By David Barboza
NY Times: Monday, January 15, 2007

HONG KONG — Just five years ago, Zhang Yin and her husband were driving around the United States in a used Dodge Caravan minivan, begging garbage dumps to give them their scrap paper.

She and her husband, who was trained as a dentist, had formed a company in the 1990s to collect paper for recycling and ship it to China. It was a step up from life in Hong Kong, where she had opened a paper-trading company with $3,800 to cash in on China’s chronic paper shortages.

“I remember what a man in the business told me back then,” Zhang Yin said. “He said, ‘Waste paper is like a forest. Paper recycles itself, generation after generation.’”

Zhang took that memory all the way to the bank. As a result of her entrepreneurship, she is now richer than virtually any other woman anywhere in the world, including Oprah Winfrey, Martha Stewart, and the chief executive of eBay, Meg Whitman. Her personal wealth is estimated at $1.5 billion or more.

Her companies take heaps of waste paper from the United States and Europe, ship it to China and recycle it into corrugated cardboard, which is then used for boxes that are packed with toys, electronics and furniture that are stamped “Made in China” and then often shipped right back across the ocean to Western consumers.

After the boxes are thrown away, the cycle starts all over again.

Late last year, Forbes magazine named Zhang the wealthiest woman in China. She may even be the richest self-made woman in the world, challenging a handful of others, like Giuliana Benetton, who started the Italian clothing company with her brothers, and Rosalia Mera, who co-founded Zara, the Spanish clothing retailer, with her former husband.

Most of the world’s richest women inherited their wealth: from the Walton sisters of Wal-Mart fame to the daughters of the men who created Mars candy bars, L’Oréal cosmetics and BMW.

But not Zhang. She started out from a modest background, the daughter of a military officer. Now she dominates the world’s paper trade through her giant companies, one centered in Dongguan, just outside Hong Kong, and the other based in Los Angeles.

“She’s a visionary,” said Herman Woo, an analyst at BNP Paribas, which helped her large paper company list shares in Hong Kong. “She doesn’t mind putting a lot of money in at the beginning, to build the company.”

That company, Nine Dragons Paper, is now the biggest paper maker in China. It raised nearly $500 million when it went public in Hong Kong last March.

Since then, shares of Nine Dragons have quadrupled, giving the company a market value of more than $5 billion. The Zhang family controls 72 percent of the company, which makes it one of the richest families in China.

Zhang’s smaller venture, America Chung Nam, which is based in Los Angeles, is one of the world’s biggest paper trading companies, with ties to recycling yards in New York, Chicago and California.

No other U.S. company sends so much material to China, in as many containers, as America Chung Nam, which was named the top U.S. exporter to China by volume for the fifth consecutive year in 2005, according to Piers Global Intelligence, which tracks import and export data.

Now, with the paper industry shifting to China, where labor and land are cheaper, Zhang and Nine Dragons are vowing to take on the world’s global paper giants, like International Paper, Weyerhauser and Smurfit Stone.

“My goal is to make Nine Dragons, in three to five years, the leader in containerboards,” Zhang said emphatically during a short interview in her Hong Kong office. “My desire has always been to be the leader in an industry.”

Zhang rarely grants interviews, and when she does, they are brief and controlled by an army of handlers.

Zhang does not go into detail about how she made her fortune. In a society known for close ties and hidden deals between government officials and business leaders, she says simply, “I’m an honest businesswoman.”

Zhang was the oldest of eight children born into a military family from northern Heilongjiang Province, near the Russian border. During the Cultural Revolution, which began in 1966, her father was sent to prison, like millions of others who were branded “counterrevolutionaries” or “capitalist roaders.”

When the Cultural Revolution came to a close in 1976, her father was released from prison and “rehabilitated.” She went to work as an accountant.

After economic change got under way in China in the early 1980s, she moved to the southern coastal city of Shenzhen, one of the first areas in China allowed to experiment with capitalism. There she started working for a foreign-Chinese joint venture paper trading company.

In 1985, she ventured to Hong Kong, which was then still a British colony. Ng Weiting, who was her partner in Hong Kong in the 1980s, says Zhang was driven and tough and had figured out how to get the best performance out of those who worked for her.

“When her employees asked for a pay raise, she would grant it if it was reasonable,” he recalled. “But when her employees made mistakes, she would criticize them severely. She made it clear when to reward and when to punish.”

Analysts say Zhang’s ebullient personality made her a great saleswoman and a savvy deal maker.

There were occasional threats from competitors, but being a woman was not a problem, Zhang said.

“Actually, I didn’t find it difficult,” she said. “I found men respected me.”

After Hong Kong’s paper market proved too small for her ambitions, she moved to Los Angeles in 1990 and married for the second time, to Liu Ming Chung, who was born in Taiwan, grew up in Brazil and is fluent in English.

Together, they formed America Chung Nam. At the time, China’s fast- growing economy was suffering from shortages of raw materials, and the country began looking overseas for scrap metal and used paper. Zhang Yin was one of the first to sell scrap paper to China.

China’s own paper products are poor quality, often made from grass, bamboo or rice stalks. Most paper made in the United States and Europe is derived from wood pulp.

America Chung Nam quickly made deals with American scrap yards and began shipping huge containers of paper back to China. The demand grew so fast that in 1995, Zhang (who also goes by her Hong Kong name, Cheung Yan) returned to China to found Nine Dragons, opening her first paper making facility in Dongguan, a major manufacturing hub in the bustling Pearl River Delta region near Hong Kong. Liu now is the chief executive; Zhang is the chairwoman.

A decade later, the company has 11 giant paper making machines, 5,300 employees, $1 billion in annual revenue and a huge new facility under construction in the country’s other booming export hub, the Yangtze River Delta area near Shanghai. Reported profit last year rose 349 percent to $175 million.

Nine Dragons is now one of the fastest growing paper companies, and yet it says it cannot keep up with demand for container board, the material used to make boxes, because of the booming growth in the Chinese economy and exports.

Foreign paper companies have been slow to build a sizable manufacturing base in China, Analysts doubt they will catch up any time soon. And Chinese manufacturers have advantages. They burn cheap coal rather than clean but expensive natural gas. And they are capitalizing on less expensive labor and the newest machinery, while paper makers in the United States and Europe are often using less efficient machines from the 1970s and 1980s.

“It’s very difficult for U.S. companies to get into this business now,” said Woo at BNP Paribas. “I heard five or six years ago they looked at opportunities but they didn’t do anything.

“Right now,” Woo added, “the largest globally is Smurfit Stone. Weyerhauser is No. 2. By 2008, Nine Dragons could be No. 1.”

Analysts have been nearly unanimous in their praise of Zhang, though she came under some criticism for appointing her 25-year-old son as a nonexecutive member of the Nine Dragons board of directors.

But Zhang vigorously defends the appointment, saying her son is qualified and Nine Dragons is, after all, a family company. She has a second son in high school. And her younger brother, Zhang Chang Fei, is the company’s deputy chief executive.

Zhang jumped to No. 5 this year in the Forbes ranking of the wealthiest people in China, from No. 107 last year, largely because of the huge public stock listing.

She has not lost her ambition, though. Sometimes called the Queen of Trash, she doesn’t disown the title. But, she said, “Some day, I’d like to be known as the queen of containerboards.”