Turning an ancient concept into a modern business

Mr Zhu thought hard about the branding of his company in order to combat the dubious image of the industry

As Zhu Guofan tours one of his foot massage establishments in the centre of Beijing, he runs his finger along the top of a doorway to check for dust.

According to Mr Zhu, if you want to build a successful business, attention to detail is important.

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Beijing Zhu Guofan Liangzi

  • Employees: 19,600
  • HQ Location: Beijing, China
  • Year founded: February 1997
  • Ownership: Private
  • 2010 turnover: RMB 160 million (approx. $25.4 million)

Zhu Guofan can claim to have built what is perhaps the first national chain of foot massage shops in China.

Many of the premises are opulent - an upstairs lobby of the central Beijing branch features a large pool adorned by fountains and statues of elephants - and Mr Zhu acknowledges that these surroundings are very different to those of his childhood.

Zhu Guofan grew up in Henan province, in central China. His family was poor, his parents earning a living as rubbish collectors. He recalls that, as a child, "every year I could only have one set of new clothes."

A new idea

Zhu Guofan has been interested in business for almost as long as he can remember.

He dropped out of school and launched his first business, a kebab stand, when he was just 13 years old.

Zhu Guofan's office Mr Zhu acknowledges that the opulent surroundings are very different to those of his childhood

He then became involved in garment trading and by the mid-1990s, when he was in his mid-20s, he was running a small chain of restaurants. But the work was exhausting, since it involved the collection and delivery of lots of supplies. He often used to go the public baths in the afternoon to rest.

One day, instead of going to the baths, Mr Zhu says he went to a friend's barber shop, had a head massage and instantly fell asleep. When he woke up, he had an idea. The street where the barber shop was located was full of small businesses, run by owners who also worked hard. He felt that an establishment offering foot massages, which perhaps also served snacks and drinks, would be successful.

Zhu Guofan set about investigating the best treatments to offer. He consulted a relative, a former hospital executive who was an expert on Chinese and Western medicine and spent a lot of time searching for skilled therapists.

Problems

Mr Zhu insisted having treatments tested on himself - but the first attempts were hopeless. He says, "They were really painful - I thought, this can't be right, I want my customers to relax, not to be tortured!"

A much bigger problem was the dubious image of the industry. There was a widely-held belief at the time that many massage parlours were little more than brothels.

Zhu Guofan says he had to work hard to ensure that his business was seen to be legitimate, by both customers and staff.

He thought a lot about the branding of the company. He chose the name Liang Zi, meaning "good children, good family", to help conjure up a more wholesome image. He believes this was a vital element in the success of his first establishments.

Over-confidence

The company grew very rapidly and by 2003 there were thousands of branches across China and some 30,000 employees.

Zhu Guofan decided to invest millions in a huge new branch in Shanghai, then disaster struck.

"We failed the fire safety inspection in Shanghai," recalls Mr Zhu.

Zhu Guofan Mr Zhu walked from Shanghai to Beijing and rethought the business

The premises had to be closed whilst improvement work was carried out. Then, just as the business was about to be reopened, the Sars outbreak arrived in the city and customers vanished.

There were other issues too. Many of the branches in the group were franchised and quality control was difficult. The problem was compounded by the presence of thousands of fake Liangzi parlours run by rivals.

Zhu Guofan says the stress of managing the company took a toll on his own health: "I was much fatter back then, about 125kg. I only had about one-and-a-half hours sleep every day."

Looking back, he says he had become overconfident. He knew he had to take steps to put matters right.

Mr Zhu found himself walking from Shanghai to Beijing, a distance of some 1,000km.

On the way, he rethought the business. He ended up giving away the company's stake in thousands of franchised branches to the managers running them and decided to start all over again, with a smaller number of shops that he could manage more easily.

Today the relaunched group is growing fast. Although the number of branches is smaller than before, Zhu Guofan says the business is much more profitable.

Expanding market

Zhu Guofan notes that in China, the service sector forms a much smaller part of the economy than in Western countries.

He believes that as the middle class expands in China, so will demand for service-based businesses like his.

He is optimistic about the future and his ambition seems to have few limits. He recalls reading in a book about a Japanese company that employed 200,000 people.

He says his dream is that, one day, he will have a company employing 200,000 people too.

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