20 Years in the Industrial Bank: an Experience Filled with Pain, but Joyful Nonetheless

The market only embraces those who are really willing to take on challenges. The Industrial Bank, which had humble beginnings in Fujian Province, can now count itself as one of the most outstanding joint-stock commercial banks in China. For twenty years, the Bank has overcome countless challenges with a true pioneering spirit. It has achieved successful listing on China's A-share market and ascended as one the Top 200 banks in the world.

Looking back on the twenty years that he has spent with the Industrial Bank, Gao Jianping, the BOD chairman of the Bank, has a wealth of feelings. In recent days, Chinese Business News conducted an exclusive interview with Gao.

Chinese Business News: How do you see the twenty-year development of the Industrial Bank? What does it feel like to have been growing with the Bank?

Gao Jianping: Over the last twenty years, the Industrial Bank has developed in an extraordinary way. The Bank was not blessed with the best circumstances when it was founded, but this did not stop us from seizing major development opportunities and avoiding major risks. For a period of time, our businesses have been developing both quickly and soundly, and in terms of scale, quality, profits and independent innovation, the Bank has been maintaining a high standard in the domestic banking industry. Many people have attributed our success to luck, saying that we had all the right chances. My view is that God helps those who first help themselves, as the saying goes.

Regarding my time at the Bank, I would like to sum it up as an experience filled with pain, but joyful nonetheless.

This “pain” comes from challenges. The banking industry has always been full of risks and challenges. Personally speaking, when I was young, I went from working in government offices to a commercial bank. Considering my background in law, this shift to finance was a fairly huge one. I have occupied a number of different positions in the Bank during my time here, from the general manager of an office in Headquarters, the president of the Shanghai Branch, the vice-president, the president of the Bank, and now the BOD chairman. Each of them can be said to be a process of constant self challenge and self improvement.

The “joy”, comes from the gains. Over the past twenty years, I have had the honor of being involved in a series of significant developments and breakthroughs that the Bank has made. Every progress and achievement that the Bank has made fills me with a sense of joy and pride, such as “foundation building” and launching cross-regional operation in the early years, nationwide development starting from the year 2000, the re-naming of the Bank, the introduction of strategic investors and the Bank's successful public listing.

Chinese Business News: In your opinion, what is the secret behind the rapid growth of the Bank ?

Gao Jianping: Chinese people often say “the right time, the right place and the right people” when analyzing a success. Specifically speaking, in our case, “right time” refers to the great opportunities presented by the reform and opening-up of the nation. This was the same for all domestic banks, we all shared these opportunities. The “right place” refers the Bank being based Fuzhou , which is neither a political center nor an economic one, in fact was not an advantage at all. For us, the most valuable element was “Right People”. Briefly, I think I can sum up the reasons for the Bank's success:

The first is the Bank's ability to plan with foresight. The Bank has been able to accurately perceive changes in the internal and external environment, make strategies that have a high degree of foresight and ensure their sound and effective implementation. This is evident in the Bank's “3-step Strategy” that it made to lay down solid foundations for development shortly after its founding, the plan of “start a new undertaking” to achieve inter-regional operation, the goal of becoming a national commercial bank that was proposed in 2000, the introduction of strategic foreign investor, the pro-active transformation of business development and profit modes in 2004 and the push to become listed.

The second is the operation rule of being oriented to the market. The Bank was born out of the reform of finance in China , its guise being a joint stock company. This meant that it had to struggle to survive in a competitive market from day one, and that respect for the laws of the market was the precondition for development. This actually made the Bank stronger, enhancing its ability to improve itself.

The third is the quality services that star from sincerity. It can be summed up with two sentences that are often used in the Bank. Namely, “Service stars with sincerity”, and “Grow together, Developing together”. Only services that are sincere can be considered as truly quality services and only the services that facilitate a mutual growth with clients are truly valuable services. Over 20 years, such concepts have been woven into the whole process of daily services, business innovations and brand establishment in the Bank. They are also widely recognized by the market and our clients.

The fourth is the courage to innovate and probe into management systems. Over the past 20 years, the Bank has been a pioneer and practitioner of financial system reform in China. The Bank has been the one of the first practitioners of almost every major reform and management innovation in China. They range from asset/liability management, five-category loan classification management and capital constraint management to the reform of corporate governance and systems……

Chinese Business News: How do you feel when you look back at the hardships experienced when establishing the Shanghai Branch, the Bank's the first cross-regional operation, and then to the growing prosperity and scale of the Bank today?

Gao Jianping: At the end of 1995, I was assigned to found the first cross-regional branch of the Bank, that is, the Shanghai Branch. On March 20, 1996, the Shanghai Branch was officially opened for business. When we first came to Shanghai, the challenges and pressures were greater than we had originally anticipated. We were in an alien environment. There we had no shareholder background, no favorable personal relations, no brand influence and no resource support. We were also faced with extreme distrust from clients. We had no choice but to start from zero.

However, these difficulties did not dampen our aspirations to develop in this new area. At the time, headquarters made the enlightened decision of giving the newly-established first branch outside of Fujian free reign to innovate in a number of aspects. In many respects, such as organizational structure, performance evaluation and incentives, recruitment and payment, the branch was entitled to make new considerations and arrangements based on the demands from the market. These provided the newly-born Shanghai Branch with conditions for smooth development based on the principles of “high starting point, high standard, and high taste”.

Something that we did back then has had a lasting impression on me. We placed a huge outdoor advertising at the most eye-catching part of Shanghai Bund. This may seem very common today, but in the mid 1990s when brand consciousness among domestic banks was very weak, it was an unprecedented action. The high advertising cost also caused quite a dispute inside the Bank. In the end, the Bank realized that it was worth it.

Launching cross-regional operation laid down the foundations for the subsequent move to go national. This was the case in terms of business, systems and personnel. After 2000, the Bank realized a nationwide network of branches within just a few years. All branches that were opened turned out to be as success. This success owes a great deal to the reforms made and experience gained by the first branches established outside of Fujian Province, including the Shanghai Branch, Shenzhen Branch and Changsha Branch.

Chinese Business News: Some say that the success of the Industrial Bank, to a great degree, can be attributed to its able and energetic team. Could you tell us a little about the personnel strategy adopted by the Bank?

Gao Jianping: The personnel strategy adopted by the Industrial Bank can be summed up in a short phrase: “running the bank with experts”. Specifically, the Bank adopts a human-oriented approach. By improving the management of human resources and optimizing the surroundings for the development of personnel, it has brought in and cultivated a large number of bankers and experts. By amassing top talent and letting them play their role, the Bank has been able to constantly enhance the intellectual elements and professional standard of its operations and management. Over the years, we have been creating a superb environment which suits the development of all variety of professional personnel. On the one hand, we give both opportunities as well as responsibilities. We were bold in our decision to appoint all-round young managers boasting professional expertise. They are trained and developed by being put in important posts and having specific tasks. On the other hand, mechanisms of personnel management and training are constantly enhanced. In the early years of the Bank, we abolished the backward idea of totally secure jobs not affected by performance. Later, we promoted the balanced scorecard and 360-degree assessment. In recent years, we have adopted career plans and professional position sequence. Through the improvement of systems, we are trying to construct an active and professional personnel environment that keeps the superior and eliminates the inferior.

Chinese Business News: Ever since its public listing in 2007, The Industrial Bank has been receiving growing attention from investors. In your view, what is the core of the Bank's intrinsic value?

Gao Jianping: When we were doing the road shows for the public listing last year, I used three sentences to promote the Bank. They can be seen as the core of the intrinsic value you just mentioned.

The first sentence was “The Industrial Bank is an excellent bank”. This is demonstrated in all aspects of the Bank's business development. Over the last 20 years, the annual growth rate of assets, deposits and loans has been 39%, 56%, and 37% respectively. At the end of 2007, in accordance with the five-category loan classification method, the ratio of non-performing loans was 1.15%, which represents an advanced level anywhere in the world. It has maintained profit for 20 years in a row, achieving a cumulative retained profit of over RMB 20 billion Yuan, an accumulation of shareholder equity of over RMB 40 billion Yuan and taxation payment of about RMB 14 billion Yuan. The achievements it has made in development pace, quality and gains are not often seen in China or abroad.

The second sentence was “The Industrial Bank is a trustworthy bank”. We have always adhered to a responsible approach to doing business, and have worked hard to fulfill our duties to the state, shareholders, clients, staff and society. These efforts have been widely recognized.

The third sentence was “The Industrial Bank is a bank worthy of expectation”. After being tempered by 20 years on the market, the Industrial Bank has developed a strong capacity to improve itself and consolidated sound foundations in business, management, finance and personnel. With this, it will enjoy excellent prospects for growth in the future.

Chinese Business News: The Industrial Bank is still going strong after 20 years. How do you see the blueprint for its future?

Gao Jianping: In the long run, the Industrial Bank is aiming to become a first-rate bank that will prosper for decades to come. In the mid term, based on our 20-years of reform and development, we will read the development trends in the process of the marketization, internationalization and integration of the domestic financial market and steadily establish a first-grade financial group with a reputable brand, outstanding value and notable contributions.  (From: Chinese Business News)