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Song Zhiping: If Righteousness is in Conflict with Interests, Righteousness Shall Prevail.

2016-08-31

Song Zhiping Attends "China Social Impact Investment Report" Press Release and Seminar and Makes a Keynote Speech

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On 25 August, "China Social Impact Investment Report" Press Release and Seminar was held at the Diaoyutai Guest House in Beijing. The meeting was presided over by secretary general of China Development Research Foundation Lu Mai. Chairman of China National Building Material Group Song Zhiping attended the event at invitation, and made a keynote speech entitled "If Righteousness is in Conflict with Interests, Righteousness Shall Prevail."

Based on enterprises' practice and the theme of the speech, Song Zhiping shared his opinion with party participants. He said, central enterprises should bear economic responsibility, political responsibility, social responsibility and national responsibility. For most of the time in the past, enterprises separated responsibility from profitability. From now on, enterprises should bear social responsibility and realize social value at the same time. If righteousness is in conflict with interests, righteousness shall prevail. Enterprises should not only bear social responsibility but also realize social value. Enterprises should obtain certain economic benefits to realize sustainable development. Taking fabricated building, green town construction of CNBM and the development of the cement industry as examples, he illustrated that big enterprises are not only the main body of the market, but also important organizations of the society. China National Building Material Group advocates that enterprises should run the businesses while maintaining a moral high ground. While carrying out various kinds of business activities, enterprises should actively fulfill social responsibility, and pursue the social value of enterprises.

Huge investments in development are needed to build a moderately prosperous society in all respects during the period of 13th five-year plan. Social value investment is a form of investment that aims to create measurable social value while giving consideration to economic return. It integrates market power with social benefit, and offers performance-oriented, effective and sustainable solutions to tackle challenges faced by the society.

Full Text of the Keynote Speech

As for the enterprises, social value investment is a new concept. In the past, when we talked about economic responsibility, political responsibility, social responsibility and national responsibility that central enterprises should bear, for the most of the time, we separated enterprises' responsibility from their profitability. When enterprises planned to fulfill social responsibility, we often thought many things should be done at all costs. Based on today's theme topic, we should bear responsibility and realize social value at the same time. Enterprises shall lay equal emphasis on interests and righteousness. Enterprises should not only bear social responsibility but also realize social value. Enterprises should obtain certain economic benefits to realize sustainable development. We believe the issue of China Social Impact Investment Report will have a big impact on Chinese entrepreneurs.

Here I would like to tell you two stories about how CNBM realizes social value. First is to solve the problem of outer thermal insulation for housing. Right now, energy consumption accounts for 40% of the total consumption in the building. On one hand, China faces energy shortage. On the other, a lot of energy was wasted. After East and West Germany were unified, the first thing the government did is installing external thermal insulation for all houses in East Germany, and saved a lot of energy. In recent years, CNBM has been committed to promoting external thermal insulation for outer wall. Though such work did not make too much profit, it produced huge social value.

The other thing is to solve the problem of noise generated by building construction. The fabricated building, recently launched by CNBM, can solve such problem. We are now vigorously promoting fabricated building in Shanghai. Every year, the floor area of fabricated building constructed by us amount to 5 million square meters. In the past, during the course of construction, building materials were divided into different systems. The cement factories produce cement, and then concrete mixing is made. After concrete is transported to the building site, the construction company will use it to build house. It is not the case anymore. Fabricated building can make the building construction easier. Fabricated boards can be directly assembled at the site. We made fabricated building before, but due to the technical reason, the quality of the building is not good. There are some problems such as air and wind leaks. We use asphalt to solve this problem, but it affected aesthetic appearance of the building. Right now, all fabricated buildings that we promote in cities are operated by computers. They are fabricated by lathe with aesthetic appearance. Such work did not generate too much profit. We are simply "unknown heroes". But its social value is huge. It leads a reform in the building industry.

 

Speaking about city reminded me of the situation in rural areas. In China, the floor area of rural houses is about 30 billion square meters. In particular, 90% of rural houses are not energy-efficient and quake-proof, let alone comfortable. In the world, an earthquake of magnitude 6 or so should not cause death. However, in China, in recent years, an earthquake of magnitude 6 or above usually would lead to collapse of tens of thousands of houses and cause casualty. The reason for such consequence is because the quality of houses is too bad. Right now, in the world, people seldom use bricks to build houses. However, in rural areas of China, people still use bricks to build houses. Every year, they use 850 billion bricks, burn 75 million tons of standard coal and release 120 million tons of carbon dioxide. Right now, CNBM promotes green town across the country, and builds houses through industrial approach with good quality. Many people have visited the green town established in Miyun. A rural house rented out during the Labour Day holidays and National Day holidays can make profit of 100,000 to 200,000 yuan. New type housing is a good deed we did for local people. We have promoted new type housing for more than 20 years. At present, new type housing has been accepted by the people.

Now, CNBM is promoting 5.0 new type housing, which integrates light and heat, photoelectricity, ground source heat, wind power, biogas and so on. In the past, the house is the main body of energy consumption. Now it has become a power plant. Every year, every country household can gain 2,000 to 3,000 yuan from electricity generation, which is a hefty income for farmers. Some time ago, we built a green town in Yengisar County, Kashgar, Xinjiang. It is now the best village in Xinjiang. Solar energy is produced on the top of every house. Local people like the house very much.

Since the reform and opening-up, metropolis in China such as Beijing have been at the top of the global rankings, but what about rural areas in China? The style of rural houses has never changed. To describe the difference between rural areas and urban areas, we can say that "our cities are like Europe and rural areas are like Africa". The rural houses in northern parts of China can not keep heat and save energy. People are reluctant to burn coal to keep themselves warm. Therefore, they are more likely to get organic diseases such as asthma and tracheitis. If they live in new type houses, which make use of solar power and wind power with good heat preservation effect, they will feel warm without burning coal.

Enterprises need to make money. If an enterprise does not make money, it can hardly survive. Corporate profitability can be classified as short term profitability and long term profitability. We should fully consider the social value. Central enterprises should do long term fundamental work. CNBM made a great deal of work in the course of China's urbanization. We are willing to be unknown heroes. Nevertheless, we believe that after promoting such practices, we can gain admirable profits.

CNBM is the world's largest cement producer, with production capacity of 450 million tons of cement. The merger of CNBM and Sinoma will have significant impact on the building materials industry in China. After the merger of two enterprises, the new group can produce more than 500 million tons of cement, which is an astronomical figure. With so much cement, everyone may think of two things:

First is haze. Is air pollution actually caused by cement enterprises? In fact, new type cement factories save energy and reduce emission through the way of double dedusting, de-sulphurisation and denitrification. They are no longer makers of haze. When it comes to haze, everyone can forget about cement factories. Nowadays, cement factories can be called "factories in the garden, the forest and the grassland". Recently, we invested and established a cement factory in Mongolia. It is a modern factory built in the middle of the grassland, surrounded by flocks of horses and sheep. It looks like a beautiful landscape painting.

Second is overcapacity. Cement is an industry with excess production capacity. However, cement is a good product. Though it has a history of only 180 years, image if we do not have cement, how can we build cities, roads, bridges and channels? In the last year, China consumed 2.53 billion tons of cement. This year, China will consume 3% more cement than the last year. Now we need to strive to eliminate low-grade cement, small cement factories, and introduce more measures in environmental protection and intelligence. Some cement factories of CNBM are unmanned factories. The intelligent manufacturing has been made possible from mining to finished products. Such unmanned factories are fruits of high technology. Modern cement factories have realized intelligent manufacturing, which produces high quality products without environmental contamination.

The cement consumption in China accounts for 50% to 60% of the total cement consumption in the world. Until 2020, the production volume of cement will not decrease substantially. A lot of investment made by us is not for building new production lines. For example, we spent 15 billion yuan in power generation with waste heat. We can save a half of electric energy consumed by a cement factory through low temperature power generation with waste heat. That not only saved the cost of enterprises, but also saved energy for the society and reduced emission of greenhouse gas.

As for the use of raw materials, we try to use industrial waste material and urban construction waste. Every year we consume 100 million tons of solid waste, such as fly ash produced by industrial power plants, and FGD gypsum produced by power plants. During the course of production, we strive to not pollute the environment, and ensure that all products are beneficial for the health of residents and the environment. From the beginning of the 1990s, decoration materials have flooded the market and caused some environmental problems. In 2002, the state government formulated the law to regulate the building materials market, which has been revised for several times. Right now, the standard of the building materials in China has reached European standard. However, authentication is required for the building materials. CNBM boasts a national authentication center. To ensure that building materials are environmental friendly and harmless, enterprises need to make huge investment. Coating and binding agent in China are all produced by small factories, whereas in foreign countries, such products are all produced by big companies, because big enterprises have the capacity of R&D and quality control. Such products look small, but they are relevant to the health of ordinary people, especially the growth of children. It is not a small problem. CNBM should not only produce bulk commodities such as cement, but also produce products that are closely related to people's daily life but are easy to be ignored. We should make more investment in the R&D of key projects, and consider more about social responsibility.

Big enterprises are not only the main body of the market, but also important organizations of the society. For every decision made by CNBM, I would ask everyone a question, "What is morality of this decision?" I will ask one more question in the future, "What is its social value?"

Thank You!


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