Making the most of Poland’s WTO entry
During the late 1980s and early 1990s, drastic changes occurred abruptly among the socialist countries in East Europe as this “extended family” disintegrated.
In the initial weeks of 1990, the earliest news to shock the world was that Erich Honecker, secretary-general of the East German Socialist Unity Party, had been dismissed by the party’s own Central Committee. Then Czechoslovakia announced the establishment of a coalition government in which the Communists held just a few posts, and the new president was an independent. Soon after, it was revealed that the secretary-general of the Bulgarian Communist Party had got the sack.
In East Germany, at least one million residents on the move from the Soviet Union and Eastern Europe crossed over the collapsed Berlin Wall, and scrambled into West Germany.
On December 12, 1990, the Polish president Wojciech Jaruzelski gave a farewell speech to his people, before handing over authority to a new president. The foreign ministers of 24 western countries held a conference in Brussels and promised to provide US$4 billion in financial support for Lech Walesa’s package of economic reforms.
Like other Chinese students overseas, Yang Bin, who was busy studying and doing part-time jobs in Holland, also paid close attention to the massive changes occurring in Eastern Europe.
In 1991 Lech Walesa was elected as president of Poland, and called for opening up the entire country. Overnight, Poland entered the World Trade Organization (WTO). Applying his powers of observation, Yang Bin could sense that the East European market would gradually open up, offering big business opportunities.
For an entrepreneur, the ability to exploit opportunity is of the utmost importance.
Yang Bin reckoned the first step in starting a business was to make the right choice. He had studied in Holland and conducted surveys in Europe, so he was very familiar with the continent. But he knew China even better.
Decisions such as what industry to enter and where to start the business are critical to success. Yang Bin chose a place where the competition wasn’t yet in place. Reasoning that Poland would be the first market to take off within Eastern Europe, he registered a private firm in Warsaw—the first ever in post-communist Poland, an act that attracted much attention in local and international media.
Yang Bin invested more than US$20,000 in his new trading firm, money that he had saved from part-time jobs in Holland. He flew back to his hometown, Nanjing, where he had good connections among comrades from the military academy, classmates, teachers, friends and relatives. He told them his ideas. In return, he received advice and access to their network of relationships. Not only could he purchase good-quality, inexpensive garments and daily-use articles from Jiangsu township factories, he was also introduced to managers at state-run silk and textile I/E corporations in Jiangsu.
Liu Jian, general manager of Jiangsu Textile I/E Corp. in the 1990s, told me the story of how Yang Bin got in touch to purchase textiles.
“I first met Yang Bin around 1995 when he’d already been doing business in Eastern Europe for one or two years. At first, he was cooperating with Jiangsu Province Silk Corporation. The Silk Corporation and our Textile Corporation were separate firms, though our office buildings were next to each other. Friends in the Silk Corporation introduced him to me, and he began buying garments from one of our affiliates.
“Yang Bin was a little over 30, not as fat as now, and he worked very hard. At the very beginning, he knew nothing about textiles, but he was a quick learner. I noticed that the textiles he ordered were already outdated in the U.S. and Western Europe, but they were still considered the most fashionable in the Eastern Europe.
“I also strongly recommended to him that he take a look at some textiles still in the factory that were originally intended for the US and Europe,” continued Liu Jian. “As market trends and popular styles in these regions changed very quickly from one season to the next, prices for products we couldn’t sell within a certain period would have to be marked down. But even these slightly less fashionable items for the US and European markets were still hot in Eastern Europe. We quoted low prices so it was a real bargain for him. If he took advantage of this opportunity, he would be able to make a good profit.”
[Caption: Interview with Liu Jian, former general manager of Jiangsu Province Textile I/E Corp.]
“Why? These textiles were leftovers originally intended for export to the US and Europe, and we were even thinking of disposing them on the domestic market. If he was willing to buy them, we could solve our inventory problem and earn foreign currency for China too, so we were happy to sell him these goods. In fact, we exported only to the US and Europe, and were unfamiliar with Eastern European market. But with his knowledge of that market, Yang Bin should have made a lot of money! ” (1)
At the outset, Yang Bin just imported clothing and daily necessities to Poland from Jiangsu.
In Holland Village during one of our nighttime chats, Yang told me the story of how he did business in Poland. “At that time, I paid five yuan for a T-shirt from Jiangsu. But I could sell it for US$4 or $5 in Poland. At four a.m. each morning, I delivered my clothes to the counter, checked each box carefully and displayed my samples one by one. And as soon as the plaza was open, my products sold like hotcakes. ”
After the business got off the ground, he imported a wider range of China-made goods, such as toys, cotton yarn and silk products, to Eastern Europe and the Commonwealth of Independent States. Within a period of just two years, his total assets reached US$20 million. He also registered his own company in Holland, Holland Euro-Asia Corporation. That was his “first pot of gold”, earned during late 1994 to early 1996.
Xu Xun, a reporter with the Hong Kong Commercial Daily, interviewed him about this.
Xu Xun: “I would like to know how you made your ‘first pot of gold’—US$20 million in Poland.”
Yang Bin: “Many people don’t understand why I went to Poland. At that time, I had just a few tens of thousands of US dollars to my name. That wasn’t enough to develop a business in the West. But the opening of the Polish market gave me an opportunity to make money by importing clothes and light industrial products, and I earned US$20 million buying low and selling high.
“I could have made US$40 million. I realized things were on a downward trend and I should have exited right then, but I lingered and so I only made US$20 million in the end. But if I hadn’t seen the writing on the wall, I would have gone bankrupt. So a good businessman should know when to cut and run.” (2)
With his keen eye, Yang Bin spotted and took advantage of good business opportunities. He understands the wisdom of the saying: “A good opportunity never knocks twice”.
And he positioned himself accurately. Yang Bin told me, “I know both Europe and China well, and I want to avoid competition. Why should I compete? It’s just like in a war— avoid being ambushed, and choose undefended locales to strike the enemy. Learn from the British and American forces when they invaded Europe by landing in Normandy. We need to pounce upon the enemy at his weakest spot. ”
That’s how Yang Bin earned his “first pot of gold”.
As soon as overseas Chinese students knew there were big profits in selling China-made goods to Eastern Europe, the Commonwealth of Independent States and Russia, a horde of so-called “International profiteers” rushed in to make a killing. Overnight, the market became very competitive.
But Yang Bin had foreseen that this kind of trading would be short-lived, and had already prepared for a strategic change of direction.

Training his sights on modernizing agriculture in China
Yang Bin decided to terminate his business in Eastern Europe and concentrate his efforts on finding new business opportunities in Holland. But his capital had shrunk by almost one-half due to his short-lived hesitation about getting out.
Yang Bin returned to Holland. He found he couldn’t compete with the Taiwanese in computers, or with the Dutch in real estate. So he began to conduct some surveys of Dutch society.
Renowned for its windmills and dikes, the country is located in Western Europe. Although it covers an area just 40 percent the size of Jiangsu Province with a population equivalent to Beijing’s (16 million), Holland is the seventh largest trading country, and sports an annual per capita GDP exceeding US$25,000, ranking tenth worldwide.
The world’s second largest exporter of vegetables, Holland dubs itself “the European Vegetable Basket,” and almost three-quarters of the European Union’s vegetables originate there. Farmland covers two million hectares, half of it pastureland where 1.5 million cows graze and produce 11 billion kilos of milk annually.
Other statistics illustrating the country’s agricultural muscle include: Holland’s per capita agricultural exports, at US$48,691, are the highest in the world; space devoted to greenhouses in Holland accounts for one-quarter globally, making Holland the leading nation in this category; and the country is number one worldwide in terms of flower production and egg exports.
Yet without significant advantages in terms of land or natural resources, Holland rose quickly to become a great modern agricultural country. It relied on popularization of modern agricultural equipment and a focus on high-efficiency production.
Yang Bin knew many Chinese diplomats in Holland, and they all encouraged him to introduce Holland agriculture to China. This attracted his attention.
Yang Bin began to research the industry’s secrets of success. He visited all the famous vegetable and flower companies in Holland, spending one week in each. He eventually discovered two significant factors. Firstly, the glass greenhouse. The Dutch were proud to say that without their greenhouses, there would be no modern Dutch agriculture. Secondly, refrigeration. The Dutch believed that without refrigeration, Holland wouldn’t have its 70 percent international market share in vegetables and flowers.
He also studied the process of China’s reform and opening to the world, as well as its agricultural modernization. With the farmland system reform in rural areas (a contract system linking remuneration with output), Chinese farmers gradually had enough food for their family and were earning an annual income of 1,000 yuan. But they still relied on the (unpredictable) weather and their industriousness to accumulate a small amount of wealth. This was the so-called “peasant economy”, a way of thinking and management developed during an age of “agricultural civilization” in the distant past.
Bluntly put, agriculture in China was essentially still at the “starting line” of primitive agriculture, while Dutch agriculture had reached the stage of modern industrialized farming. An average Dutch farmer was earning US$250,000 a year. That’s the difference between modern agriculture and primitive agriculture. This finding shocked even Yang Bin himself.
Now he had a dream. He wanted to introduce Dutch agriculture to China so that Chinese farmers could experience such a wealthy lifestyle. By then, he was acutely aware of the business opportunities in bringing high technology to China’s agriculture sector.
In 1996, Yang Bin decided to invest in China’s agriculture, and to import the Dutch agricultural model. Many of his Chinese friends in Europe didn’t understand his logic. Why, they wondered, did Yang Bin want to return to China to be…a farmer? At that time, there were more than one million Chinese residing in Europe, not one of them working in agriculture. Most were doing business in advanced machinery, computers or chemical products.
But once Yang Bin had made up his mind, he would stick to his guns. He had chosen to go into the flower and “green agriculture” business. So he threw himself into the wholesale markets in the major cities of China to get a feeling for supply and demand. The Chinese adore flowers, and so wholesale flower markets were very crowded. He also discovered that most of the flowers were grown in greenhouses with basic, outdated equipment. The enterprises running this business were in urgent need of advanced greenhouse facilities.
Yang Bin was inspired by the outlook for even better conditions thanks to the policies of reform and opening, and he could imagine that the living standard of the Chinese people would be greatly improved as a result of those policies. All these signals gave him greater confidence to invest in China’s agriculture sector.
Between late 1996 and early 1997, he took over two Dutch companies. One was a greenhouse company with a 70-year history, the other a refrigeration company. These two firms were the platform he used to launch Dutch agricultural model in China. Both companies were now under his wholly owned firm, the Holland Euro-Asia Group, headquartered in Leiden, Holland.
Very soon, he signed contracts with wholesalers from Beijing, Shanghai, Dalian, Guangzhou and Chengdu. He flew overnight to Holland to organize supply. A few days later, the first batch of Dutch flowers, seedlings, and seeds—valued at US$10 million—were delivered to his customers. And within a very short period of time, all these products were in the hands of China’s consumers, sold out in a flash.
At the end of 1997, Yang Bin rented three offices on the tenth floor of the Wantong Building, New Century Square, located on Fucheng Menwai Street, to serve as the Beijing-based branch office of the Holland Euro-Asia Group. He then formally commenced his project of importing the Dutch agricultural model into China.
The vice-president of the Shenyang Euro-Asia Group and one of the most senior employees of the Group, Li Gang, recalled when Yang started his business in Beijing. “At the end of 1997, I was introduced to Yang Bin through a friend of mine. He was still at the initial stage of his business, transitioning from pure international trade, to joint investment, and production. I handled corporate image for Euro-Asia Group at that time. Later, I was put in charge of office administration, general management and various projects.”
“In March 1998, I accompanied Yang Bin in Xi’an, Shijiazhuang, Shandong, Shenyang, Dalian, Changchun and Zhuhai, to discuss many projects, primarily the establishment of industrialized production bases. In April, the Laitai Flower Market in Beijing was completed. That was a joint venture between Yang Bin and Sun Palace County in Chaoyang District. It was basically a large-scale flower exhibition hall and a marketplace. In May, we summarized our survey results for the various cities we had visited. These summaries covered our initial observations, planning, feasibility studies, development prospects, regional location, local government policy support, and so forth.” (3)
Shi Jun was another of Yang Bin’s senior staff who has been with him since he started the business in Beijing. Shi is currently vice-president of the Euro-Asia Group. “I joined Euro-Asia Group on April 15, 1998 when Yang Bin had only three office units on the tenth floor of Tower B in Wantong New Century Square,” he recalled.
“That was the time when all provinces in China were planning to establish ‘modern hi-tech agricultural demonstration zones.’ Euro-Asia Group not only sold flowers, seeds, seedlings, and greenhouse equipment, but also provided technical support and equipment installation. Therefore, we were very busy. Our customers had to queue up for our products and services, since we were fully booked.
“On April 18, my third day in the company, I joined the opening ceremony of the Laitai Flower Market. It was really lively. Customers had come from all over China. As I understand it, in 1996 and 1997, Holland Euro-Asia Group, Sanhe City Forestry Bureau of Hebei Province, and Jiangsu Province Textile I/E Corporation had jointly organized the ‘Holland Tulip Exhibition’, which caused a sensation in the industry.
“Via those exhibitions, Yang Bin established good relationships with players in the fields of domestic agriculture and flower cultivation, and agents of agricultural products. Many of these old customers and friends showed up for the opening ceremony of Laitai Flower Market.
“The Beijing market for Dutch flowers was crazy, literally ‘red-hot.’ In the past, the flowers one saw in China were mostly from Yunnan or Guangdong. But Laitai Flower Market offered a totally different choice, with a great display of high-end flowers, shapes and new species from Europe. It was the first time for Chinese people to see anything like it, and the response was very intense.
“The Chinese always trust what they see. If you simply promote nice vegetables and flower seeds, nobody would give you the order. But if you arrange an eye-catching sample demonstration, then many wholesalers, suppliers or even farmers will fight to get your products. Sometimes they quarrelled with each other just to be able to buy some new species. Occasionally the varieties we introduced were for limited offer and priced quite expensively. Some seeds were charged at 60,000 yuan per kilo.” (4)
Yang Bin introduced the Dutch sales model to his native country. A flower auction—that was a first for China.
In May 1997, Euro-Asia Group established 14 branch offices in cities such as Beijing, Shanghai, Wuhan, Shenyang and Chengdu. From then on, China began importing foreign flower brands. Demand for these foreign brands was increasing at 20 percent annually. According to statistics from China Flower Industry Association, in the 1990s, 70 percent of fresh Dutch flowers available in China were imported by the Euro-Asia Group.
The training Yang Bin received in the military academy had helped him to assess matters strategically. He positioned himself wisely, making use of his knowledge in Europe and even greater familiarity with China.
Before introducing the Dutch agricultural model to China, he analyzed it in detail. He knew that he already had in hand four of the five critical elements: a market, greenhouse technology, refrigeration for transportation and scientific management. What he lacked was financial support. He needed a strong cash flow to realize his dreams.
You can say that Yang Bin entered China’s agriculture industry already able to “walk on both legs.” One leg advanced into the flower trading market, while the other took strides in applying high-tech to the agriculture industry, i.e., by trading greenhouse equipment.
With further reform in China, more and more enterprises entered the business of modern agriculture. Many cities and provinces were also eager to develop their own “high-tech agriculture.” This trend caused China’s demand for greenhouse equipment to skyrocket.
All eyes were on Holland. But Yang Bin applied a low-cost strategy to successfully grow his market share in greenhouse equipment, defeating Dutch greenhouse equipment producers and resellers. He compared this competition to “the car battle between [Germany’s] Mercedes-Benz and [China’s home-grown two-door] Xiali. ”
“The price of a Dutch greenhouse was almost twice mine. They overestimated the purchasing power of Chinese farmers. Of course, their products were much better than mine. But for the Chinese farmers at that time, they were happy enough to have ‘Xiali-class’ products. A Benz? That was too luxurious for them. I won this competition because I had a better knowledge of the China market.”
This success netted Yang Bin a 90 percent share of the market for greenhouse equipment in China.
Although his first two steps towards the modernization of agriculture in China involved only trading, his success won him tens of million US dollars in profit. Together with the earlier profits from importing clothing for East European consumers, he had already accumulated more than US$100 million in net assets. His investment in the Beijing Laitai Flower Market was also doing quite well. By this point in time, he had established a strong enough cash flow to promote the “Dutch agricultural model” at full speed in China.

Footnotes:
1. My May 16, 2002, interview with Liu Jian at Holland Village.
2. Refer to page A5, October 5, 2002 edition of the Hong Kong Commercial Daily.
3. My May 13, 2002, interview with Li Gang at Holland Village.
4. My May 16, 2002, interview with Shi Jun at Holland Village.