Dubai: He came to the UAE 24 years ago. He had a degree in mechanical engineering. He was looking for an opportunity to start a business and make money. And he did just that.
Meet Huaheng Zhang, a 67-year-old Chinese expatriate from Beijing, who has built a UAE-based business making tofu, commonly referred to as 'soy cheese' or 'bean curd', over the past 16 years. A small enterprise owner, he moved to the Emirates at the invite of his cousin to partner in the man’s tofu business.
“In 1997, a relative of mine, who owned a business making tofu in the UAE, contacted me and asked me if I was interested to partner with him. I was tempted by this offer because I knew for a fact that even by making tofu – something that may sound insignificant, he was earning more money than I did. Additionally, he had the privilege to control things and be his own boss.”
But Zhang was still a little hesitant as he had no prior experience running a business and he had a stable job that provided security to his family. Over the following couple of years, his relative continued to persuade Zhang to join him, “He wanted my English language skills, as he wasn’t fluent in it. And he offered me 50 per cent of the company’s shares – this appealed to me. I told him, ‘If I can earn $50,000 (Dh183,645) a year, I will join you’. To which he replied, ‘Yes, you can.’ So I made up my mind, left my job and moved to Dubai in 1999.”
‘They thought I was crazy but I knew it was the right time’
“I had a good job. Working for a state-owned company in Beijing was considered an admirable thing at the time – it meant stability. And not everyone was selected to work for these companies - you needed to stand out. So, when I decided to leave my job in 1999, people thought I was crazy – including my family members,” Zhang told Gulf News.
The move was not going to be easy. Despite facing resistance from his family, Zhang still made the decision to leave his job. He said, “No one supported me, but I knew it was the right time for me to start my own business.”
He was inspired by the boom he was witnessing in the private sector in China. “I saw an opportunity in the private sector. It welcomed challenges and had immense growth potential. People were making a lot of money by running their own businesses.”
However, things weren’t always smooth
Following the exciting move, came adversities. Zhang quickly found himself in a rather embarrassing situation.
He disagreed with the way his business partner ran things. More specifically, two things needed to be changed in his opinion – firstly, the tofu was made in a villa, which was supposed to be a personal living space instead of a tofu-making factory. Storage and production areas were not separated. And there was not enough space for further expansion. Zhang thought the tofu-making machines needed to be moved out of the villa and into a more regulated factory.
Secondly, his partner didn’t have a strong intention to expand the business by re-investing the profit, instead, he wanted most of the profit to be in his pocket. Zhang thought this would not be good for the company in the long run.
After much discussion, Zhang could see that there was no hope of changing things. After about a year, he took a second leap of faith and decided to leave the company to start something by himself.
No one supported me, but I knew it was the right time for me to start my own business
The first Chinese supermarket in the UAE
Living in Dubai for about a year, Zhang had noticed something important, “There were around 150,000 Chinese expats in the country. They, including myself, were in need of some home flavours and products, but they were not available in the UAE. The only way to get Chinese groceries and products was to carry as many of them as we could in our suitcases when we visited home, which was usually once every year or two years. Thus, I saw the necessity for a Chinese supermarket here.”
In September 2000, Zhang started his own Chinese supermarket in Dubai, which required an initial investment of about $20,000 (Dh73,460).
“To my knowledge, it was the first Chinese supermarket in the UAE. To start the business, I used my savings to buy a full container of goods in China and had them shipped over to the UAE. Here, I borrowed some money to rent a shop in Deira - it became the location of my supermarket. The container of goods was sold out within two to three months’ time. Chinese customers came to my supermarket not only from Dubai, but also from other Emirates. They were happy to be able to get Chinese groceries so conveniently.”
A company providing construction materials
In a few years’ time, Zhang had enough money to expand his business. This was when he wanted to make use of his engineering background and decided to get into the construction field in 2004, providing window products such as glasses and frames. It cost him about $73,000 (Dh268,131) to start the construction firm, which was located in Sharjah Industrial Area.
“It was a new industry for me. So the plan was to learn about it in the first year and after we were familiar with it, we would then talk about making profits. We did exactly as planned – learning, acquiring clients and earning their trust by offering good quality products and flexible payment terms at the beginning. Then, after a few years, although our account books should show that we were making profits, in reality I found one fundamental issue – as sub-contractors, we were often unable to collect payments from contractors after we had supplied our products to them. Then, around 2009, the issue got worse. I persisted but finally closed the company in 2011.”
Starting 2002, multiple Chinese supermarkets came into the picture continuously - perhaps they also saw the profitability in this line of business
Going back to making tofu
Between 2004 and 2007, Zhang started facing issues with his Chinese supermarket as well. A couple of years after Zhang opened his supermarket, competitors came along.
“Starting 2002, multiple Chinese supermarkets came into the picture continuously - perhaps they also saw the profitability in this line of business. I noticed that the price for grocery items was significantly lower in these supermarkets, compared to mine. They adopted a low-pricing strategy, aiming to dominate the market as it was obvious that whoever offered the lowest price would gain the majority of customers. They were fierce because they didn’t seem to care about making profits at the time. They competed to be the top supermarket in the UAE, even if it meant losing money at first. And amidst such competition, many supermarkets that couldn’t afford to play the game were pushed out.
“And not just that, the competitors carried out other strategies such as working with media agencies to broadcast their brands. They were smart players, who were always up to date with the latest trends in the industry, such as establishing online platforms for their brands. And they acted fast on their strategies. Over time, I struggled to keep up with their pace. Additionally, it didn’t make sense for me to join the competition and sell groceries with little or no profit. It was not the way I would have liked to run my business. So I decided to close my supermarket in 2007.”
At this point, Zhang felt it was time to rethink the idea behind his first tofu-making joint venture that he had come to the UAE for. He realised that there was much room for improvement in the quality of tofu produced in the UAE, and also how, even the variety of tofu products was very limited and there was potential to include more.
Most importantly, Zhang had a vision about tofu
“Let me tell you an interesting story – every time people asked me to describe tofu to them, I struggled, because if they didn’t grow up having tofu, they might not be able to understand the concept fully. But gradually I noticed another product that was so similar to tofu in many ways and was popular in many countries – cheese. That was when I realised that I could explain the concept of tofu to others using the reference of cheese,” Zhang laughed.
“For instance, the processes of making cheese and tofu are very similar - cheese is made from cow or sheep milk and tofu is made from soy milk. Both processes separate the water from the milk. Then, the remainder deposits will be compressed to a more solid block. Besides, both tofu and cheese are nutritious – they are high in protein and calcium. Particularly, tofu is also high in iron. On top of that, tofu can be cooked in various ways – it can be roasted, fried, boiled, simmered… it can be cooked fast and it absorbs flavours easily.
“So I had a sense back then that, with many merits, it is likely that tofu will be accepted and liked by a growing number of consumers in the future.”
It was for these reasons, Zhang went back to making tofu in 2007. The 2011 closure of his construction materials company only sharpened his focus.
16 years of making tofu
In order to start producing tofu on his own, he had to rent a 400-square-metre plant in Ajman. This entrepreneurial move also meant he had to change his business focus from retail to wholesale, from running a supermarket to managing a full-fledged food trading company that supplies to hotels, restaurants, supermarkets and other retail businesses. However, he had to first start small.
As soy beans are imported from Canada, the business was initially only producing about 1,000 packages of tofu daily, of 500 grams each, and he had only eight staff members when he started. Now there are about 50 staff members in total and the small-scale business makes between 7,000 and 8,000 500-grams’ packages every day.
Aside from tofu, Zhang revealed that his business also makes other products like noodles, dumplings, steam bread and buns. However, he noted that tofu makes 60 per cent of its revenue, and his profits make up 10 per cent of his total turnover every year.
He attributed the reason for steady profits to hiring more staff, the higher number of Chinese people in the UAE (which is now over 300,000, as opposed to 150,000 back then) and also because other nationalities began developing a taste for tofu.
Zhang also detailed how the salary for staff makes up about 20-25 per cent of total expense, while raw material comprises about 40 per cent of overall costs. Zhang also revealed that of the 10 per cent profits, he consistently re-invests 5 per cent back into the business, and sends the remaining 5 per cent to his family back home.
Aside from reinvesting profits back into the business, what about seeking money from investors in order to grow the business further?
“I didn’t want to take money from elsewhere,” explained Zhang. “It’s too risky, especially when it comes to consistently returning the money back regardless of financial or seasonal challenges the business may or may not face.” When enquiring further about such industry-related problems, this was his response.
“There have been several uncertainties that have affected my business, particularly of late,” said Zhang. “For instance, the recent issues faced worldwide like COVID-19, have visibly driven up the costs of raw materials we use for our business like soya bean, which is used to make tofu, and flour, used to make noodles, bread and buns. Also, transportation costs rose as well.”
‘The UAE was a suitable place for me to run my businesses’
Zhang said, “After I moved to the UAE, more specifically to Dubai at first, I found that this country offered friendly and efficient business policies to small business owners like us. Moreover, I enjoyed the vibe of this country – it welcomed diversity and ideas. Additionally, I was fond of the way how simple business relations are here – it was fairly straightforward, without complex relationship-building needed, which can drain you at times. Twenty four years have passed, this country continues to advance and it’s attracting more and more businesses to settle here. I’m glad I made the decision to come in the first place.”
As to the future…
When asked what his plans were in the future, Zhang replied, “I am nearly 70 years of age now and I have a six-year-old grandson. I would like to retire after five to six years, to be able to spend more time with my family members. And I don’t plan to keep my tofu business a family business – it should always be managed by skilled and capable hands.
“In my opinion, apart from acquiring profits, an entrepreneur should also have social responsibilities. In my case, I would like to see my company (named, ‘Green Village Foodstuff Industries LLC’) not only provide good quality tofu and other food products to the public, but also create job opportunities for more people. And when people come work here, I would like to see them grow and develop within the company. In return, they can create more value and earn more money. Consequently, they are able to support their families better – it becomes a good circle of things.
“In the future, I want to give 20 per cent of the company shares to someone who has the ability to run this business. Additionally, I hope to carry out more comprehensive rules and regulations to reward my employees, so that they are inspired to keep the company growing with or without me. As to my family and myself, it’s simple - I may give a small percentage of shares to my daughter but that’s about it. We have a house, a car, and some savings in the bank, what more could I ask?”