In the 1960s and 1970s, many small nitrogenous fertilizer companies were established with limited resources and technical capabilities. These enterprises often struggled from the beginning, facing challenges in production efficiency, energy consumption, and product quality. To survive and grow, they had to constantly seek ways to fund technological upgrades aimed at increasing capacity, reducing energy use, and improving product standards. However, this path was fraught with risks—any misstep could lead to heavy debt burdens, pushing companies to the edge of collapse. This is why some refer to such efforts as “technological reform leading to death.†But not all companies followed this tragic path.
Hebei Jinglong Fengli Chemical Co., Ltd. is a rare exception. The company’s journey through technological transformation offers valuable lessons for other small enterprises. During the planned economy era, many small fertilizer plants relied on state funding for their projects. Since the money came from the government, there was little emphasis on repayment. Plant managers often focused more on securing funds than on long-term financial sustainability. As debts piled up, and the expected benefits from technological upgrades failed to materialize, many companies found themselves trapped in an unsustainable cycle.
This was the case for what was once the Ningjin County Fertilizer Plant, which later became part of Hebei Jinglong Fengli. After completing a major urea project in 1995, the plant made a significant leap in production capacity, moving from low-concentration ammonium bicarbonate to high-concentration urea. However, the project cost 160 million yuan, and total liabilities eventually exceeded 250 million. By 2002, the company was forced to halt operations due to overwhelming debt.
Despite the crisis, the workers and management refused to give up. They tightened their belts and raised 1.5 million yuan in just three days, enough to keep the brand alive. With that capital, they carefully planned a recovery overhaul and eventually resumed production. From that point on, the company set two strict rules: first, never to invest beyond its ability to repay; second, always to honor debt obligations promptly. This approach helped maintain a healthy asset-liability ratio, typically below 80%.
Over the next few years, the company gradually introduced new technologies, improved energy efficiency, expanded production, and developed new products. Each investment was modest but strategic, allowing steady growth without excessive risk. Over time, the company increased ammonia capacity from 40,000 to 60,000 tons per year, urea production from 60,000 to 130,000 tons, and launched a 200,000-ton compound fertilizer line, along with melamine and methanol products. The company’s product structure became well-balanced, and its technology and quality reached advanced levels domestically.
By 2006, the company’s profits and taxes exceeded 40 million yuan. Throughout this period, the asset-liability ratio remained around 70%, ensuring a sustainable business model. Liu Yingjiang, the general manager, summarized the company’s success by emphasizing that development should not be driven by impulsive decisions or overconfidence. He pointed out that while the saying “no change means waiting for death, but change may lead to death†was partly true, the latter part was misleading. Instead, he suggested it should be rephrased as “change for survival.â€
According to Liu, “change for death†refers to reckless investments driven by overreliance on borrowed money, assuming that debt can be ignored or that repayment abilities are overestimated. Such short-sighted strategies often lead to failure. Therefore, small businesses must prioritize sustainable growth, avoid excessive debt, and ensure operational stability. Only then can they avoid falling into the trap of rapid expansion and financial collapse.
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