The dragon of the shrimp industry

For the first few years, all he did, except for building the market itself, was develop relationships.

He made friends with as many dealers and buyers as possible: talking with them, offering them free advice, and linking trustworthy dealers with out-of-town buyers.

Friendships and reputation brought in business.

As he became someone known and liked, he built a prawn-trading exchange where dealers, farmers, and buyers met face-to-face.

Dealers received a commission of 0.4 yuan per kilogram, while Long collected his dues from rentals.

But most importantly, all who came to his market had to go by his "Long rules": no fraud, no fakes, strictly open and honest business.

Shrimp magnate Long Tujin turned an unscrupulous market into one governed by his rules: no fraud, no fakes, strictly open and honest business. [Photo/China Daily]

His market was a game-changer.

It provided incentives for the dealers to process as much volume as possible, while no longer depending on unreasonably high markups.

And since all the transactions were openly negotiated in his marketplace, involving huge volumes on a daily basis, people didn't have to work excessively hard for a reasonable profit.

His being "reasonable" has had a formidable effect.

The Xiashan market's annual trading volume has grown from 3.5 billion yuan ($555 million) in 2002 to about 10 billion yuan last year.

Its turnover would hit 30 billion yuan, if other aquaculture products were counted.

Long's employees, he says, work hard to remain "reasonable".

They send mobile text messages, for instance, to prawn farmers who have registered for his service, feeding them information about the industry and his market, and most importantly, supply and demand around the world for shrimp.

"You are wrong if you think this marketplace is only a trading center," Long says. "Far from it. It is also a logistic and information center and connects numerous stakeholders in numerous ways."

Pointing to his newly built, ultra-modern cold warehouse, which can hold 100,000 metric tons of shrimp, Long says proudly: "This is now what we can do to help prawn farmers dodge seasonal price changes."

Prawn harvests, which mainly occur between September and October, are kept at -23 degrees Celsius in the warehouse, waiting to be arranged in steady shipments to Western markets.

The cold storage serves as a reserve - hoarding prawns when supply is abundant, and releasing them when supply is low. The aim is to prevent the industry from being affected by price shocks.

Based on its huge and growing daily volumes, and soaring credit standing, Long's market is now offering financial plans to help its registered buyers.

Traditionally, prawns have been a strictly-cash business, demanding huge cash payments from purchasers.

If they couldn't make the payments, they sometimes resorted to private lenders, usually at much higher interest rates to regular bank loans.

Seeing the problem, Long successfully persuaded commercial banks to extend their services to the market, equipping it with a modern payment system.

With the agreement of the market, three to five registered buyers can provide a group guarantee for one small buyer's credit standing.

Of the 320 loans that have been extended so far, not one single default has been reported.

By May 2012, Industrial and Commercial Bank of China, the country's largest bank, had issued 1.13 billion yuan in loans to Long's members.

Long isn't the least bit worried about his methods being imitated by others.

Smoking tobacco at his newly completed holiday home on the coast, the short, dark, slim man speaks in a heavy local accent.

"They may try to copy my methods in other industries. But in the prawn industry, once a trading center like this is established, it would take a hell of a lot of effort to replicate it."

Contact the writer at zhengyangpeng@chinadaily.com.cn

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