Postcards From Tomorrow Square (6 page)

I delicately asked whether he needed such a plane now, or if he could wait two or three years for one of the many small jets currently being developed. Without waiting for translation he said, in Chinese, “Now! Now!” As I began to say (gulp) that no such plane existed at the moment, I saw his face cloud. So I backtracked and said I would call a friend at NASA who was the world’s expert on exciting new aircraft, to see if he knew of one. “Fine!” said Zhang. “Let’s call him now!” Well, it was 3:30 a.m. on the U.S. East Coast. Maybe we could wait an hour or two?

Airplanes deferred for the moment, Zhang spent half an hour talking about himself, his company, and his vision for China. Every second of that time, he was in motion around the room, talking as if dictating to scriveners. Zhang Yue is a short, very trim man, forty-six years old; his black hair appears undyed, and his face is youthful and smooth. “I have not taken a medicine in eighteen years!” he said at one point with pride. Nervous energy may be the key to his fitness. Like many Chinese nouveaux riches (I am told), he is impatient and indulged. Unlike many American plutocrats, he has no formality or stuffiness. I enjoyed being with him. Suddenly he decided that he’d had enough—and with a reminder that we’d meet that evening, after I called my NASA friend, he was gone.

China, like America, is too big, complicated, and contradictory to have any “typical” or representative character. Zhang Yue is no more representative of today’s China than a fur merchant like John Jacob Astor or a press baron like William Randolph Hearst was representative of the America of his time. But certain prominent characters are interesting because they are so clearly
of
their culture’s moment in history. Astor was of the era in which natural resources were being turned into fortunes, and those fortunes turned into social standing. Hearst built his fortune in the age of large urban markets and converted it, with mixed results, into political influence and the artistic legacy of his castle. Zhang is of the moment when China has opened the door to ambitious people with entrepreneurial plans. And to me he is more interesting than many others superficially like him, because he suggests an answer to one fundamental question about the China of the era to come. The question is what China will dream of as its dreams of money begin to be realized. Most people will be poor, far into the future. But tens of millions of Chinese are already able to think of more than just getting by. Zhang, it turns out, has more than making money and buying as-yet-undeveloped planes on his mind.

ZHANG OF THE BUSINESS WORLD

Depending on the rankings, Zhang Yue stands somewhere between twenty-fifth and fiftieth on the list of the richest people in China, with assets worth as much as $300 million; Broad Air Conditioning has no debt, and last year it had annual sales of about $300 million. His wealth does not appear to be based principally on political connections, which have obviously been crucial in the formation of other empires—in real estate, construction, and broadcasting, for example. Indeed, Broad has been discussed in Chinese business blogs, which I’ve seen in translation, as proof that a business can thrive while keeping government more or less at arm’s length.

The company’s English name is derived, perhaps too literally, from its Chinese name
Yuan Da
, which might also have been rendered as “expansive” or “spacious.” The company’s logo—the familiar @ sign, but with the
a
in the middle replaced by a lowercase
b
, for
Broad
—is elegant and eye-catching; Zhang designed it in 1990, before e-mail made the “at” symbol common. Among the six “Broad Values” that Zhang says must guide the company, one is “Don’t pay bribes” and another is “Do pay taxes.” (The others are environmental protection, respect for intellectual-property rights, no price gouging, and no predatory competition.)

Nor does Broad aim to beat its competitors with a lowball “China price” that manufacturers in developed countries cannot match. According to a quite respectful case study of Broad used at the Harvard Business School, the company’s prospects have been closely tied to the technological niche that Zhang has insisted it occupy. Broad’s specialty is a form of air-conditioning that uses less energy than conventional means. Broad did not invent the technology on which its business is based, but it did take the risk of investing heavily in an approach that companies in Japan, Korea, Europe, and North America had looked at and neglected.

The company and its CEO came to their current identities through an indirect route. Zhang grew up near Changsha, studied art in college, and began work as an interior decorator in southern China. His younger brother Jian trained as an engineer at Harbin Institute of Technology, in Manchuria. In the late 1980s, as Deng Xiaoping opened China seriously for business, Jian, in his mid-twenties, patented the invention that got the company started. This was a “pressure-free boiler” for factories, and its main selling point was that if anything went wrong, the boiler would collapse rather than explode. Such explosions were common in China; demand was brisk. Using the roughly $3,000 Zhang Yue had saved from his decorating company, the brothers went into business selling boilers and consulting on factory design.

By 1992, they had decided to concentrate on what is now Broad’s entire business: “nonelectric refrigeration.” The air conditioners most Americans are familiar with are compression coolers. They use electric power to compress a refrigerant such as Freon, and when the refrigerant expands, it cools the surrounding air. The nonelectric coolers instead use natural gas (or some other source of heat) to boil a lithium bromide solution, and when the vapors from that solution condense, they cool whatever is near them.

It sounds odd to use a flame to cool a building—and, indeed, when China’s premier, Wen Jiabao, visited Broad Town in 2005, he asked several times to have the principle explained. A company pamphlet that lovingly commemorates this historic visit calls the premier’s persistent curiosity a sure sign of his acumen. “If I spread a drop of alcohol on your hand, you will feel very cold,” Zhang told Wen, describing part of the cooling process. The account continues: “The Premier nodded in understanding and said, ‘Yes! Yes! For it evaporates and takes away the heat.’ The Premier is a specialist indeed.”

Zhang has never wavered from this technology, even when, in the early 2000s, market conditions temporarily turned against it and his sales force begged him to add normal, electric-powered air conditioners to Broad’s offerings. Its advantages all involve energy savings. Compared with typical compression systems, nonelectric air-conditioning as Broad makes it will always require less energy per unit of cooling, because when energy is converted from one form to another, some of it is lost. Electric-compression cooling requires more stages of conversion—fossil fuel to electricity at the power plant, electricity to mechanical power at the compressor, both stages very wasteful—than does using natural gas to boil liquid. Nonelectric cooling will also always be more adaptable to other sources of energy, since it is easier to apply a variety of heat sources, including solar power and biomass burning, to do the boiling than to use them to generate electricity in a remote plant and transmit it to the air-conditioning site. And this method of cooling helps reduce the costly peak loads imposed on the power grid, because natural gas is cheapest and most abundant in the summer, exactly when the demand for air-conditioning goes up. Indeed, since storing natural gas is expensive and difficult, in many countries the available gas is simply burned off—wasted—during the summer, when no one needs it for heating. In China, air-conditioning accounts for as much as 50 percent of the electric load during peak times in the summer. Zhang pointed out to me—as he has noted in countless speeches, and as is emphasized by the Harvard Business School case study—that with all of these advantages, his kind of air-conditioning can make both the electric and the natural-gas networks less wasteful while still keeping people cool in the summer. And while we’re at it: the nonelectric systems use a relatively benign natural salt (lithium bromide) rather than using—and inevitably releasing—Freon and other chlorine-based products that erode the earth’s ozone layer.

The company made its first big sale of air conditioners in China in 1992. As construction throughout China boomed, so did Broad’s business—partly because installing the system required little paperwork or official approval compared with what was required for electric units, which would draw on the power grid. It succeeded overseas in India, Pakistan, and other countries with shaky electric systems, since the natural-gas-powered cooler would run during a brownout. “Japanese companies did poorly in markets like those, because their systems were designed for clean water and good management,” Sean Wang, who handles Broad’s international accounts, told me. “Ours were designed with the assumption of worse conditions and looser management.”

Broad made its first American sale in 1999, a combined heating-cooling system at a medical center in downtown Boston. It pushed hard into the California market after the blackouts of 2000–2001, it equipped a community college in New Jersey, and it arrived in New York: Near Zhang’s office is a large picture of a Broad cooler in a Con Edison plant in Manhattan. “Thomas Edison is our idol,” Wang said. The company competed for, and won, Department of Energy contracts to demonstrate energy-saving techniques, notably a major project in Austin, Texas. It now has more than 200 installations in the United States, including at Fort Bragg and other military bases, and many hundreds more around the world, including in the new airport facilities in Madrid, Athens, and Bangkok.

In 2001, ’02, ’04, and ’05, Broad was named one of the “20 Most Admired Companies in China” by China’s
Economic Observer
weekly. I thought of asking Zhang, “What happened in 2003?” But I only thought it.

ZHANG: UTOPIAN OR TYRANT?

The first time I was in an office building at Broad Town, a European friend who has lived in China for years nudged me and asked, “What don’t you see?” I looked around and realized: I didn’t see piles of junk. There were no scrap papers, cigarette butts, half-empty teacups, or other debris on the Broad Town desks, which made it different from other places I had seen in China. What was true in the office was true of the factory as well: no heaps of spare parts or scrap metal, no workers holding welding guns while standing barefoot, no oily rags looking as if they were about to burst into flame. What I had seen in many other Chinese work sites fit the motto, “If it’s worth doing, it’s worth doing sloppily.” But when I saw a gardener kneeling on one of Broad Town’s sweeping lawns and resodding a small plot of grass practically blade by blade, I realized: This is like Japan!

Those would be fighting words in much of China, so let me be precise: The people working at Broad Town seemed not just to be holding jobs but to have been made into a culture and team. Japan’s thoroughgoing organization of people into large teams—the Mitsubishi team, the Toyota team—often seems like a peacetime military. At Broad Town the connection is more explicit. New recruits go through a ten-day session of literal boot camp, wearing military-style outfits and living in barracks on the grounds. They run in platoons through Broad Town’s streets in fatigues, behind an instructor carrying a unit flag. Many of the blog-world concerns about Broad involve recruits who drop out during the training—or are summarily dismissed for versions of “bad attitude.”

After demobilization into the regular workforce, employees are like an army in mufti. They eat, work, and sleep on the base—I mean, the factory grounds. They are roused each morning at 6:00 for physical training before the workday begins. Zhang and his wife and son live at Broad Town, too, as do his parents, in houses tucked behind the fishpond that helps supply the company cafeteria. White-collar workers, male and female, wear a blue-blazer uniform every day, as does Zhang. Factory workers wear royal blue uniforms with their employee number stenciled in large digits down one leg. Every Monday morning the workforce musters for the raising of the national and company flags. When I asked Sean Wang about the clean factories and overall air of control, he said, “We want to solve problems at their root.” He was talking about how a little bit of dirt in the factory could lead to big, expensive problems later on, but the point seemed to apply more generally. It was a one-company illustration of what former Singaporean Prime Minister Lee Kuan Yew and others have called the Asian social bargain: less individual latitude, more collective success.

I heard from a former factory worker that pay for blue-collar workers, nearly all of them male, starts at 1,200 yuan per month, or about $150
*
[about $175 in late 2008]. That’s not bad by Chinese factory standards—especially considering that Changsha is a low-cost area, and Broad workers get their food and housing free. I’ve visited factories near Shanghai and Guangzhou where monthly wages started at 900 yuan. Zhou Wei, of Broad, declined to comment on pay levels in the company, but I heard that white-collar workers started at around 2,000 yuan per month. In theory, Chinese law requires companies to pay overtime to anyone working more than forty hours in a week. Some managers of North American–, Japanese–, or European-owned companies with Chinese plants have mentioned to me that they obey this rule. It hardly ever comes up in discussions with companies from mainland China, Taiwan, or Singapore. At Broad the rule seems to be “Work till the job is done.” I met some former employees who said that they typically had two days off per month; often worked till midnight; and survived by shoveling down food as quickly as they could and then using the rest of their lunch and dinner breaks, two hours apiece, for sleep. They weren’t complaining: this is modern China.