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RUEHCN/AMCONSUL CHENGDU 0403
RUEHHK/AMCONSUL HONG KONG 0499
RUEHSH/AMCONSUL SHENYANG 0408
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RHEHAAA/NSC WASHINGTON DC
RUEHGH/AMCONSUL SHANGHAI 5808

UNCLAS SECTION 01 OF 02 SHANGHAI 000045 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EAP/CM AND INR/EAP 
STATE PASS USTR FOR STRATFORD, WINTER, MCCARTIN, ALTBACH 
 
E.O. 12958: N/A 
TAGS: PGOV EINV PINR KIPR ELAB CH
SUBJECT: WENZHOU'S CHINT - A MODEL ENTERPRISE 
 
REF: SHANGHAI 44 
 
(U) Sensitive but unclassified.  Not for dissemination 
outside USG channels; not for Internet distribution. 
 
¶1. (SBU) Summary:  During a visit to Wenzhou on December 14-15, 
Congenoffs' toured the CHINT company, one of Wenzhou's leading 
enterprises.  According to CHINT executives, the company's 
success was due to its President's leadership and its close 
relations with the local government.  CHINT is the third largest 
producer of electrical goods in the world and one of the leading 
enterprises of Wenzhou.  Executives appeared intent on meeting 
quality standards and claimed that they provided employees with 
training and healthcare.  The company was also interested in 
social issues and company President Nan Cunhui has given 
approximately 100 USD million RMB to various charities in the 
past two years.  Wenzhou's economic development and migrant 
labor practices were reported reftel.  Wenzhou's religious 
situation will be reported septel.  End Summary. 
 
Nan Cunhui: A True Rags-To-Riches Story 
--------------------------------------- 
 
¶2.  (SBU) Congenoffs toured the CHINT factory and headquarters 
in Wenzhou on December 15 with CHINT Vice President Lin Kefu and 
Fred Hong, one of CHINT's legal advisors.  Congenoffs also met 
with CHINT Chairman Nan Cunhui on December 5 and at a dinner on 
December 14.  Lin and Hong were also present at the December 14 
dinner.  Nan is a true rags-to-riches story.  A former shoe 
cobbler, Nan founded CHINT in 1984 with a 6,000 USD investment. 
Nan was ranked 58th in Forbes "China's Top 100 Richest 
Entrepreneurs in 2002" and is often asked by the Chinese 
government to represent entrepreneurs at governmental meetings. 
During the December 5 lunch, Nan showed Congenoffs pictures of 
him with former President George Bush, Former Chinese President 
Jiang Zemin, former President Bill Clinton and Henry Kissinger. 
He had also just returned from Stanford University where he 
participated in an exchange on high technology. 
 
¶3.  (SBU) According to Lin, Nan was the driving force behind 
CHINT's success.  Lin compared him to Bill Gates and said 
although Nan had never gone to college, he was constantly 
learning and had spoken at universities such as Harvard and 
Stanford.  Nan was also very good with people and knew how to 
unite people towards a common goal.  Lin added that CHINT was 
also successful because of the local government's support.  Lin 
also served as the Secretary of CHINT's Party Committee and 
added that the communist party's role was to help companies such 
as CHINT to grow stronger.  He noted that Nan was not a member 
of the communist party and, although he could join the party, 
there was no need for him to be a party member. 
 
Factory Conditions 
------------------ 
 
¶4.  (SBU) CHINT is the third largest producer of industrial 
electrical equipment in the world behind Siemens and ABB.  It 
had 15,400 employees and factories in Shanghai, Hangzhou, and 
Wenzhou.  Its Wenzhou factory produced low voltage electrical 
goods, while its Shanghai factory produced middle to high 
voltage goods and had a research and development center.  The 
Hangzhou factory produced industrial automatic control systems. 
Its headquarters are located in Wenzhou.  According to its 
promotional materials, it was involved in electrical projects in 
Italy and Pakistan and also had projects with the Three Gorges 
Dam project, Baosteel and Chinese Central Television (CCTV).  It 
also had a joint venture with General Electric in Wenzhou. 
CHINT executives appeared intent on making the company operate 
at world-class standards and have implemented plans regarding 
Six Sigma (quality control program) and RoHS (restriction of 
hazardous substances).  The company had also installed an ERM 
(enterprise resource management) software system for managing 
company-wide resources. 
 
¶5.  (SBU) According to Hong, Nan was considering listing the 
company on the London, Hong Kong or U.S. stock exchanges.  He 
was not interested in obtaining more capital, but believed that 
listing the company on an international market would help it get 
more recognition and compete with ABB and Siemens.  He noted 
that Sarbanes-Oxley accounting constraints might limit interest 
in CHINT's listing on an U.S. stock exchange, however, there was 
still prestige in being one of the first homegrown Chinese 
companies to do so.  One of Nan's goals for the future is to 
make CHINT the leading supplier of industrial electrical goods. 
 
SHANGHAI 00000045  002 OF 002 
 
 
 
 
¶6.  (SBU) During Congenoffs tour of the factory, the factory 
appeared clean, heated, and well-lit.  However, there were fumes 
in the air that might have indicated poor ventilation.  Most of 
the factory workers appeared to be stressed.  Few looked up from 
their work and most appeared to be working as fast as possible. 
According to CHINT Vice Director Zhang Xinghua, workers were 
paid by the number of pieces they assembled.  A worker could 
make up to 1,600 RMB (206 USD) per month and the lowest paid 
workers had a salary of 1,200 RMB (155 USD) per month.  Workers 
were required to meet production quotas, but he did not provide 
details on what this meant.  The factory's working hours were 
from 8:00 to 4:30 and there were two shifts for lunch.  Workers 
worked an average of five and a half days a week.  One week they 
worked five days and the next they worked six days.  Most of the 
workers were from other towns and lived in dormitory-style 
housing at the factory.  Factory workers lived in four-person 
rooms, engineers were provided with their own rooms and 
high-level managers were provided with an apartment.  Workers 
had to pay an average of 30 RMB a month to live in the dorms. 
Those who were from Wenzhou and lived outside of the factory 
were provided with a small stipend for housing. 
 
¶7.  (SBU) According to Zhang, most of the workers at this 
factory were females between 20-25 years of age.  The turnover 
rate was only five percent per year, although this did not 
include the people the factory let go.  (Comment: It is 
difficult to believe that the turnover rate was only five 
percent given the young age of the workers and the fast pace in 
which they were working. End comment.)  Zhang claimed that CHINT 
valued its employees and took measures to improve their lives. 
The factory had a gym, ping-pong and basketball equipment as 
well as a library and karaoke facilities.  It also provided 
medical check-ups to its workers for free.  Nan said in the 
December 5 meeting that the factory also provided training for 
workers and was one of the first companies to provide employees 
with insurance and healthcare.  Truly outstanding workers were 
given stocks in the company to increase their loyalty. 
 
Giving Back to the Community 
---------------------------- 
 
¶8. (SBU) CHINT officials also stressed that CHINT was a 
productive part of the community and interested in improving 
life in China.  Lin said Nan wanted to improve society and had 
contributed nearly 100 million RMB in two years to various 
charities.  He donated money to the Red Cross for a HIV/AIDs 
project and to a HIV/AIDS village in Henan.  After the district 
government of Yueqing complained that Nan only gave his money to 
outsiders, Nan donated 20 million RMB (2.6 million USD) to the 
Yueqing district charity fund.  Nan is from Yueqing and his 
factory is located in the district.  Nan noted in his 
conversation with Congenoffs that he was concerned about the 
environment and made sure that his factory recycled.  Lin told 
Congenoffs that CHINT was very strict about the environment and 
treated all of the water near the factory.  Lin added that Nan 
was typical of many entrepreneurs.  When he first began his 
company, Nan was not very cultured or educated.  But as he 
became more successful, he became more socially aware and was 
not interested in broader issues, such as the environment. 
JARRETT