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Yangtze Business Daily News● Changjiang Business Daily reporter Wang Jing

Over a century and four generations, the wealthy Thai Seah family has worked hard to build the Charoen Pokphand Group, which has annual sales of nearly US$100 billion.

In the 1920s, the Charoen Pokphand Group was founded by the Thai Chinese brothers Chia Yichho. Remembering their roots, the Chia family continued to increase their investment in China. The Charoen Pokphand Group became one of the multinational enterprise groups with the largest foreign investment in China and the most investment areas, and it has grown along with China's prosperity.

Interestingly, despite its huge assets, Charoen Pokphand Group has not been deeply involved in China's capital market. It currently only owns one Hong Kong-listed company - China Biologic Products (01177.HK).

However, through various shareholding methods, the Xie family participates in the domestic capital market in all aspects. Behind many listed companies, there is the shadow of Charoen Pokphand Group, including many industry leaders, such as Ping An of China and CITIC Group in the financial field.

At present, the power transition of the Xie family has come to the fourth generation. Its important representative company of the big health sector, Sino Biopharmaceutical, is managed by the siblings Xie Qirun and Xie Chengrun. They have deeply cultivated the Chinese innovative drug market. From the performance point of view, in the first half of 2024, Sino Biopharmaceutical's operating income and net profit attributable to the parent company reached 15.87 billion yuan and 3.02 billion yuan respectively.

However, according to the latest "Thailand Rich List 2024" released by Forbes, the Xie family, which has been the richest family in Thailand for more than ten years, has fallen to second place, with its wealth shrinking from US$34 billion to US$29 billion.

It is another round of power transfer. Can the new generation lead Charoen Pokphand Group to continue its glory?

Drink water and remember its source, invest heavily in China

When hearing the familiar name Charoen Pokphand Group, many people will think of the "Charoen Pokphand Variety Show" broadcast on CCTV at the end of the last century. This "explosive" program is an important symbol of the media sector of the Charoen Pokphand Group.

The CP Group is a Thai consortium whose founder, Xie Yichu, was born in Chaoshan, Guangdong. In the 1920s, Xie Yichu went to Thailand to pan for gold with 8 silver dollars. He was good at agriculture, so he started selling Chaoshan rapeseed in Thailand. Soon after, he opened a shop called "CP Village" in Bangkok and called his younger brother Xie Shaofei and his uncle Xie Qinglin to work together. The CP Group was born. Xie Yichu also had four children: Xie Zhengmin, Xie Daming, Xie Zhongmin, and Xie Guomin.

Xie Guomin is the second generation of the Xie family. He was born in 1939. When he was 11 years old, Xie Yichu sent him back to China to study. When he returned to Thailand, the CP Group, which was run by his uncle Xie Shaofei, had become large-scale and formalized under the advice of his brother Xie Zhengmin, and entered the feed industry and began to lay out in the agricultural field. After several years of experience, Xie Guomin took over the position of general manager from his second brother Xie Daming and took over the family's core feed business.

Under Xie Guomin's leadership, the CP Group has transformed from a simple family business to a more modern one. He invited professional managers to manage the business and set a rule that family members are not allowed to enter the company's core business, the agriculture and animal husbandry industry.

In 1969, Xie Guomin became the chairman of Charoen Pokphand Group. Under his leadership, Charoen Pokphand Group developed rapidly and entered the Fortune Global 500 for the first time in 1987.

At that time, China opened its doors to foreign investment. Xie Yichu, who was already in his eighties, still had his heart set on his motherland. Charoen Pokphand Group became the first foreign investment group to come to China.

As one of the first foreign-funded enterprises to enter the Chinese market, CP Group also enjoyed the dividends of reform and opening up. By 1998, CP Feed's market share in China had reached 10%. Xie Guomin also came up with a "CP Model", namely the model of "local government + financial institutions + leading enterprises + professional cooperatives", so that farmers can develop modern farms at low cost through policy support and low-interest loans from banks. Some people regard CP Group as the "Whampoa Military Academy" of China's agriculture and animal husbandry.

In addition to the core agricultural and animal husbandry sectors, Charoen Pokphand Group owns Charoen Pokphand Feed, Charoen Pokphand Food, Charoen Pokphand Seeds, etc.; in the wholesale and retail sector, Charoen Pokphand Group has created a variety of business formats such as CP Lotus, Charoen Pokphand Fresh, Charoen Pokphand Catering, and Charoen Pokphand E-Commerce; in the real estate sector, it owns a number of landmark buildings such as "Charoen Pokphand Plaza", "Charoen Pokphand City", and "Charoen Pokphand Center"; in the industrial sector, it has created Yichu Industrial; in the financial sector, it has successively invested in Ping An Group and CITIC Group.

In the Chinese market, as of now, Charoen Pokphand Group has established more than 600 enterprises, with subsidiaries spread across all provinces, cities, and autonomous regions, with nearly 100,000 employees and a total turnover of RMB 180 billion in 2023. It is one of China's multinational enterprise groups with the largest foreign investment and the most investment areas.

Four generations of relay, steady development

By deeply rooting in China, the second generation of the Xie family successfully expanded and strengthened the company. Today, Charoen Pokphand Group has become a behemoth spanning more than 10 fields including agriculture, animal husbandry and food, wholesale and retail, telecommunications and television, finance, real estate, pharmaceuticals, and machinery.

For such a large group, Xie Guomin is also very cautious about succession. He believes that no matter the age, the capable one should take over, which also leads to his education of his descendants being as strict as his father was to himself. He once said: "Children should be placed at the feet of the master, rather than letting them become bosses right away."

Due to the rule set by Xie Guomin that "children should not be allowed to enter the core industry", the three generations of the Xie family had to explore new fields and prove their abilities. Therefore, Xie Guomin's eldest son Xie Jiren explored finance and real estate, the second son Xie Hanren was responsible for the supermarket chain, mainly developed in China, and the youngest son Xie Rongren worked in the telecommunications industry.

Among them, the supermarket chain managed by the second son, CP Lotus, was once highly expected by the group and was listed in 1981. However, the development of CP Lotus was not satisfactory. In 2008, Xie Guomin's eldest son Xie Jiren took over CP Lotus, and Xie Hanren chose to leave the core of the CP Group. Unfortunately, with the passage of time, despite struggling for nearly 40 years, CP Lotus was still delisted in 2019.

In 2017, Charoen Pokphand Group once again underwent a power transition. Xie Guomin resigned as chairman and CEO, and his eldest son Xie Jiren took over as chairman of the group, while his third son Xie Rongren took over as CEO.

It is worth noting that in addition to Xie Guomin's children, the next generation of his eldest brother Xie Zhengmin has also made great contributions to the development of the CP Group. Another growth sector of the CP Group in China, Sino Biopharmaceuticals, was founded by Xie Zhengmin's eldest son Xie Bing.

Currently, Sino Biopharmaceutical owns subsidiaries such as Chia Tai Tianqing, Beijing Taide Pharmaceutical, and Jiangsu Chia Tai Qingjiang Pharmaceutical, and was listed on the Hong Kong Stock Exchange in 2000. The company started out with liver disease and cardiovascular and cerebrovascular drugs, and currently has several major sectors: anti-tumor drugs, liver disease drugs, respiratory system drugs, surgical/analgesic drugs, and cardiovascular and cerebrovascular drugs.

Currently, China Biopharmaceuticals has also undergone the fourth generation of power change. It is now managed by Xie Bing’s children, with brother and sister Xie Qirun and Xie Chengrun serving as chairman and CEO respectively.

China Biopharmaceuticals has also adopted the Xie family's system of separation of management and operation, and hired Li Yi, former chairman of JPMorgan Chase China and chairman and president of UBS China. It is reported that his annual salary is nearly 50 million yuan.

During Li Yi's tenure, like many pharmaceutical companies, Sino Biopharmaceuticals has made large-scale mergers and acquisitions, such as acquiring Belgian respiratory inhalation preparation company Softhale and a majority stake in mRNA vaccine company pHion through its overseas subsidiary invoX, and acquiring a stake in Sinovac Biotech in 2020. Benefiting from the dividends of the new crown vaccine, Sino Biopharmaceuticals made a huge profit of 14.61 billion yuan in 2022.

China Biopharmaceuticals, which has been deeply involved in the Chinese market, was also affected by the centralized procurement, and its profits once fell sharply. To this end, the company transformed into innovative drugs and began to "slim down" and divest non-core businesses. Since October 2023, the company has successively divested assets representing general medicines and commercial flow businesses such as Zhengda General, Suzhou Tianqing, Lianyungang Zhengda Tianqing, and Zhejiang Tianqing.

On August 13, Sino Biopharmaceutical released its first half performance for 2024. During the reporting period, the company's operating income, net profit attributable to the parent company, and adjusted net profit attributable to the parent company were 15.87 billion yuan, 3.02 billion yuan, and 1.54 billion yuan, respectively, up 11.1%, 139.7%, and 14% year-on-year, respectively.

In the first half of the year, the company's generic drug and innovative product revenues were 9.74 billion yuan and 6.13 billion yuan, up 9% and 14.8% year-on-year, respectively. The latter accounted for 38.62% of the total revenue. During the reporting period, the company had four innovative products approved, three of which were Class 1 new drugs.

However, the main reason for the doubling of net profit in the first half of the year was the sale of Chia Tai Qingdao shares. The transaction price was 1.819 billion yuan, and China Biopharmaceutical recorded a profit of 1.71 billion yuan.

Next, it will be worth looking forward to whether innovative drugs can lead the growth of China's biopharmaceuticals.