CHEUNG YAN: CHINA’S PAPER QUEEN
i) Summary of the case
Cheung Yan, the co-founder of the Nine Dragons Paper Holdings Company has been one of the richest woman in China with a fortune of US$ 1.35 billion back in November 2006. Cheung was a truly successful business leader in Asia. She started off by setting up a paper recycling unit called America Chung Nam in the United States as the market in Hong Kong was too small for her ambition. The unit collected waste paper and shipped them to China from United States. She soon realized that there was a huge opportunity for her in China as the demand for export packaging were rising. In 1990, Cheung took a bank loan together with the support of her brother and husband, she successfully established Nine Dragons in Dongguan, China. The unit started off with two paper machines and made 600,000 tons of kraft linerboard per year.Cheung’s vision was to make Nine Dragons the biggest ,most efficient and environmentally friendly paper company. It was expected by 2009 Nine Dragons would be Asia’s top producer of packaging paper and the first in the world in terms of production capacity. Fortunately as of August 2008, Nine Dragons was already the largest producer of containerboard products in China in terms production capacity. Cheung’s success was attributed to Nine Dragon’s strategy to produce at lower cost and economies of large scale production. In terms of efficiency, Nine Dragons continually looked at technological improvements to achieve higher product quality. Also, Cheung played an important role in balancing between the strategic controls and the financial controls of the company.

ii) Chronology of the case
Cheung Yan, also known as Zhang Yin was born in 1957 in Loaning province, north-east China.
Cheung experienced early hardship when she started working for a textile company at a young age as she was lacked of formal education in order to support her mother and seven siblings with a pay of only US$6 per month.
In 1985, the 28-year-old Cheung moved to Hong Kong, working as an accountant at a Chinese trading company which however closed within a year.
With just US$4000 in savings, she set up a waste-paper trading business instead of looking for another job because she saw an opportunity in China’s chronic paper shortages.
Cheung left for the United States in 1990 as the market in Hong Kong was too small for her and despite the fact she spoke very little English.
Together with her husband, she started a paper trading unit called America Chung Nam where the unit collected paper for recycling from all over the United States and shipped it to China.
The potential for manufacturing paper in China’s fast growing economy made Cheung returned back to China in 1995.
Financing from a bank and the support of her husband and brother, Cheung set up Nine Dragons in Dongguan, China.
By 2006, the company had an annual production capacity of 3.3 million tons of containerboard with ten paper machines running and five more under construction.
She, her husband and her brother continued to have a major say in the company’s affairs. In February 2006, Cheung appointed her 25-year-old, Lau Chun Shun as a non-executive member of the Board of Directors.
By 30 June 2007, Nine Dragons had successfully installed 13 paper making machines and the average utilization rate of these machines was an impressive 94.6%
As of August 2008, the company was the largest producer of containerboard products in China in terms of production capacity. iii) Key issue in the case
The key issue in this case is how effective strategic leadership can lead to success. Cheung possessed qualities and abilities that turned her into a successful business leader. Cheung was able to become successful in China where established paper companies have failed because she believed that one day China would be like Europe or the United States. Cheung’s vision and strategy were clear as she put a lot of effort and determination at making Nine Dragons the world’s leading paper manufacturing. In this case, Cheung’s strategic leadership provides direction for the growth and success of Nine Dragons. Cheung was able to look at the big picture when she moved back to China by setting up Nine Dragons from scratch. Strategic leader will constantly convey their vision until it becomes a component of the organizational culture. Cheung was open to new ideas and innovation as the company become the first-mover in the industry.

iv) Case discussion questions
1. What is strategic leadership?
Strategic leadership can be defined as the manager’s ability to influence the organization and the workers to make day-to-day decisions that lead to the organization’s long-term growth and survival. Also, it is about how well a manager can maintain their financial health of the organization. A manager with strategic leadership skill would contribute to the organization’s well-being and constantly checking progress and performance to better see the vision, mission and the values of the organization. This shows effort and determination in one self. In Cheung’s case, her desire was to be the leader in an industry. Success however didn’t come easily as she had to start from the bottom in order to get to the top. Cheung was working really hard and all the hardship she experienced was all a part of the journey.

2. What would constitute key strategic leadership actions? What are the key elements of a ‘Balanced Scorecard’?
One of the key strategic leadership actions involves managing the human capital.By having a vision of what the organization can and should become and offering new ways to better understand the challenges and opportunities. Cheung believed that Nine Dragons people were one of its critical success factors. She would ensure opportunities for transfers and promotions to improve overall staff development. A leader would honor and acknowledge every worker’s value to the organization. Besides that, a leader should maintain a good relationship with the government. Cheung had always maintained a good and conflict-free relation with the government. An organization should have an effective organizational culture. Nine Dragons become the first-mover in the industry.Cheung supported innovativeness by being open to new ideas and creative processes. Another key to strategic leadership action is to portray ethical practices. No matter how bad the problem might be, Cheung was able to solve it in an ethical way. Last but not least is to have corporate social responsibility. The key elements of a ‘Balanced Scorecard’ can be seen from the financial perspective. Cheung would ensure the consistently profitable Nine Dragons remains financially stable. In terms of customer perspective, a manager should measures the level of customer satisfaction, customer retention and market share held by the organization. Cheung had correctly predicted the huge demand for the paper that Nine Dragons produced. The internal business processes consists of measures such as cost and quality related to the business processes. The Nine dragons had installed 13 paper-making machines by June 2006. Learning and growth perspective consists of measures such as employee satisfaction, employee retention and knowledge management. Cheung introduced the “3R” principles of “Reduce, Reuse and Recycle” in order to launch lightweight linerboard products in China.

3.How has Cheung Yan seen such success as a strategic leader? What are the quality she possesses?
Cheung has a clear vision to be a leader in the industry. Her plan was to make Nine Dragons the “world’s leading fully integrated paper manufacturer, from forestry to paper”. She wanted the company to capitalize on the large scale economies of the paper–making industry to become the largest packaging paperboard manufacturer in the world. She worked really hard over the past few years to achieve her vision for the future of Nine Dragons. The quality that she possesses is humility. Great leaders are those who are strong and decisive but also humble. Cheung set up Nine Dragons from the bottom. She did not received any proper education. But instead, she started working at early age to support her family. Second, the quality of courage means she was willing to take risks in the achievement of her goals with no assurance of success. Having very little experience, she believe that she can be successful just like anyone else as long as she have the courage to do so. With courage, she proved to the world by successfully setting up Nine Dragons.