Liu Yunguang: An Entrepreneur with a Passion for Youth

Abstract

I’ve met XMU alumni all over China, and even in many other countries, but never any one like Mr. Liu Yunguang, chairman of Guanghui Interactive Group. He claims to have been a poor student, yet he excelled in his studies in the Department of Scientific Engineering, Xiamen University (XMU). At the same time, his small department (only 36 students) defeated all other departments in sports. He also helped bring about changes at XMU that influence the school to this day, including overcoming considerable opposition to help my old friend Professor Ji Yuhua to start the XMU English club in 1984—four years before I myself arrived on XMU’s scene.

I’ve met XMU alumni all over China, and even in many other countries, but never any one like Mr. Liu Yunguang, chairman of Guanghui Interactive Group. He claims to have been a poor student, yet he excelled in his studies in the Department of Scientific Engineering, Xiamen University (XMU). At the same time, his small department (only 36 students) defeated all other departments in sports. He also helped bring about changes at XMU that influence the school to this day, including overcoming considerable opposition to help my old friend Professor Ji Yuhua to start the XMU English club in 1984—four years before I myself arrived on XMU’s scene.

When Professor Ji was denied permission for the club, Mr. Liu asked to be made president.

“Why would you want to be president when you didn’t even speak English,” Ji asked (Fig. 2.1).

Fig. 2.1

Prof. William Brown interviewing entrepreneur Liu Yunguang in Nanjing, Jiangsu on July 4, 2019. Photo by Zhu Qingfu

Ever confident, Yunguang said, “Because the school won’t allow you to start the club — but I can get them to agree!” And true to his word, young Yunguang lobbied school leaders, explaining why an English club would be so helpful to XMU, and he won many decision makers to his cause.

Yunguang continued to hone his persuasion and communication skills by helping to print Xiamen University Youth magazine, which had a cover color—a rarity at that time.

In 1984, Yunguang became vice chairman of the XMU student union, and later served as chairman of the graduates federation. He also played a part in bringing about Youth—the first XMU sculpture that was not of a human figure.

XMU already had many sculptures but all were of famous people such as Lu Xun, Tan Kah Kee and Luo Yangcai. Liu helped lead the charge to erect a non-historic figure sculpture in 1988, but XMU refused for three reasons. One, the sculpture was not a human figure. Two, the students had no money to build it. And three, given Yunguang was a senior, leaders doubted he had time to finish the project.

Although the leadership was almost unanimous in its disapproval, Yunguang was unperturbed and lobbied the leaders even as he had lobbied for the English club. As Xi Jinping likes to say, even drips of water will eventually penetrate rock. The school eventually conceded.

“I was bold,” Yunguang said. “I asked the Finance Department to ask all of the 1,700-plus graduate students to donate RMB2 each and for the School of Economics to also donate, but they indignantly argued, ‘You want to make a sculpture, and donate it to the school but then force every student to donate for it? You are obsessed with this!’”

When the School of Economics Party Secretary called Yunguang to his office, the youth was not cowed. “We will build this sculpture, and engrave the names of all participating departments in its base,” he said. “The School of Economics does not need to participate. Please just confirm this, and I will remove your college name from the base.”

“To avoid being left out, the school not only participated but even increased its contribution,” Yunguang said.

I wondered where Yunguang got his assertiveness, and was not surprised to learn that both of his parents, who are now in their nineties, were soldiers—his father a well-known general who later served as the dean of one of the Academy of Sciences.

“The atmosphere in our military family was very strict,” Yunguang said. “I had to study hard. I originally wanted to study architecture at Tsinghua University but my mother balked at this because one of my two sisters had already studied this. Happily for me, I still have opportunities to pursue my youthful dream of architectural design today because I’m in charge of church design in Nanjing. My staff are architectural designers and I often oversee their church designs and volunteers in the church.”

After his mom refused to let him study architecture, Yunguang applied to study engineering at XMU. “I met my wife right after I entered XMU—a beautiful girl from Gulangyu of Xiamen who, like me, was also a good student. At that time, XMU banned dating between the students, and a foreign language classmate was expelled for having a relationship. I was not expelled, though. While others met their dates in secret in the woods, we hid in plain sight in the lighted basketball court. We married two years after graduation.”

“What do you think have been the greatest changes in China?” I asked.

“Chinese look at China’s changes differently from foreigners,” Yunguang said. For him (as for me, actually), the greatest changes were not those that could be easily seen and quantified but the invisible changes. “When I graduated from XMU, it was hard to get permission to stay in Xiamen, but since my wife was from Xiamen, in 1990 the school leaders helped me to get a good job in a Taiwanese-funded company. Companies from overseas were popular back then because even though the work was hard there, the salaries were also high, so inland people vied for jobs in Xiamen, Shenzhen and other coastal cities. That was phase one — the preference for overseas companies.”

“Going to Sea”

“After working for the Taiwanese boss for six years, I realized I was not going to be promoted soon. I capitalized upon the rapidly developing economy to start my own business. Entrepreneurs had many opportunities as China’s economy transitioned from planned to market. The phrase ‘Go to sea’ (xiahai) became popular as many officials and academics, including those at national level, left their careers to go into business or run industries. This was phase two.”

As if these opportunities were not enough, along came the stock market! At first, opportunities were limited because foreign exchange accounts were strictly controlled, which made international business difficult. Yunguang also had to contend with foreign trade quotas. To save costs, his brother moved his company to Jordan, which was able to export products to the US and Europe tax-free, which of course gave their firm a big edge over less savvy competitors.

“Another challenge was that private companies had far less access to bank loans than the large state-owned companies, and China’s private companies at that time paid some of the highest taxes in the world. Half of our income went to taxes. The two major problems for private companies were lack of money and high taxes. But in spite of the challenging environment, China’s private enterprises were still able to make money. And we were extremely competitive when we went abroad. We Chinese are hard-working, and sales from our company in Irbid, which at its peak had 8,000 Chinese workers, exceeded the GDP of the entire country of Jordan. My brother of course had a very good relationship with the King of Jordan.”

“As Chinese became more confident abroad, we moved labor-intensive industries overseas and at home we focused more on high tech. But private enterprises still face many challenges. A government friend said that of RMB800 billion earmarked for economic development, only 10 percent was for private enterprises. But China is implementing many new policies to help struggling private enterprises.”

“You have a fascinating story,” I said to Yunguang. “But what really intrigues me is why, when private enterprises have such formidable challenges, you suddenly moved from your very profitable business of making games to producing education programs. What was your motivation, and how has it affected your profits?”

“We were leaders in games in China,” Yunguang said. “And even in Japan and South Korea. But after I became CEO, I decided to drop games because of their bad influence on children. We switched to education — and not just the math, physics and chemistry of the college entrance exam but the four courses of music, art, sports and technology. Our company is now leading yet again, but this time we are helping children, not hurting them, and the education bureau is using my products to teach children singing and painting.”

His four courses reminded me of Confucius’ curriculum some 2600 years ago. Westerners often question the “practicality” of the ancient Confucian curriculum, but China’s scholar bureaucrats were actually quite creative and pragmatic and able to solve the nations’ problems. And as Western research has shown, scientists who have hobbies such as music or art are more likely to become Nobel Prize laureates.¹ Root-Bernstein’s research revealed,

Nobel laureates were almost three times as likely to have arts and crafts avocations as Sigma Xi members and the US public, and about 50 percent more likely to have such avocations than Royal Society or National Academy of Sciences members.

This insight is nothing new. Almost a century earlier, in 1911, E.L. Thorndike² wrote,

Artistic ability, as in music, painting or literary creation, goes with scientific ability and matter-of-fact wisdom. The best abstract thinker will be above the average in concrete thought also.

While I admired Yunguang’s courage in going cold turkey and switching from gaming to education, I wondered if it was financially feasible. “Was it hard to switch from gaming to education?” I asked.

“No, because our programmers are amazing. The technology is the same for either games or education. In fact, games have much higher technological requirements than education, and it was quite easy to shift focus. But while games are played by millions of people at a time, fewer people at one time use educational software — except of course near exam time.”

“You’ve shared about changes in the economy, and the challenges facing private businesses, but what other changes have you seen?” I asked.

“There are so many. The large-scale infrastructure and transportation improvements are obvious, and people enjoy vastly better clothing, food and housing. But it is also very important to note the changes in education and culture. Now that Chinese understand the West better, we no longer blindly worship the West. It is now obvious to us that the West also has many shortcomings, and there are many things we must learn for ourselves. We no longer need to have such low self-esteem and look to the US as so powerful and No.1 at everything. The US is also facing very big problems. And no matter how powerful the US is, China will soon overtake it, and by 2025 China will be the leading power, primarily because of technology but also because China is serious about solving many social problems.”

“And how will China do this?”

“President Xi Jinping is very smart,” Yunguang said. “He has many ideas that are obviously correct. One is the Chinese Dream; another is the Belt and Road Initiative. The Chinese Dream is to let us all have goals and to once again be the world’s No.1 as we were during the Tang, Song, and Ming dynasties. We have 5,000 years of unbroken history, and our self-reliance will allow us to become No.1 again. In addition, the Belt and Road Initiative is using Chinese methods to positively influence the world. China’s method is infrastructure construction.”

“Yes,” I said. “Thirty years ago, the Chinese said, ‘If you want to prosper, first build roads.’”

“Only good infrastructure can facilitate trade,” Yunguang said. “And people can move. As the old Chinese saying goes, ‘Trees move to die, people move to live.’ When people can move, things improve. With good roads, high-speed rail and bridges, trade grows, we can make money, and the world will continue to improve. Chinese are good at this, but some other countries are not. I drove a highway to the Los Angeles airport and it has needed repair for decades. And the hi-speed railway from Los Angeles to Francisco can’t be finished.”

Planning for this Los Angeles to San Francisco hi-speed railway began in 1992 but only in 2015 did actual construction begin after having spent US$650 million in planning. The 2029 deadline was extended to 2032, and then in 2019 California’s Governor Newsom admitted publicly that it could never be completed. As I ask my graduate business students, “What hope would China have had if the nation had built its infrastructure in this manner?”

“Such problems show that some things cannot be solved by American democracy,” Yungang said. “The Communist Party of China also speaks of democracy, but some things can only be done when all parties work together in unity, avoiding quarrels. No nation can compare with China at this, and this is why we are No.1 in the world.”

Yunguang is thankful that he began his business career just as reform and opening up were taking off. He prospered, but “now I want to use my remaining years to do something meaningful. So, I and my business friends decided to do only three types of business. The first is education—real education, not just for making money. The second is environmental protection and organic food. Xiamen Yuanchu Food was started by a good friend, and he began by importing and exporting food. I asked them, ‘Why can’t we sell such quality food to Chinese consumers?’ When they explained it was 20–30% more expensive than other foods, I argued that people would still pay a premium price because they were worried about pollution in the air and ground. And sure enough, the business is doing very well and will be listed soon. The third type of business my friends and I do is medical care and retirement facilities. China has many retirees, so my wife is building a nursing home now. We can build more, so that we can offer cheap or free care for the elderly, but we need to find people who know how to run them.”

Yunguang was excited not only about the transformations in China but also about the great changes in XMU, his alma mater. “XMU has not only changed but it has become much bigger and has had many firsts such as XMU Malaysia — China’s first overseas campus. And teaching has changed — mostly good but also some not so good. I want to cooperate with XMU but it must focus more on real research and not just writing articles. Everyone wants to make money and become a professor but not many want to do the hard work of scientific research. And I hope that XMU will not only excel at technology but also be a university of warmth. XMU has 10 times more alumni than present students, and it should think about how to involve us more.”

“You obviously still have strong feelings for XMU,” I said.

“My time at XMU was the happiest of my life. I met my wife there and we’ve now been together for 35 years. Some people have told me that I can’t work with my wife but we’ve worked together very well.”

“I have a last question,” I said. “You’ve shared many changes in China but what do you think will be the next change or opportunity?”

“Huawei is a good example,” Yunguang said. “Huawei is the future, but not just Huawei. Huawei represents China and Chinese enterprises such as Xiaomi. Although Tencent, Baidu and 360 are very large companies, I don’t like what they do. They are all big companies but not good companies. But Huawei is not only a large company but also a good one. More companies like Huawei will appear in China, and they will have good influence on a global scale. China already leads the world in some technology, and as more Chinese companies lead the world, our country will become stronger. Examples include controllable nuclear fusion. This technology, which we will realize by 2050, will make electricity very cheap. And we already lead the world in graphene, and quantum communication. There are many other examples.”

China is indeed beginning to lead the world in more and more ways, but fortunately for the rest of the world, throughout history China has sought peaceful cooperation, not domination, even 1000 years ago when China’s economy, technology and military were far more powerful than those of any other nation. And over the past three decades that I’ve witnessed the growth that Yunguang discussed, China has continued to grow and innovate. But given my own military experience, and the West’s five centuries of ceaseless warfare, I’m thankful that China to this very day seeks prosperity only through peaceful means.

I hope that this does not change.