Sanpower Group only took 23 years to develop from a sales company of electronic products on Zhujiang Road, Nanjing, to a large enterprise group, which is characteristic of informatisation and takes modern service as its core, with synergic development of diversified businesses. Despite that Sanpower Group once had neither background nor capital, how can it have today’s achievements starting from scratch? In the eyes of Chairman Yuan Yafei, these are attributed exactly to integrity.

On January 11, 2016, Jiangsu New Space-time Programme broadcast the Feature Programme about Publicity of Jiangsu Law-bidding Key Enterprises with Integrity, which reported the integrity management of Sanpower Group for past 23 years, and Chairman Yuan Yafei received an exclusive interview with TV station. And he talked freely about the essential role played by integrity in the development and operation of an enterprise. The following is the interview notes:

 

 

Reporter: Could you please talk about how important is integrity in the development and operation of an enterprise?

Yuan Yafei: In 1993, I resigned from Yuhuatai District Government and went into business to establish Sanpower. At that time, with no background and capital, the only thing I have is a heart of positivity, and also a wish of integrity. How can we get trust from clients, government, suppliers and financial institutions? The most important thing is that we rely on integrity.

One enterprise can develop from a small one into a bigger one. In my opinion, it should be an enterprise with integrity firstly, or it would be kicked out from the market sooner or later by the tide of market economy. As for way of life, if you cheat others, eventually, you will pay this debt in the future. From an individual and enterprise to a country, if you want to continuously gain the recognition of others, you need to continuously maintain this quality of integrity.

Actually, integrity is easy to say but difficult to do. When I started my business, I vouched for other people, but some enterprises turned out to break down. Objectively speaking, market mechanism of that time is not perfect, so it’s entirely possible for us to avoid these guarantee responsibilities reasonably. Even if Sanpower itself also had difficulties at that time, we still undertook the guarantee responsibilities that shall be assumed by us. Even though this act has brought great challenges for our enterprise, our integrity has gradually established the social trust for us and has been recognised by all sectors of society. Therefore, Sanpower can develop step by step to today’s size with “double hundred million” of total capital and annual turnover.

 

 

And our integrity has also been recognised by foreign market. Before, House of Fraser, the oldest department store in UK, which was acquired by us, had high-yield bonds of 250 million pounds, with an annual interest rate up to about 8.9%. Owing to Sanpower’s integrity, we gained 400 million pounds of low-interest refinancing provided by London branch of ICBC and HSBC Bank Head Office last August. The average interest rate is less than 4.9% and it’s pure credit not requiring any collateral. So it has saved over 10 million pounds of financial costs and enhanced the profitability of enterprise. And this is exactly the function of integrity.

As for operating an enterprise, we must take credit more important than life. Sanpower Group adheres to the corporate culture of “kindness, reasonability, insight”, and the credit has become our gene. More than ten years ago, I told my employees “not to cheat others, not to cheat ourselves and not to be cheated by others”. If you cheat somebody, you will pay that back sooner or later; if you take petty gains today, you maybe pay more for that tomorrow; so we should be “kind”. Of course, “do not cheat yourself”. Most of us don’t know what we really want to pursue and drift with the current, but what do you really need? What should you do? What is right? Have you ever thought of that? So we say that we shall not cheat ourselves, and this is exactly the “reasonability”. Surely, we should not be cheated by others. If cheated by others, you will be deprived of opportunity for survival. And this is what “insight” is all about.

What we require for our cadres is three words, namely, “Honesty, Seriousness and Professionalism”, and this is positive energy. Honesty shall be put in the first place: only if the boss is honest will his employees be honest; only if the employees are honest will the enterprise be of integrity; and only if your corporate culture is an honest one will the image that your enterprise gives to society be an image of integrity.

Reporter: So what you mean is that integrity can bring not only profits but also opportunities to enterprises?

Yuan Yafei: Yeah, that’s right. Integrity itself cannot be measured by value, but it can bring value. We started from scratch and achieved such achievements from having nothing. Why can we have so many opportunities? That is because that we conduct ourselves and do things in good faith. Then other people are willing to come to contact with us and cooperate with us so that we can have so many opportunities. Therefore, integrity is the foundation for an enterprise to gain opportunities and achieve dreams.

Now, we have more and more opportunities. Many people come to seek cooperation with us, which is brought by our integrity. And this is the value of integrity for an enterprise.

 

 

Reporter: The two sessions will be held soon, and the report will certainly mention the construction of China’s social credit system. In your opinion, what kind of benefit can the construction of social credit system bring to enterprises?

Yuan Yafei: I believe that the growth of Chinese economy is gradually converting from being driven by export and investment into being driven by domestic demand. Our country now mentions the “supply-side reform” and I think that “supply-side reform” is also “consumption-side reform”. And the construction of Chin’s social credit system is also an important means for the supply-side reform.

When driving the domestic demands, we also can learn from foreign experience. For instance, the cost of consumption in the USA is very low, such that you even can buy things without money and can return the goods back if you don’t like that. Another case in point is the e-commerce in German. If the consumer wants to buy one piece of clothes, the seller will send clothes in various colours and of various sizes. And then he returns what he doesn’t need and pays for what he needs. But in China, nobody can do things like that. Advanced foreign countries have established a perfect credit system and the cost for credit loss is very high. While in China, the cost is too low as the overall social credit system has not been perfectly established yet.

So the credit itself is a lever, and establishing a credit system throughout the country can greatly drive the domestic demands and consumption.

We should, nevertheless, also see that our country is making progress day after day, people’s credit level is increasing day after day, and the social credit system is also being improved day after day. Therefore, I believe that in the future, the scale of our domestic demands’ driving economic growth can be larger, which is beneficial to enterprises and will finally form a positive circulation.