparative. To get a company to grow stronger, one needs to stand in others’ shoes. “When you are good to others, others will return your positive responses, which will benefit you eventually”. Companies, in the meantime of obtaining good operation benefits, should lay emphasis on the improvement of the group, such as the hardware, salary, welfare, and environment, etc. The nature of companies is the nature of society, which is the reason of companies social responsibilities.” This is what called the spirit of entrepreneurship. One may not be an entrepreneur but should maintain the spirits of an entrepreneur.
In SOTON, Lou Zhongping discussed frankly the instability of the basic level. “Nobody wants to work for others for lifelong. Living things are mobile. So you need to make up for the insecurity under the time's background”.
He builds 5-star dorms for his employees. He uses high-quality-branded no matter for decoration or home appliances.
As for the saying that being kind to employees is doing charity, Lou Zhongping doesn’t agree with this saying. “It is the fundamental care of a company. We could see the flowers, leaves, and branches of a tree, but we couldn’t see the roots, which would determine the life. While employees are the roots of companies”.
He paved 120cm-thick dirt on the roof of the plant to grow ten kinds of fruits and vegetables. Lou Zhongping also designed the rain water-collection and central water recycling system by himself. On each Wednesday, the factory will conduct routine sanitation checks, on the production workshops, dorms, and canteens, etc.
The Intelligent Factory Phase II of SOTON
As early as 15 years ago, Lou Zhongping could foresee the importance of energy preservation. He said it was for lowering the operation costs but not explain this as the social responsibility or the consciousness of environmental protection.
In his opinion, people should not take themselves as great persons. Instead, they should keep the attitude of criticism. Only by this way will we know the problems underlying in us, improve our knowledge of ourselves, and change ourselves. Otherwise, we will get satisfied.
Lou Zhongping would communicate with the local entrepreneurs when he comes to a country, and learn in the communication. Lou Zhongping has been stressing the sustainable development of the company. And it is not enough for long-term development, but high-quality sustainable development.
It is the concept shared by Lou Zhongping and his employees to welcome each change with the cares each day. To Lou Zhongping, the issue posing to the innovators is growth instead of success, and innovation is an ever-lasting thing.
The outstanding entrepreneurs would not be mean in investing their intelligence. Philosophy is not only the small tips in life, nor the macro theories, but the inner strength that will lead people ahead.
From the commodity carrier to the “King of Straws”, it is a book of an entrepreneur and an epitome of the entrepreneurship spirits of the businessmen in Yiwu.