CCTV Securities and Information - Celebrity Interview: Xiaojie HUANG - PE New People
Recently, Jiuding Capital’s partner Xiaojie HUANG accepted the interview of CCTV Securities and Information Investment Celebrities Interview Column, talking about his investment philosophy and the secret of Jiuding Capital’s rapid growth.
Commentary: China’s youngest private equity investment manager - establishing Jiuding Capital at his 30 years old; fund manager with the highest efficiency of investment - establishing his own team within one year, raising more than one billion yuan capital. Despite all of the above, president of Jiuding Capital Xiaojie HUANG, like other partners, works hard without slack.
Huang: A partner said that everyone tells me that he is very diligent. How do you demonstrate your diligence? I thought for a moment and then said that, firstly, count the times of his flights; secondly, observe the departure time of his flights, for example, man who takes 7:30 flight has different mindset from one who takes 10:30 flight. Man who takes 7:30 flight has to get up at 5:30, while man who takes 10:30 flight may get up at 8:30. Both are different in requirements and selection for life.
Commentary: As can be seen from the mileage table of the airlines, within half a year, Xiaojie HUANG’s flights have exceeded 100 times accumulatively, dominated by morning and night flights. Despite the short time in the venture investment industry, he is able to easily deal with heavy work of project investigation, thanks to his track and field athlete career which has brought Xiaojie HUANG extraordinary durability and will power.
Huang: Firstly, you can’t fear hardships, because the professional sports is, in fact, a huge physical torture, despite of hardships of the venture investment, its physical torture is absolutely lower than before. Secondly, it is an ordeal for the will power, because the sports is a two-way competition in physical power and will power, any top sports talent is certain to be striking in both physical power and will power; through drill during this period, I feel that I am firmer than those undrilled ones in the will power, and can face huge stress.
Commentary: Xiaojie HUANG is professional in the sports, and excellent in the academic record. He had got two firsts in master and doctor in The People's Bank of China Graduate Faculty, taught there after his graduation, and cut a striking figure in the research of investment theory. Nevertheless, post-70 Xiaojie HUANG knew himself very well. He was not willing to be a teacher, so he resigned and entered private equity investment industry, where he gave full play to his strong points.
Huang: Firstly, I think that the investment needs to master your required information within limited time as soon as possible; I think that we ourselves have enough resources in the financial system, so we can obtain your required information in a short time. Secondly, the investment needs insight; a high-level person is able to look into future; I think that we ourselves have such potential in some way. Thirdly, the investment needs decision-making ability; despite that you have your information and insight, but at a moment when you must make a decision, not everyone can make a decision; I think that I myself have such ability to “cut my arm to save my body”; if needed, I think that, in nature, I can do well.
Commentary: In 2007, Xiaojie HUANG, together with his like-minded friends, established Jiuding Capital. As some newcomers in this industry, without burdens and prejudices, they dare to break through old system and boldly use some innovative methods to solve old problems.
15:00 Because we are young, to what extent can our management system reach? Although I am a founder, late-comer may fire me.
Huang: (Xiaojie HUANG’s co-worker Liu Xuemei) If your deeds and contributions can’t match with your status as a partner, you are likely to be fired through voting of the whole partner team. In truth, it proves that we ourselves are an open platform.
Commentary: In the venture investment industry, youth means the courage to break through set pattern and challenge authority; youth also means weak foundation and deficiency of knowledge. In his opinion, there is no shortcut for such problems. “Diligence can make up for the lack of intelligence” is the only answer.
Huang: China has many investable industries. Our invested industries involve many enterprises. I frequently ask myself such question: if you are diligent enough, Mainland China has more than 2000 listing companies, and you can remember major businesses, major financial data, major operational characteristics, major business arrangement and competitors of 80% the listing companies. If you can do this, I think that you are certain to be diligent in such sector. Most of people can’t do it well, but we can.
Commentary: After solving some problems in the internal forces, the biggest external difficulty is lack of project resources. The solution from Xiaojie HUANG is that: the newcomers shall fear no hardships, build nationwide network system actively, and seek target enterprises with dragnet-type search.
Huang: Lots of people sit in their offices to wait for the projects recommended by finance companies. In China, we call such merchants as “shopkeeper”. Another type of merchant is called “itinerant trader”, who bears the burden and wanders about the streets to sell goods each day. As far as the efficiency is concerned, the itinerant trader is higher than the shopkeeper. In the venture investment, we hardly depend on any external intermediary agency, our projects are discovered in line with our own industries and our self-built regions. So to say, in China PE industry, only Jiuding Capital has so many employees, and has built so many points in various regions. We always believe that, compared with the shopkeeper, the itinerant trader works harder, pays more labor, and creates more value.
Commentary: All the efforts finally got a good return. Since its inception, Jiuding Capital has invested nearly 50 companies, including 2 first-batch listing companies on the second-board market. “Weirdness, vigorousness, social relations, and family background”, there was a multiplicity of views on it. In the face of such guesses, Xiaojie HUANG is self-confident and calmed. In the project selection, Xiaojie HUANG, as a newcomer, can adopt the strong points and avoid the shortcomings, and give full play to the opportunities.
Huang: Firstly, we are willing to select some areas without extremely-high price, such as second-tier and third-tier cities. Secondly, many enterprises in the second-tier and third-tier cities have been developed up to a large scale, ranking top in the industry. So it has higher requirement on personnel. If we instill our vision, our resources, and our comprehension on this industry, the possibility that he creates the industrial miracle will be increased. This is our selection.
Commentary: Just like his simplicity and steadiness in Xiaojie HUANG’s speech and deportment inconsistent with his age, the enterprises in his investment project table are dominated by some unknown traditional enterprises, without any internet and new energy enterprises.
In his words, his work is, together with his young team, to implement traditional value investment philosophy with new mode.
Huang: We tend to invest in a traditional industry, because we do believe that Chinese will become rich. After being rich, people want to do two things. The first thing is to comfort ourselves, that is, consumer goods industry. The second thing is to lessen the pain, that is, health and pharmaceutical industry. We believe that such two industries are certain to maintain long-term stable growth in China. Moreover, the business modes of the two industries are very clear, you can understand the future development space and boundary of this enterprise, so we invest in the two industries.
Commentary: Despite of youth, Xiaojie HUANG comes into contact with traditional industries each day. Compared with his peers, Xiaojie HUANG is plainly dressed. He dressed in his most expensive suit presented by his friend for interview. In front of the camera, he acknowledged his “rusticity”.
Huang: We invest some relatively-traditional industries, such as consumer goods industry, pharmaceutical industry and agricultural industry. Taking the agricultural industry as an example, the entrepreneurs in this industry look rustic, disliking the ones in TMT (Technology, Media, Telecom) industry, who are highly-educated and fashionable. Recently, we are investigating a condiment enterprise. We need to enter the supermarkets to interview the delivery workers and the upstream suppliers of pepper and black pepper, who represent a majority of this social labor group and require that we have the same temperament as them. Now we are relatively “rustic”. We know the truth. We call it “native” instead of “rustic”. We have international vision and international technique, but we use China’s native behavioral pattern and appearance to perform our required philosophy and truth of investment. It is our concept for “rusticity”.
Commentary: Root into China, eye on the world; be aware of their own strong points, and break through and innovate in system; correctly treat their own shortcomings to adopt the strong points and avoid the shortcomings in the industry selection; hold fast to their own investment methods; keep an open mind; Welcome “fresh blood” to join in! This is something that Xiaojie HUANG has been adhering to for three years. As an industrial newcomer, he will continue the equity investment. Just like his words in a letter, “We are born at the right time. With the new opportunity of unprecedented variation over the past thousands of years, even a mediocrity, in nature, is also filled with ambition! I will set a great goal, do things in a down-to-earth manner, live through hardships, and grow up to be an outstanding talent finally.”