The richest self-made woman in the world is Chinese

Blazing a Paper Trail in China -- by DAVID BARBOZA/NY Times

HONG KONG — Just five years ago, Zhang Yin and her husband were driving around the United States in a used Dodge minivan begging garbage dumps to give them their scrap paper.

She and her husband, who was trained as a dentist, had formed a company in the 1990s to collect paper for recycling and ship it to China. It was a step up from life back in Hong Kong, where she had opened a paper trading company with $3,800 to cash in on China’s chronic paper shortages.

“I remember what a man in the business told me back then,” Ms. Zhang said. “He said, ‘Wastepaper is like a forest. Paper recycles itself, generation after generation.’ ”

Ms. Zhang took that memory all the way to the bank. As a result of her entrepreneurship, Zhang Yin (pronounced Jang Yeen) is now among the richest women anywhere in the world, including Oprah Winfrey ,Martha Stewart and eBay ’s chief executive, Meg Whitman. Her personal wealth is estimated at $1.5 billion or more, with members of her family worth billions more.

Her companies take heaps of waste paper from the United States and Europe, ship it to China and recycle it into corrugated cardboard, which is then used for boxes that are packed with toys, electronics and furniture that is stamped “Made in China” and often shipped right back across the ocean to American consumers.

After the boxes are thrown away, the cycle starts all over again.

Late last year, Forbes magazine named Ms. Zhang the wealthiest woman in China. She may even be the richest self-made woman in the world, challenging a handful of others, like Giuliana Benetton, who started the clothing company with her brothers, and Rosalia Mera, who co-founded Zara, the Spanish clothing retailer, with her former husband.

Most of the world’s richest women inherited their wealth: from the Walton women of Wal-Mart fame to the daughters of the men who created Mars candy bars, L’Oréal cosmetics and BMW.

But not Ms. Zhang. A petite 49-year-old woman with a cherubic smile and a fancy for diamonds, she started out from a modest background, the daughter of a military officer. Now she dominates the world’s paper trade through her giant companies, one centered in Dongguan just outside Hong Kong and the other based in Los Angeles.

“She’s a visionary,” says Herman Woo, an analyst at BNP Paribas , which helped her paper company list shares in Hong Kong. “She doesn’t mind putting a lot of money in at the beginning, to build the company.”

That company, Nine Dragons Paper, is now China’s biggest papermaker. The company raised nearly $500 million when it went public here last March with the help of Merrill Lynch .

Since then, shares of Nine Dragons have quadrupled, giving the company a market value of over $5 billion. (The Zhang family controls 72 percent of the company, which makes it one of the richest families in China.)

Ms. Zhang’s smaller, Los Angeles-based venture, America Chung Nam, is also one of the world’s biggest paper trading companies, with ties to recycling yards in New York, Chicago and California.

No other American company sends so much material to China, in as many containers, as America Chung Nam, which was named the top American exporter to China by volume for the fifth consecutive year in 2005, the most recent ranking, according to Piers Global Intelligence, which tracks import and export data.

Now, with the paper industry shifting to China, where labor and land are cheaper, Ms. Zhang and Nine Dragons are vowing to take on the world’s global paper giants, like International Paper ,Weyerhaeuser and Smurfit Stone.

“My goal is to make Nine Dragons, in three to five years, the leader in containerboards,” Ms. Zhang says emphatically in a short interview in her glistening Hong Kong office. “My desire has always been to be the leader in an industry.”

In person, Ms. Zhang is filled with nervous energy and hearty laughs. But she rarely grants interviews, and when she does, they are brief and controlled by an army of handlers.

Ms. Zhang is cagey about how she made her fortune. In a society known for close ties and hidden deals between government officials and business leaders, she says simply, “I’m an honest businesswoman.”

Ms. Zhang was the oldest of eight children born into a military family from northern Heilongjiang Province, near the Russian border. During the brutal Cultural Revolution, which began in 1966, her father was sent to prison, like millions of others who were branded “counterrevolutionaries” or “capitalist roaders.”

When the Cultural Revolution came to a close in 1976, her father was released from prison and “rehabilitated.” She went to work as an accountant.

After China’s economic reforms got under way in the early 1980s, she moved to the southern coastal city of Shenzhen, one of the first areas in China allowed to experiment with capitalism. There she started working for a foreign-Chinese joint venture paper trading company.

In 1985, she ventured to Hong Kong, which was then still a British colony.

Ng Weiting, who was her partner in Hong Kong in the 1980s, says Ms. Zhang was driven and tough and had figured out how to get the best performance out of her workers.

“When her employees asked for a pay raise, she would grant it if it was reasonable,” he recalled. “But when her employees made mistakes, she would criticize them severely. She made it clear when to reward and when to punish.”

Analysts say Ms. Zhang’s ebullient personality made her a great saleswoman and a sharp deal maker.

There were occasional threats from competitors, yet being a woman was not a problem, she says. "Actually, I didn’t find it difficult," she says. "I found men respected me."

After Hong Kong’s paper market proved too small for her ambitions, she moved to Los Angeles in 1990 and married for the second time, to Liu Ming Chung, who was born in Taiwan, grew up in Brazil and is fluent in English.

Together, they formed America Chung Nam. At the time, China’s fast-growing economy faced shortages of raw materials, and the country began looking overseas for scrap metal and used paper. Zhang Yin was an early mover, one of the first to sell scrap paper to China.

China’s own paper products are poor quality, often made from grass, bamboo or rice stalks, leaving it at a disadvantage against waste paper derived from wood pulp, the source of most paper made in the United States and Europe.

America Chung Nam quickly made deals with American scrap yards and began shipping huge containers of paper back to China. The demand grew so fast that in 1995, Ms. Zhang (who also goes by her Hong Kong name, Cheung Yan) returned to China to found Nine Dragons, opening her first papermaking facility in Dongguan. Mr. Liu now serves at chief executive; Ms. Zhang is chairwoman.

A decade later, the company has 11 giant papermaking machines, 5,300 employees, $1 billion in annual revenue and a huge facility under construction in the country’s other booming export hub, the Yangtze River Delta area near Shanghai. Reported profits last year rose a whopping 349 percent to $175 million.

Nine Dragons is now one of the world’s fastest growing paper companies, and yet the company says it cannot keep up with demand for containerboard, the material used to make boxes, because of the booming growth in China’s economy and exports.

Foreign paper companies have been slow to build a sizable manufacturing base in China. Analysts doubt they will catch up any time soon. And Chinese manufacturers have advantages. They burn cheap coal rather than clean but expensive natural gas. And they are capitalizing on less expensive labor and the newest machinery, while papermakers in the United States and Europe are often using less efficient machines from the 1970s and 1980s.

“It’s very difficult for U.S. companies to get into this business now,” says Mr. Woo at BNP Paribas. “I heard five or six years ago they looked at opportunities but they didn’t do anything.”

“Right now,” Mr. Woo adds, “the largest globally is Smurfit Stone. Weyerhaeuser is No. 2. By 2008, Nine Dragons could be No. 1.”

Analysts have been nearly unanimous in their praise of Ms. Zhang, though she came under some criticism for appointing her 25-year-old son as a nonexecutive member of the Nine Dragons board of directors.

But Ms. Zhang vigorously defends the appointment, saying her son is qualified and Nine Dragons is, after all, a family company. She has a second son in high school. And her younger brother, Zhang Chang Fei, is the company’s deputy chief executive, worth an estimated $900 million, according to Forbes.

Ms. Zhang jumped to No. 5 this year in the Forbes ranking of the wealthiest people in China, from No. 107 last year, largely because of the huge public stock listing.

She hasn’t lost her ambition, though. Sometimes called the queen of trash, she doesn’t disown the title. But, she said, “Some day, I’d like to be known as the queen of containerboards.”