Monday Interview: Ren Jianxin, ChemChina

Ren Jianxin, chairman of China's largest chemicals company, ChemChina, entertains visitors in a boardroom just down the hall from the group's Chinese Communist party general office, a mandatory feature at big state-owned enterprises and increasingly common at many private businesses too. It is a reminder that ChemChina's Mr Ren is, as head of one of the country's largest state companies, a senior member of the country's ruling party.

Mr Ren is also the prospective new boss of Pirelli, after he recently cut a deal to acquire Camfin, the investment vehicle that has a controlling 26 per cent stake in the Italian tyre company. That will be followed by a €7.3bn offer for Pirelli's remaining shares via a newly created holding company. If completed, the F1 sponsor's famous automotive tyre business will continue to be independently managed from Italy, while its industrial tyre business will be combined with a ChemChina subsidiary.

As 57-year-old Mr Ren enters the meeting room, it is immediately apparent that he is cut from a different cloth to his party and government peers. He is wearing a blue jacket with a white dress shirt open at the neck and makes no attempt to hide the grey in his hair. As such, his appearance is a far cry from the usual Chinese apparatchik chic - typified by buttoned-down cadres in dark suits and red ties, their hair dyed jet-black and often a pair of long-johns peeking out above the ankle on chilly spring days.

The fact that Mr Ren has asked three international media organisations, two Italian ones and the official China Daily to a hastily arranged briefing at 10am on a Sunday - or any time or day for that matter - is also unusual. When Dongfeng Motor, also state-owned, made a similarly high-profile European investment last year, paying €800m for a 14 per cent stake in French automaker Peugeot, it hid behind bland statements put out by its investment advisers. Dongfeng chairman Xu Ping, the driver behind that deal, routinely refuses in­terview requests from overseas media.

At first, Mr Ren also turned down interviews when his deal was officially announced on March 22. But within a week he realised that, even with Pirelli management and Italian politicians effusive in their praise for the acquisition, lying low was not an option for a captain of Chinese industry who is poised to take over one of Europe's best known brands.

His Sunday morning session, which begins as bells ring out at a Christian church opposite ChemChina's Beijing headquarters, lasts four hours including a late lunch of spicy beef noodles. A staple dish in northwestern China, where he was born and where he studied at university, Mr Ren likes ma la mian so much that he started his own restaurant chain, Ma La Noodles, in 1996.

He waxes eloquent about the wonders of noodles that can be "as thick as a chopstick or as fine as a human hair" and, with the Pirelli deal in mind, he comments that: "Producing tyres is like mixing flour for noodles - you need to get the rubber right."

The noodles are served, somewhat incongruously from both a culinary perspective and in light of Mr Ren's passion for all things Italian, with an Australian red wine. "I've only been to Italy twice but my impression is that creativity and innovation is in its people's blood," he adds. "It's no accident that a brand like Pirelli's grew out of Italian soil."

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Such a statement might usually seem a bit rich, coming from the head of one of China's largest state companies. ChemChina is one of 117 industrial champions that are directly administered by the Chinese government's State-owned Assets Supervision and Administration Commission. Moreover, ChemChina is ranked 276 on Fortune's Global 500 list of the world's biggest companies, with annual revenues of about Rmb300bn ($48bn).

But unusually for such a behemoth, ChemChina was established only a decade or so ago but its roots go back to 1984 when Mr Ren, then a cadre in his mid-20s with the long since disbanded Ministry of Chemicals Industry, began an industrial cleaning company with a Rmb10,000 government loan. This was a time when Chinese government officials began to xia hai, or "jump into the sea", of private commerce in large numbers. Because of its government financing, Mr Ren's company, Bluestar, was technically state-owned but was managed more like a private-sector start-up.

Over the next two decades, Bluestar would rise from a humble enterprise whose workers scrubbed tea urns and boilers to the top of China's chemical industry.

After a relentless acquisition spree in the 1980s and 1990s, during which Bluestar acquired more than 100 other state companies, its boss was dubbed China's "merger king" by admiring state media.

The group that emerged from this process became ChemChina, whose six divisions include Bluestar and the Aeolus Tyre arm, which is involved in the Pirelli transaction. Although he has spent his entire career in the state sector, Mr Ren speaks of his experiences as a newly minted internet billionaire might after listing his dotcom on the Nasdaq. "Every youngster has dreams and aspirations," he says. "I dreamt of building Bluestar into a big business."

Shortly after ChemChina was established, Mr Ren began buying overseas businesses too. These included France's Adisseo, which manufactures organic compounds used in products ranging from fertilisers to perfumes; the silicone and sulphide business of Rhodia, another French group; and Qenos, an Australian plastics group.

It was as if Mr Ren, having emerged victorious from a 20-year Chinese campaign, decided to turn his attention to foreign fields of battle.

The ChemChina chairman does not, however, welcome such martial analogies. "I don't like to call them acquisitions - it sounds too aggressive. I prefer to call them investments," he says.

"Of course, we value these assets themselves but we value co-operation with their management teams even more," he adds. "I am inundated with ChemChina's own challenges and problems. I don't have time to look after these investments personally."

He speaks in similarly generous terms of Pirelli's chief executive, Marco Tronchetti Provera, who will continue to run the Italian company until 2020. The 67-year-old Mr Tronchetti Provera also has the right to choose his own successor if he leaves before then. "Marco will be my role model," Mr Ren says. "I respect him as a teacher, an older brother and a friend . . . He is a very good man. If he wasn't a good man, how could I shake hands with him, let alone hold hands with him in this partnership?"

But, for all his graciousness, Mr Ren makes clear who is ultimately in charge in these relationships, albeit with a diplo­matic emphasis on his "student" status.

"We are a strategic industrial player and anything less than a 51 per cent stake would make us a financial investor rather than a strategic one," he says. "I always say to our overseas CEOs that from an ownership perspective I am your boss, but from an operations perspective you are my teacher."

Second opinion: Joel Backaler

"We always hear about Chinese [tech] entrepreneurs like Jack Ma, Robin Li and Pony Ma, but Ren Jianxin has been just as successful in a much different context," says Joel Backaler, who was a consultant for ChemChina's Bluestar after Blackstone took a stake, and wrote about ChemChina in China Goes West.

"The key to the Pirelli deal's success will be [whether] Ren allows Pirelli to operate fairly autonomously . . . or merges two very different firms too quickly," he adds.

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