|
  Gilbert
Lee
Chief Financial Officer
23 Langdale Road
Wayne, NJ 07470
United States
Phone: 214.906.0065
Mr. Lee
joined the Company as Chief Financial Officer on August 1, 2011 after a
one-year finance executive role at Dimensional Merchandising Inc., a
family-owned beauty aid and pharmaceutical contract manufacturer based in
Wharton, New Jersey. From 2008 to 2010, Mr. Lee served as Director of
Finance of Two’s Company, a wholesale distributor of giftware and fashion
accessories from China and India, based in Elmsford, New York. For the ten
years prior, Mr. Lee held director-level positions in finance, operations,
and marketing at Essilor of America, a U.S. subsidiary of Essilor
International, the world’s largest eyeglass lens producer based in France.
Mr. Lee received his MBA degree from the University of Texas at Austin after
earning a Master degree in accounting and a Bachelor degree in marketing.
Mr. Lee is also a CPA and CMA.
Company Profile:
www.tanke-bio.com
Tanke BioSciences Corporation, founded in 1997, is one of China's
leading developers, manufacturers, and marketers of animal feed additives
and livestock nutritional products. A recipient of several prestigious
government awards and certifications, Tanke occupies a favorable competitive
position in China's $6 billion animal feed additive market. The company's
products optimize the growth and health of livestock and farmed seafood,
helping China satisfy its 1.3 billion population’s growing demand for safe,
high-quality and reasonably priced animal-protein food. All of Tanke's
products are free of harmful substances such as genetically modified
organisms (GMOs) and antibiotics, and are environment-friendly, making them
optimal for animal consumption. |
Biosciences
Animal Nutrition
(TNBI-OTCQB)
Tanke BioSciences Corporation
Room 2801, East Tower of Hui Hao
Building, No. 519 Machang Road
Pearl River New City, Guangzhou
Guangdong, China 510627
www.tanke-bio.com
TNBI-Print Version
|
|
Interview conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine,
Published - August 27, 2012
CEOCFO: Hello Mr. Lee. What is the main
focus at Tanke today?
Mr. Lee: Primarily, to grow the company
and to grow sales. Last year our focus was to establish a world-class R&D
center and, thanks to our CEO, we accomplished that. We now possess what we
feel is a solid array of some of the world’s finest animal feed additives.
So this gives us a lot of ammunition to go out and increase sales rapidly.
We’re also looking at a few potential acquisitions, but again, our focus is
on growing sales.
CEOCFO: What is Tanke’s specific plan to
increase sales, and to expand its markets outside of China?
Mr. Lee: Actually, demand for our
products in China is currently so huge that we do not, in the next few
years, need to expand our sales to other geographic areas. We are, however,
building a second plant here in China that will be operational by the middle
of next year. This plant will more than double our capacity. We also are
expanding our sales force in China with the formation of a new sales
division that will grow our revenue tremendously in the next two or three
years. Plus, China is leaning towards banning the use of antibiotic- and GMO-laced
animal feed, so that strengthens our market potential here even further.
That being said, to be a worldwide leader in our industry we obviously must
increase our overseas sales, which are now only one percent of our total
revenue. Our goal is to grow that number to 30 to 50 percent within 10
years. We expect this growth will materialize first in Europe, which has
completely banned the feeding of animals with any antibiotics or GMOs. Our
best European prospect is Russia, where we sell currently and have very
strong relationships with major food distributors. We also have strong
distributor relationships in Thailand and in most of Southeast Asia, as well
as in the Caribbean, Africa and South America, where we currently sell to
Uruguay.
The only major country we are not working on at present is the U.S., where
we would require a great amount of capital and effort in order to acquire
the FDA product approvals and marketing relationships necessary for success.
At present, there are also high tariffs here that don’t allow our products
to be as price competitive as in other parts of the world. Having said that,
we would still like to consider entering the U.S. market in about five
years, or perhaps earlier, if these conditions should change.
CEOCFO: Okay, let’s talk about the
market in China. Tanke has said that its primary function is to help satisfy
China’s soaring demand for better and healthier food. Is this increased
demand coming primarily from China’s growing middle class, or from the
Chinese government, or both?
Mr. Lee: From both, really. As the
middle-class population in China continues to grow – and it’s going to grow
another 500 million within 10 years – there are many more well-educated and
well-informed people who know how to stay healthier and eat healthier food.
Another factor is that China exports a great deal of food to the world. The
Chinese government is therefore extremely concerned about these problems, as
they will not only cause damage and instability internally, but will also,
if not corrected, severely damage the reputation of China’s food export
business. Therefore, the government is very much behind the drive to
increase food safety in China, and Tanke is actually playing a very
significant role in helping the government accomplish this goal.
CEOCFO: Tell us about Tanke’s work with
the Chinese government. How does this collaboration impact your business?
Mr. Lee: We benefit considerably, and in
many ways. First, Tanke is a government-certified "high technology company,"
which means that our national and local governments give us numerous R&D
grants to work on projects that directly benefit the health of the Chinese
people. As part of our work on these projects, we regularly collaborate with
China's Academy of Sciences and the Ministry of Agriculture to help define
animal feed additive industry benchmarks – in fact, we’ve already helped the
Ministry establish five separate national standards for these additives, all
of which have a vast impact on human health. In return for our input,
besides the grant funding, we also receive major tax benefits. Another
advantage is that when a R&D project is completed, the government grants us
rights to commercialize the animal feed additive products we’ve developed.
And since the government relies on our input to elevate the standards and
requirements for all vendors of these additives – thereby elevating the
overall level of food safety in China -- we set these standards at an
extremely high level. The end result is that many of the smaller feed
additive companies -- because they do not have the capital or the equipment
or the technology -- cannot reach that level. But we can. Eventually these
smaller companies cannot operate and will just disappear, or will be
absorbed by larger companies like Tanke. So, you see, we have a huge
competitive advantage by having this strong relationship with government
agencies.
CEOCFO: Let’s talk financials. Tanke
recently announced its second quarter results. Can you comment on those, and
on the rest of the company’s financial picture?
Mr. Lee: Our second quarter was very
good. Revenue grew 49 percent over the same period last year and our
operating income was $1.5 million, which is more than six times our second
quarter operating profit in 2011. We have a very strong balance sheet with
over $10 million in cash, and that will prepare us if some of our expansion
projects come to terms. We have very little debt, only about $2 million in
loans from a China bank. We can still borrow many times that amount without
any problems and the interest rates in China are relatively low because we
receive interest subsidies from the Chinese government.
While repeating 49 percent growth quarter after quarter is probably not
realistic, we definitely expect double digit growth. We have recently
launched a series of new water-soluble organic feed additives that we
believe will add significantly to total revenue. We are also putting a very
tight control on our expenses -- in fact, in the second quarter of this
year, both selling and G&A expenses were actually lower than a year ago.
Looking forward, I foresee manufacturing costs, or at least unit costs,
continuing to improve because of our new manufacturing facility, which will
contribute higher automation, better efficiency, and better quality control.
So we think the future looks very bright for Tanke.
CEOCFO: Let’s cut to the chase: As you
know, several Chinese companies have been delisted here. Why should U.S.
investors pay attention to Tanke?
Mr. Lee: Well, firstly, because we have
a terrific management team who stands by our results and attests, as I do,
to their truthfulness. Secondly, it is a great time to invest in Tanke
precisely because Chinese companies in the US have been attacked. This has
caused the valuation of Chinese companies stocks, including Tanke, to hit
exceptionally low levels – levels that do not reflect the true value of many
of these companies. As I said earlier, Tanke has shown excellent results in
the second quarter, and we certainly have the potential to grow rapidly and
very profitably over the next few years. We have been reporting for over a
year and a half now, so investors can look at our financials and make an
informed decision as to the strength of this potential. Personally, I
foresee the company continuing to grow strongly, especially in the second
half of this year.
CEOCFO: That sounds very promising. But
again, how do you convince people here in the U.S. that what has happened or
been perceived in the past about companies in China is not relevant to Tanke?
How do we know that Tanke is a real company with no fraud or
misrepresentations, and that you are really doing what you say you are?
Mr. Lee: There are unscrupulous
companies everywhere. Unfortunately, China has had more than its share in
the past few years. All Tanke can do is to continuously improve both our
transparency and our financial reporting. We took a big step in this
direction in January, when we changed auditors from a relatively small Hong
Kong-based audit firm to a higher-level U.S.-based audit firm, EFP
Rotenberg. Concurrent with this change, we are continuing to improve our
accounting and our bookkeeping, and we regularly file our 10Ks, 10Qs, and
all SEC required filings. Thus, as a public company, we are making sure that
all our disclosures and financial information are not only highly accurate,
but accessible, on time, by investors and the financial community.
CEOCFO: Although Tanke is based in
China, you are based here in New York. What are the advantages of this
set-up? And with the bulk of Tanke’s business being in China, why the choice
of raising money here?
Mr. Lee: Although our operations are
almost all in China, we do have investors in the U.S. Many of them know very
little about the business environment and the culture in China. Likewise,
very few people at Tanke’s headquarters in China can speak English.
Therefore, having someone who can quickly bridge the gap between these two
groups – without having to engage a professional translator -- is crucial, I
believe, to the success of our company. While it’s true that many Chinese
companies listed in the US choose not to have this arrangement, I strongly
believe that having a U.S.–based CFO helps considerably -- If anyone here
needs information on Tanke, they can always come to me. In addition, I can
bring back to Tanke a great deal of information on what the market is doing
and what we need to do to improve our standing in the market – including the
manner and price at which our stock trades.
Regarding the choice of raising money here…When I first interviewed with our
CEO, Mr. Guixiong Qiu, I asked him why he wanted to come to the U.S. to be
listed here. He answered that raising money was not the main reason. In
fact, he explained, Tanke could easily get loans from banks in China, and
the Chinese government gave them subsidies for the interest. The real reason
he wanted Tanke to be listed here, he told me, was that the U.S. capital
market was the most sophisticated and stringent in the world, forcing
companies to comply to a great deal of very tough financial standards and
regulations. If Tanke could get listed in the U.S., he said, our reputation
among customers in China, which was very good at the time, would appreciate
still further. Likewise, government officials in China would view us in the
greatest possible light, and continue to award us the advantages and
benefits we currently enjoy as a government-certified high-tech company. I
have to say that both developments have in fact occurred, and are providing
great benefit to our overall business.
CEOCFO: On a personal note, what first
attracted you to the company? What motivated you to be part of the team?
Mr. Lee: Throughout my career, I had
worked for both U.S. and international companies, but never for a Chinese
company. Toward the end of my tenure with my last employer, Dimensional
Merchandising, it occurred to me that China was growing tremendously and
might offer me advantages that companies elsewhere could not. Another
personal motivation was to get closer to my parents, who reside in Hong
Kong.
I started looking for opportunities in China and a friend of mine soon
introduced me to a Tanke financial advisor in the US. I got a chance to
interview with him and subsequently with the CEO, Mr. Qiu, who just blew me
away with his passion and vision to grow the company. He gave me the
impression of being a very genuine person – brilliant yet down-to-earth --
and the company sounded really exciting, with terrific products in high
demand. Of course, I had heard many of the bad things about Chinese
companies, so I was cautious and agreed at first only to go to Guangzhou and
visit Tanke. Once I did, and did quite a bit of research on the company, I
decided that it was real. Not only did they make real products, but they
were special products – ones I saw were essential for helping China solve so
many of the food safety problems that were causing such havoc throughout the
country. A short time later, I decided to join the company, and I am really
happy that I did. It’s been a great experience for me, and I’ve got to say
that I’m very optimistic about this company’s future.
disclaimers
Any reproduction or further distribution of this
article without the express written consent of CEOCFOinterviews.com is prohibited. |
