Interview with Fredy Bush

China International Business (http://www.cibmagazine.com.cn/Features/Face_To_Face.asp?id=742&fredy_bush.html)

Thirty years ago Fredy Bush was a teenage single mother on welfare in Utah. Now, she’s the CEO of a multi-million-dollar listed company. Bush is CEO and founder of Xinhua Finance Media Limited (新华财经媒体), a NASDAQ-listed media content and distribution company, as well as executive vice-chairman of Tokyo-listed Xinhua Finance Limited (新华财经有限公司), the leading provider of China-based financial news and indices, which Bush established in 1999, in partnership with the Xinhua News Agency.

But it hasn’t been a trouble-free journey from Utah to Shanghai; from tackling the humiliation of using food stamps to weathering the economic downturns of 9/11 and SARS, and, most recently, seeing her company’s share price crash, Bush’s emergence as one of Asia’s most important financial media figures has been extremely eventful. She sat down with CIB last month to discuss the triumphs and challenges of her career so far.

You had no formal college education. Can you tell us about your background?
I was a young mother. I’ve been a single mother most of my adult life. Due to my need to support the kids, I didn’t have the opportunity to go to college, but because of my desire to support the kids, I also had drive.
Most of my career has been built on that. I had my son when I was 16 and he’s now 31. I was raised in a culture in Utah where women had children very young. Women were meant to get married and raise children. I did odd jobs, clerking and secretarial work. Being a single mom was tough, to manage work and home. Every parent goes through that: how much time can you spend at the office and how much time can you spend at home?

When did you realize your life was not going to be like that of other women in Utah?
A big part of me always wanted to break out. There’s such an incredible gender bias. I’m the sixth of eight children. There came a point where I knew that I wanted to define my life for myself, rather than let the male elders in my community do it for me, which is why I left the US. I took a job in Taiwan in 1985 simply because it was going to pay me more than what I could make with my background. It broke me out of my community. I was about 26 at the time.

How did the move to Taiwan come about?
I was working as a clerk in Utah, and my bosses had family back in Taiwan and asked if I was interested in a position with the Taiwan Feed & Grain Association. Those early years were really what led me to do what I’ve done in China, to create the charities and the company I have.

Did you ever imagine your life would be where it is now?
No. But I did have the determination from being on welfare that I wasn’t going to stay there. I was going to do everything I could do to get my children out of that demographic. Now they are both graduated from college, and married. When I moved to Taiwan, I took a big risk. I didn’t know the culture. I didn’t know anything. But I did understand the opportunities Asia provided. I got here when Asia was emerging. Taiwan began to change, with capital markets and so forth. I started up consulting, which led to my doing consulting for [the Chinese mainland], which led to Xinhua.

You brought about a major transformation of Taiwan’s commodities markets. How did this come about?
People [in Taiwan] were already buying commodities, they [just] didn’t have the legal ability to hedge. So the first thing I started doing was to ask the regulatory authorities in the US to come to Taiwan and to talk to the regulatory bodies to develop the ability to hedge. That eventually led to Taiwan mirroring the US.

How were you able to achieve this?
Because I put my hand out. I knew what problems existed in Taiwan and I knew what the market was like in the US.

How did you go from this to starting up Xinhua Finance?
Once hedging became legal in 1989, what quickly happened was [investors] needed data to trade. If you don’t have the quote, or real-time news, you can’t hedge efficiently. The next milestone was saying: all that data is available, we just have to bring it here. I wasn’t the only one doing it, but my success came from the fact that I was offering it for free. I was young and I didn’t have the resumé, so I took the risk. I structured the business so that as long as clients did business with partners, then I got paid. It certainly made me work really hard because I had to make sure that relationships worked.
The next big breakthrough was when I met a small division of Xinhua News Agency, where I did a very simple transaction for them when they needed some commodity quotes from the West. It was a very small step, but it was the seed of a relationship that has existed now since 1992.

When did you start focusing on the Chinese mainland?
I moved to [the Chinese mainland] in 1992. When I got [here], Taiwan was [this] microcosm and China was this huge market that I believed was going to emerge. And it turned out that way. China is enormous; more internet users, more television viewers. My relationship with Xinhua started with commodity quotes, and it grew from there. In 1999, we thought China was going to get into the World Trade Organization, so I thought a good business plan would be to found a company that created financial information infrastructure to international standards. That was the basic idea. I took this to Xinhua News Agency and they agreed that it could be a good business, so we started Xinhua Finance Limited in 1999.

It took almost seven years between your first contact with Xinhua and setting up Xinhua Finance Limited. What happened during that period?
I was in Hong Kong, Shanghai, here and there. When markets emerge, you can be anywhere, and opportunities come from the fact that it’s changing. It’s always inevitable what’s going to change, you already know where it’s going to head.
Because my relationship with Xinhua was built up over time, by 1999 it was a very solid relationship. But that year was the beginning of the dotcom crash. Nobody was interested in China. I put my own money into the company and people thought I was crazy. It was a very tumultuous time. The money that I and two other investors put into it was almost gone. I was worried about the payroll, I couldn’t eat, I couldn’t sleep at night and I had to tell my children that I had sunk all the money into this venture. I was able to raise some money and it felt better. But then 9/11 came, and SARS, and it was very difficult. It was the second most stressful time in my life.

What was the most stressful time in your life?
Being a single, teenage mom.

What was it like to go from an entrepreneur to becoming the CEO of a publicly listed company, when Xinhua Finance became the first non-Japanese company to launch an IPO in Tokyo in 2004?
The upside is that you have access to capital markets. The downside is that you’re subject to all the whims of the market. Your stock price goes up and down and it doesn’t always track your performance. It’s frustrating because you don’t have control over that. It does allow you to grow, it’s great for the staff and it’s a great exit for your shareholders. As the CEO, or the management, you have to stay focused on the bottom line and not be distracted by stock prices. Xinhua FTSE China index is the largest index in the world. I think we have about USD 140 billion under management.

You went from managing a staff of eight or nine to 2,000. What was that like?
Talk about a learning experience. When you’re eight people, you’re a family. When you’re 2,000 people, it’s hard to get your arms around them. I used to know everyone’s name, and about their husbands and wives, but I can’t do that anymore, and I do miss that. When you’re a small company, you can control everything. You have your finger on every button. But as you get bigger and bigger, you have to give a lot of authority away. It’s ironic; the more power your give away, the more power you have; it’s counterintuitive. It took time to realize that the more trust I put in people, the better the company became.

Last year an investor filed a lawsuit accusing Xinhua Finance Media of misrepresenting material facts in its IPO prospectus by not disclosing that its CFO was under investigation by the SEC. Can you comment on the negative publicity the trial brought your company?
We said at the time when the allegations were made that they were inaccurate and unfounded, and we were proved to be right and they were dismissed. I find it interesting that the media hasn’t put as much intensity on the dismissal of the unfounded allegations as on hearsay. But it is my opinion that some journalists have treated our success unfairly.

Stock prices for both Xinhua Finance and Xinhua Finance Media have dipped dramatically this year. Are you worried?
In terms of stock prices, one of the greatest frustrations is that you can’t control your stock price, and I certainly can’t control the media, so I . . . control our business performance, and sooner or later, the media and market will see what this company does. Xinhua Finance Group is strong and we hit our numbers quarter after quarter; we have a good company. So I try not to focus on things we can’t control and focus [only] on things we can.

You stepped down from the role of CEO at Xinhua Finance Limited earlier this year to become executive vice-chairman. Why did you do this?
EFor better corporate governance, and to comply with the stringent rules of the Sarbanes-Oxley Acts in the US.

Where do you see your company’s largest growth in the next five-to-10 years?
I think content is going to be king. It’s becoming extremely important in China, with such a fragmented marketplace and so many different ways to distribute content, but insufficient high-quality content in the market. And if content is king, access is key. Having the ability to offer content and sell ads and sponsorship, I think there will be big growth there.

Tell me about your charity work.
My personal charity helps girls in poor provinces of China get an education. If girls are not in high school, their culture and community force them into marriage and a lifetime of poverty. That struck very much at my heart. We don’t just contribute money; we actually dig the ditches and stack the bricks. It’s really changed their lives.

What are some of the major East-West differences in doing business?
In America, we tend to be very aggressive, very blunt. We do business via fax, phone, but we don’t need to believe that there’s a relationship there, as long as it’s a financial relationship. In the East, the relationship is very important, nothing happens very quickly and face is very important. You can’t be rude or discourteous. It’s a 180-degree difference. I had to tell the Asians not to be offended and tell the Americans not to be offensive. In America, you have 30-40 page contracts, and that governs, whereas in Asia, you sign a one-page memo and it’s the relationship that governs.

Do you feel that your lack of education has been a help or a hindrance?
I’ve felt both. I don’t recommend that anyone not get a college education. Everywhere you go, people ask you, where did you get your degree? When you’re very poor and very young, nobody thinks you’re hirable. On the flip side, some of my business successes have been due to me feeling it in my bones. I know a trend is moving and a market is coming. There’s an intuition; I’ve always been able to sense the trends and we at Xinhua have been at the forefront of many of them. Because I don’t know any better, I just think, okay, I can make that work and I go there. It’s been very successful so far.

How much of your success was about being in the right place at the right time?
I do think that luck played into it. But when I saw opportunities, I took them. I always wanted to seize the moment. And in an emerging market, there are so many opportunities.

Any regrets?
Just one: no college education. It still haunts me, even now. I can’t tick that box next to college education on my Chinese work visa application, so I cannot get a work visa, which is one of the reasons I have to work six months [of the year] outside of China. I did the health check-up, everything, but I couldn’t check that box, so no work visa.