According to local media reports in Indonesia, the Red Lion Group, founded by Zhang Xiaohua, finalized a super contract during a visit to China by officials from the Indonesian Ministry of Investment: the cement giant from Zhejiang plans to invest $5 billion in Indonesia to build an industrial park covering polysilicon, batteries and components. If the investment is fully landed, it will have the opportunity to create a new record of investment in the domestic photovoltaic industry in Southeast Asia and even in the world.
China Entrepreneur contacted the relevant personnel of the marketing and administrative departments of Red Lion Group on this matter, which was not confirmed, and the company did not provide more relevant information.
Apart from holding the second camp of silicon materials in early 2023, Asian Silicon Industry, the photovoltaic industry has little impression of Zhang Xiaohua and Red Lion Group.
"Completely do not understand", even in private exchanges, many people in the photovoltaic industry are not optimistic, that this type of overseas super project, its "publicity significance" is far greater than practical significance. Especially at present, photovoltaic enterprises have begun to call for overall production restriction and shutdown to cope with cyclical problems, and few enterprises invest in new production capacity.
Red Lion Group is not listed in the capital market. According to public media reports, the company achieved sales revenue of 72.3 billion yuan in 2023. By the end of September 2024, the monetary capital owned was 11.941 billion yuan, and the asset-liability ratio was 54. The above financial information has not been confirmed by the company. In May
2023, Red Lion Group ranked third in the industry in the "Top Ten List of Total Sales of Cement Clinker in China in 2022" released by China Cement Network Cement Big Data Research Institute. The second 
in 2002, it was only an annual output of 1 million tons, with assets of 1. It took him five years to increase production capacity to nearly 20 million tons and enter the main battlefield. Since then, it has made great strides to surpass its competitors, most of which are state-owned enterprises and large listed companies. In the past ten years, the
cement industry has experienced complex changes in policy and supply-demand relationship. Zhang Xiaohua's style of play from the initial industry "do not understand", to now have their own school, the industry's general evaluation of his grasp of market changes is very accurate.
His own internal conclusion is that when the cement industry is in an upward cycle, scale is the key. In the downward cycle, operating cash flow is the key. Looking at the timeline, Zhang Xiaohua has done a lot of extremely radical expansion, but at a very critical point in time, he has achieved "restraint". At the annual business meeting held in January
2023, Zhang Xiaohua's report entitled "Based on the main cement industry, enter the polysilicon industry, build a" cement + polysilicon "dual main industry pattern", first proposed to create a "second growth curve". It is clear that the main cement industry should be "strong as the main and big as the supplement", while the photovoltaic industry should speed up the layout and form a scale.
In fact, Red Lion Group has invested 15.5 billion yuan and 29.5 billion yuan respectively in the past two years to build silicon production capacity in Xinjiang and Qinghai. The polysilicon production capacity of the two projects is 100000 tons and 200000 tons respectively, and there are more than 370000 tons of industrial silicon production capacity. If all of them are put into production, and then join the Asian Silicon Industry's production capacity of nearly 100,000 tons, Red Lion Group can enter the top three of the polysilicon track and wrestle with Tongwei and Xiexin.
In the cement industry, is the "counter-cyclical king" who is already familiar with the cycle going to replicate the photovoltaic industry again? In the late 1980s, after graduating from Zhejiang Building Materials School at the age of 20, he directly entered Lanxi No.5 Cement Plant, where his father was the director of the factory, starting from the director of the laboratory, and was soon promoted to deputy director.
Under the wave of enterprise restructuring, he made a prompt decision to contract the cement plant. In 1994, Zhang Xiaohua, 26, and other shareholders founded Lanxi No.6 Cement Plant and invested 15 million yuan to build a 100,000-ton production line, which can be regarded as the first private joint-stock cement plant in Zhejiang.
His strategy in the initial stage is to "hold high and hit high".
First, expand production capacity in Zhejiang. At the beginning of 2004, on the basis of the original two production lines with a daily output of 2500 tons, another production line with a daily output of 5000 tons was expanded. As a result, Hongshi Group has an annual production capacity of 5 million tons in Zhejiang market and has become the largest single cement production enterprise in the province.
After the resumption, Zhang Xiaohua said that in 2005, he launched the strategy of "going out of Zhejiang and developing across provinces", but at that time, Red Lion Group's entry into Jiangxi and Fujian markets was widely questioned by the industry. The traditional industry view is that cement is a "short-legged product", the entry threshold is not high, regional layout is an important way to form enterprise control, the most taboo is cross-regional "pepper noodles".
But Zhang Xiaohua, who has been in the Zhejiang market for more than ten years, also has enough business logic support. In the next few annual business meetings, he mentioned the understanding of the Zhejiang market: "In those two years, the national cement industry is depressed, a loss.". Compared with the national market, the most competitive Zhejiang market has the highest cost and the lowest price. On August 23,
For Zhang Xiaohua, the regional layout is under greater pressure when the market goes down, which requires strong capital and policy support, and as a private enterprise, risk diversification may be a "unconventional" way to live.
By 2007, the overall production capacity of Red Lion Group had exceeded 15 million tons, reducing the production capacity of Zhejiang market to one third. This made it possible, including the Year" of China Building Materials, Zhang Xiaohua's goal is to produce more than 30 million tons in 2010 and enter the top five in the industry. At that point, this remark made him a "fool" in the industry for a while. In August
2007, he received an investment agreement from Goldman Sachs, which, in his previous description, essentially solved the problem of expanding funds. Negotiations between the two sides began in 2005 when the cement industry was in the doldrums. Zhang Yi, managing director of Goldman Sachs Asia, mentioned that after many contacts, he deeply felt the management team's accurate grasp of the macro situation, decisive decision-making ability and excellent execution ability. So during the 2008 international financial crisis, Goldman Sachs chose normal delivery, when a large number of insiders were worried about whether Goldman Sachs could fulfill its contract.
The Red Lion Group is expanding at the rhythm of "opening a province a year". First, Jiangxi and Fujian began to take Sichuan as the center in 2008, covering the whole southwest market.
Although Red Lion Group did not enter the top five of the industry in 2010, its production capacity far exceeded the previously planned 30 million tons. In the external introduction at that time, the total assets of the company were 12 billion yuan, and the new dry cement production capacity was 50 million tons.
Since October 2010, sales records have been broken every month.The cumulative sales volume in October was still 2.91 million tons, and in March of the next year, it became 376. The background was that production and operation in many regions were affected at that time, and enterprises with high energy consumption were required to stop production and give up electricity. When
Zhang Xiaohua attacked, he often "piled up" production capacity in a region. At that time, the production capacity of the cement industry was relatively scattered. For example, in less than five years, the production capacity of Red Lion Group in Fujian reached 9.5 million tons through self-construction and acquisition, and it became the double champion of production capacity and sales. It was in 2007 that two production lines with a daily output of 5000 tons were put into operation, which made it the largest single cement enterprise in Fujian.
In 2008, the real estate market around the country entered the rising channel, including high-speed rail, highway and other infrastructure also entered the scale construction cycle. Based on the production capacity landed in the past few years, Red Lion Group has eaten up the "dividend". Its speed is getting faster and faster. When it opened up the western market, the regional production capacity was close to 20 million tons in less than five years.
2013 is an important node of Red Lion Group. It ranked ninth in the list of the top 100 annual production capacity released by China Cement Network, only about 5 million tons behind the eighth place. At this moment, Red Lion Group has entered the main battlefield, because it has become the first private enterprise in the cement industry, and all the competitors it has to face are large state-owned enterprises and listed companies. At the stage of
rapid expansion, Zhang Xiaohua was 30 to 40 years old in his life. "He was very decisive, had many ideas, and advocated new things and new models." People in the industry who have contacted him told China Entrepreneur.
In 2006, Red Lion Group began to try to export, and the cement enterprises in Zhejiang market had no relevant experience at all. At the beginning of the year, the exporters who came to inspect were very satisfied with the products, and then brought foreign businessmen to see them. The other side proposed that if it could follow the "British BS196 Standard", it would place an order of 600000 tons. I don't know
what the standard is, and there is no ready-made information. But Zhang Xiaohua insisted on doing it, and finally the team searched all the standardization departments and companies in the country, and finally found a Shanghai company to complete the test. In May of that year, the first batch of cement was successfully exported. In the second half of
2006, the cement industry ushered in a rare small peak season in the downturn. Zhang Xiaohua demanded that various effective measures be taken to achieve full-load production.
Red Lion Group is only a "private village enterprise", which is different from the conservative strategy of many similar enterprises. At that time, the team quickly purchased the right to use 40 train wagons, which was the first time that it used its own train wagons to transport cement, greatly improving the supply capacity of transit depots in coastal cities and firmly grasping a wave of orders. When
deciding to operate across regions, Zhang Xiaohua's first action was to deploy ERP, which was still a new thing at that time and only partially landed in some industries. His understanding of this is that the implementation of ERP is a good way for the company to realize the transformation from single enterprise management to group operation, from visible management to invisible management, from emotional management to system management.
Around ERP, all management processes are grouped in the group. For example, the biggest change in the sales plan in 2008 is to bring the branch factories into the unified assessment, determine the annual sales tasks of the subsidiaries, and re-divide the sales areas. Each branch factory no longer fights separately, but unifies the big legion to fight.
Including the subsequent introduction of Goldman Sachs as an investor, Zhang Xiaohua is evaluating from the perspective of the "national market", which actually laid the foundation for the rapid expansion of the whole. At the business meeting, he mentioned that after the rapid development of the company, competitors have undergone essential changes, facing state-owned enterprises or listed companies supported by large international consortia.
"Our capital is raised by shareholders, which has become a bottleneck restricting the development of the company.". To find the ladder to the new platform, we must introduce strategic investors. He said.
Zhang Xiaohua always mentions building a "lion" team. Although he does not have a more detailed explanation of this definition, he can roughly guess the literal meaning. Red Lion Group's strategies vary from place to place, and Zhang Xiaohua attaches great importance to the efficiency between production capacity and sales. Starting
from the site selection of the factory, the factors such as mine, market, mixed materials and transportation conditions should be considered comprehensively. Under the large-scale and high-specification standards, the lowest cost scheme should be sought, and the goal is to become the most competitive cement enterprise in a single point or a small area. Later, the
industry had a relatively unified methodology, building clinker bases in areas rich in limestone resources, building grinding stations in areas with convenient transportation and great market potential, and separating production links to achieve overall efficiency.
But around 2005, there were few entrepreneurs with this kind of overall awareness in the same size company as Red Lion Group. When entering the Fujian market, Zhang Xiaohua put forward the so-called "Hercynian Strategic Concept", choosing Zhangping, Sanming and other inland cities bordering Jiangxi, landing clinker production lines, and then cooperating with the coastal Zhangzhou to build grinding stations, thus realizing the mode of "producing in the west and selling in the east".
At that time, the Red Lion Group, which had just entered the Fujian market, was not optimistic. Although the competitive pressure is not as great as the Zhejiang market, the former local enterprises " have to rely on "careful calculation.". Red Lion Group has an unwritten rule that as long as the cement production line is built, it must be equipped with low-temperature waste heat power generation projects, so as to reduce production costs. For a long time, the average power consumption per ton of cement of Red Lion Group has been several degrees lower than advanced level of the industry determined by the relevant state departments.
In the years of leapfrog development of orders, Zhang Xiaohua in the summary report of the business conference, the weight of "economic and technical indicators" is juxtaposed with sales performance, and coal consumption and electricity consumption are announced every year.
When expanding the regional market, the outside world thinks that Zhang Xiaohua is a "barbarian". But looking at these decisions from Zhang Xiaohua's perspective, we can find that he is pushing back from the cost item. From Zhejiang, Jiangxi to Sichuan, Zhang Xiaohua's understanding is to develop the market along the Yangtze River.
In his view, although the cement industry has obvious regional protection, the rich logistics of the Yangtze River offsets this regional advantage. Enterprises along the Yangtze River can choose many cement manufacturers to buy cement, which is extremely advantageous to rely on the characteristics of the Yangtze River waterway when the market goes up, and can expand the sales radius. Therefore, expanding production capacity and competing for sales in market segments can achieve the greatest results.
Red Lion Group has only launched large production lines with a daily capacity of more than 5000 tons in various places, which makes it easier to control capital and financial risks after the process is skilled. Zhang Xiaohua focuses on an indicator-current liabilities per ton of cement. The value of Red Lion Group is 70 yuan/ton , which is almost unsurpassed in the industry. Many enterprises are 300-400 yuan/ton in this value. The more the
war went on, the more it was found that the Red Lion Group was not an "upstart" or a "grass team". Zhang Xiaohua often mentioned at business meetings that enterprises need to rely on systems, processes and technical specifications in order to expand rapidly to the national and global markets.
In the recruitment notice issued in March 2022, the top two are the deputy general manager of the process it department and the deputy general manager of the R & D center, with an annual salary of 1 million to 1.5 million yuan, which is much higher than 600000 to 1 million yuan for the same positions in the marketing, finance and supply departments.
Turning to photovoltaic
Zhang Xiaohua is not "ignorant" of photovoltaic. In 2022, Red Lion Group set up a number of new energy companies to deploy distributed photovoltaic power generation projects in the plant area.
For example, in September 2022, Hongshi Group invested in the construction of 16. The original intention is to reduce costs and increase efficiency, which is similar to the logic of supporting low-temperature waste heat power generation projects. At the same time, the photovoltaic project was put forward as a highlight at the business meeting of Yongzhou, Hunan Province in early May
2023. The principle of Red Lion Group is to "approve and build" and vigorously promote the construction of photovoltaic projects of subsidiaries. It is said that 36 subsidiaries have completed the project filing in 2022, with a total capacity of 252 MW, and a total capacity of 115 MW has been built.
Zhang Xiaohua also proposed for the first time to explore the two-wheel drive mode of "new energy + cement industry". At the previous year's business meeting, he only mentioned "promoting the research and application of low-carbon technologies such as intelligent manufacturing, photovoltaic + energy storage, alternative fuels". Just after the annual business meeting, Red Lion Group completed its holding of the Asian Silicon Industry.
The Red Lion Group did not release more detailed information.However, according to media reports, after the completion of the transaction, Red Lion Group will hold more than 68% of the total equity of Asia Silicon Industry at a cost of more than 8 billion yuan. At the end of
2020, Asia Silicon submitted an application for listing, and in May 2022, the application was terminated. During this period, the company has responded to three rounds of inquiries from the SFC. This is also the stage of soaring polysilicon prices, with the average sales price rising from less than 60,000 yuan/ton in the first half of 2020 to more than 210,000 yuan/ton in the first half of 2022.
However, with the expansion of leading companies such as Tongwei and Xiexin, the competitiveness of Asian silicon industry, which ranks outside the top five in the industry all the year round, has been greatly affected. Asia Silicon has also mentioned that the company's operating performance and profitability are greatly affected by price changes. If the price drops sharply in the future, the company will face the risk of gross margin decline and operating performance fluctuations.
Asia Silicon Industry is one of the polysilicon production enterprises supported and invested by Suntech in Wuxi in the early stage to solve the problem of raw material supply. Under the impact of the international financial crisis in 2008, external investors gradually withdrew, and Wuxi Suntech acquired a controlling stake. In the view of the industry, this asset was not scarce, and Red Lion Group did not encounter much competition in the bidding at that time.
But for Zhang Xiaohua, this is a "shortcut". He mentioned at the business meeting in early 2024 that the use of "mergers and acquisitions + new construction" to enter the polysilicon industry can reduce uncertainty, and mergers and acquisitions of enterprises with technology, brand, channel and team advantages can quickly enter the industry.
At this time, he has made it clear that the photovoltaic industry should be heavily stocked. Zhang Xiaohua's strategic positioning of the main cement industry has become "strong as the main, big as the supplement", from the pursuit of scale expansion to cash flow growth. He said that due to the overall impact of infrastructure construction, the cement industry should shift from "de-production" to "de-capacity", the value of cement business should shift from "asset scale" to "cash flow creation capacity", and provide financial support for cement to cross the cycle and enter polysilicon.
"Polysilicon is in the upstream of the photovoltaic industry, with strong premium ability, matching with the organizational ability of Red Lion, which can realize the transfer of organizational ability; the polysilicon industry pattern has not yet formed, and new entrants still have opportunities for growth." Zhang Xiaohua clearly demanded that first-class enterprises should cooperate with first-class units, select first-class design institutes, first-class technology and first-class equipment to achieve first-class economic and technological indicators and competitiveness. "New projects should be able to pass easily at the lowest point of the industry."
Industry speculation, Zhang Xiaohua may choose the "main point of attack" is the Southeast Asian market. Because the domestic photovoltaic industry has experienced a price war for more than a year, the sales price has generally been lower than cost price. Even if the new production capacity has technological advantages, the management efficiency of Red Lion Group is higher, and it is difficult to produce essential differences. In March
2015, Red Lion Group and Nepal Hope Cement Group formally signed a cooperation agreement, with a joint investment of US $300 million to build a production line with an annual output of 3 million tons. This is the fourth cement project signed by Red Lion Group in Southeast Asian countries after the implementation of the "going out" strategy.
Zhang Xiaohua copied the path of the previous "Blitzkrieg" to the Southeast Asian market. In 2013, Red Lion Group set up a special overseas regional department. In more than a year, seven production lines with a daily output of 6000 tons or 8000 tons have been planned and invested in Myanmar, Nepal and Indonesia.
"Overseas projects are very difficult, the problem is very complex, we have no experience, can not swarm.". We must be very careful when choosing the market, and we must have friendly relations with our country. Zhang Xiaohua's request to the team is that the cooperating countries and partners should be clear, all procedures must be complete, the mine is a one-time purchase, and the interests and partners are tied together to reduce mistakes. The experience of regional expansion accumulated in the
past has played a great role in this round of negotiations. For example, a joint venture project in Nepal has been prepared by Red Lion Group for more than three years in advance. The reason for choosing here is that there are only more than 40 cement factories in the country, but the demand is growing at the rate of 10% to 15% per year, and the output of domestic factories can not meet the demand at all. As a result of the final negotiation, the Red Lion Group invested 70% and the local partners invested 30%, and then quickly built a competitive factory in the local market. When referring to the internationalization strategy,
Zhang Xiaohua said that "give first and take later", we should bring the world-class cement technology, technology, equipment and management overseas, improve the overall level of the cement industry in the host country, and create new benefits for the local people. In July 2015, Red Lion Group built a cement production line with a daily output of 5,000 tons in Henghe County, Laos. The project site is only about 100 kilometers away from the capital, which is the nearest cement plant with obvious location advantages, which is totally unimaginable in China. Since 2019,
the Indonesian market has been the main battlefield of Red Lion Group in Southeast Asia. In June of that year, Red Lion Group signed a cooperation agreement with its partners in Indonesia for a cement project with an annual output of 10 million tons, with a total investment of about US $1 billion. The project is even equipped with a large wharf, which will become one of the largest cement enterprises in Southeast Asia after putting into operation, and its products will cover all countries in Southeast Asia.
This good relationship between government and business may explain why Red Lion Group chose to build a factory here "against the trend". In the past year, the photovoltaic industry has been "fleeing" Southeast Asia and shifting production capacity to the Middle East, Africa and South America. Whether
Red Lion Group can use new ideas to break the current predicament of the domestic photovoltaic industry remains to be tested by time. But "cold winter" more than a year, suddenly appeared a new player to open the posture to attack, but also to add some sunshine to the industry.
