Neoglory Jewelry: Setting Sail

Yu Jiangbo, the eldest son of Ms. Zhou Xiaoguang, President of Neoglory Holdings Group, in 2008 returned home from the UK, where he had spent seven years studying, and joined Neoglory Jewelry Co., Ltd. as Assistant to the Deputy General Manager (GM) of Marketing. Two years later he was appointed General Manager of Neoglory Jewelry Co. and put in charge of the Group’s jewellery business. As a young manager his leadership has been effective so far, not only has he made his mother proud, he has also begun a new chapter for Neoglory Jewelry.

20130626135631530.jpg

Founded in 1995, Neoglory Holdings Group is a privately-held conglomerate active in the fashion jewellery business, as well as the investment, commerce, trade, and real estate sectors. With total assets exceeding RMB 10 billion, the Group owns 21 wholly-funded subsidiaries and shareholding companies. The jewellery business was the first foray into entrepreneurship by Zhou Xiaoguang and her husband Yu Yunxin, and it remains the cornerstone of their business operations. Although he studied financial investment in the UK, unlike most second-generation rich, Yu Jiangbo decided that rather than pursuing a career in the investment sector he would hone his leadership skills in his family’s jewellery business.


Returning to the fold at a critical moment

Although they contemplated passing the mantle on to their eldest son, Zhou Xiaoguang and Yu Yunxin had never made their intentions clear. However they did decide to groom Yu Jiangbo to succeed them. The global financial crisis of 2008 accelerated their succession planning. Upon graduation Yu Jiangbo landed a job in a foreign-funded bank. It was his first job and he cleverly sensed that despite the global financial crisis, China’s rapid economic growth still offered many business opportunities. He decided that rather than be one of many employees in a foreign enterprise, it would be better to develop himself along with his family business.

“With no knowledge about the industry, you can’t be a good investor,” he said frankly. “You need to learn how to run a company and organize a competent team; otherwise your investment will go down the drain.” Though it requires a lot of effort, industry can help improve a manager’s leadership skills, and thus Yu Jiangbo went to work at Neoglory Jewelry as Assistant to the Deputy GM of Marketing.


Learning the hard way at the grassroots level

Since a good manager needs market insight and an understanding of customer needs, Zhou Xiaoguang began helping Yu Jiangbo broaden his experience in the market, enabling him to get familiar with the products, gain insight into the market and consumers, and understand the company and its market positioning. When he began working with the company’s local offices, Yu Jiangbo didn’t know much about the industry. Moreover, it would take some time for him to gain a full understanding of his company. His lack of experience presented many challenges. He needed to learn how to marry ideas with market conditions, integrate existing teams and get along with senior employees. Subordinate to the Deputy GM and GM, he had to deal with other professional managers in addition to his mother. Instead of trying to insist on his own ideas and suggestions, he made an effort to communicate with other managers according to the principle of mutual respect.

When it came to decision-making and management control, it took a long time for Yu Jiangbo and Zhou Xiaoguang to adapt to one another due to their generation gap, which influenced their management philosophies, business ideas and the manner in which they evaluated people. Though able to reach some compromises, on matters of principle or that were of great significance, they would each cling to their own point-of-view. To help mediate, they would invite suggestions from a third party, such as a consultant or other entrepreneur.


Assuming the role of a young manager

Yu Jiangbo was appointed GM of Neoglory Jewelry in early 2011. He faced great pressure in the new role, as he had only been working at the company for two years. Before deciding on her son’s promotion, Zhou Xiaoguang met with middle level and senior managers at the company. She insisted that during the business succession, Neoglory’s middle managers and senior employees should offer their ideas on the best approach to grooming the next generation of business leaders to ensure the sustainable future development of the company. She also expressed her hope that all executives would put the same effort into nurturing the companyur second generation of business leaders as she had put into launching her company.

While Yu Jiangbo was working as a salesperson in Neoglory Jewelry, some like-minded employees wanted to help promote the company’s reform and development. Knowing that the young manager had to demonstrate his leadership with an outstanding business performance, they stood ready to fulfil the business’ target within just three to six months.

Zhou Xiaoguang thought highly of her son’s great courage to take on responsibility. During his two years working at the grassroots level, Yu Jiangbo was admired by a team of senior employees for his down-to-earth style. Zhou Xiaoguang had appointed three general managers from outside the family who were experienced in the succession process. She began to notice that unlike her family, the professional managers always regarded themselves as employees rather than owners of the company. They lacked an acute sense of responsibility and total devotion to their duties. Regardless of his capability, Yu Jiangbo considered himself the owner of his company and demonstrated strong enthusiasm and commitment to the work. On the other hand, some of the competent professional managers failed to see their role in the company and did not have a positive attitude.

Zhou Xiaoguang’s original management approach put family relationships ahead of corporate rules. Yu Jiangbo, however, insisted that in corporate governance, established rules should take precedence over family relationships. Despite his considerable degree of flexibility in enterprise management, he refused to compromise on his principles. Zhou Xiaoguang did all she could to help her son manage the company. When some of his ideas could not be implemented in Neoglory Jewelry, she would transfer her son to the parent company for a transition period in order to help remove some obstacles for him.

During the business succession process, particularly after his appointment as General Manager, there was seldom friction between Yu Jiangbo and his mother. Though Zhou Xiaoguang gave her son considerable freedom in management, as she thought too much intervention would make it difficult for him to exercise his leadership, she did try to improve his management approach. For example, she believed her son had a better understanding of the segment of the jewellery market that was aimed at consumers born in the 1980s and the 1990s, as he could identify the needs of his peers. Thus she gave her son a free hand to demonstrate strong leadership while trying to shore up his deficiencies.


Transitioning and upgrading

Since assuming his current post, Yu Jiangbo has emphasized brand building. Neoglory Jewelry has transitioned from being a manufacturing company into an enterprise based on branding and distribution channels. Neoglory Jewelry was recently renamed as Neoglory Jewelry Industry. Due to China’s weak system for protecting intellectual property rights (IPR), competitors can quickly copy the jewellery products that the company invests time, energy and capital to develop. Therefore, Neoglory must develop its own channels and create private brands. Due to rising domestic labour costs, Yu Jiangbo is phasing out the company’s manufacturing business. With the exception of some core techniques, most production processes have been outsourced to external partners. Yu Jiangbo has his own ideas for the Group’s strategic framework.

“Jewellery is the core business, while the Group focuses on the investment and real estate sectors in the short- and mid-term timeframe,” he said. “Neoglory’s continous prosperity depends on a diversified business, in which the jewelry business lies at the heart.” The Group’s private brands must also be competitive in the European and American markets by taking different approaches that draw from the hands-on experiences of its overseas counterparts.


Family Committee

Zhou Xiaoguang had the idea of setting up the family committee, which is currently chaired by Yu Jiangbo. Neoglory Group invited Prof. Joseph P.H. Fan, an expert on family businesses in Hong Kong, to be a consultant to the committee and offer a neutral point of view. All family members are required to participate in discussions and reach a consensus on the company’s business plans.

The idea to establish the family committee and family charters came to Zhou Xiaoguang and Yi Jiangbo when they realized the importance of intergenerational communication during the business succession process. In their opinion, a company that is built to last will make efforts to clearly define many rules of order on the corporate front, including making plans for the cultivation of second-generation business leaders. When drawing up the family charter, Neoglory Group recognized some professional managers from outside the family who would be granted equity and a lifelong role. Zhou Xiaoguang and Yu Jiangbo are also exploring ways to fuse family relationships with clear corporate best practices and rules that cover the operations of both the company and the family.

The family committee will focus more attention on the development issues within the family. The family charters will set out the rules of order regarding family members’ decision-making and resolutions. It will remain the role of the shareholders and board of directors to decide on corporate issues. Mixing family relationships with corporate decision-making can be prejudicial to both the family and the company. As far as Zhou Xiaoguang is concerned, figuring out the best way to separate the management from the ownership of the company will continue to require some trial and error.