Imagine working for a company that gave stock options to employees at all levels, from factory workers to cooks to janitors. But then imagine that in the 10 years after taking the stock options, the stock rose in value by +9,500%! For many workers at the Chinese lens-maker Sunny Optical, that is the story of how they became millionaires.
The story of Sunny Optical has, in a sense, always been one of rags-to-riches and long shots. It was founded more than 30 years ago by Wang Wenjian, who was an appliance-factory worker with no more than a high school education and $10,000 of borrowed cash. In the 1990s, when Wenjian started to see some substantial growth, he changed the company from a “village and township enterprise” into a joint-stock company, and he took the rare step of distributing shares of the company to employees from all walks – not just top management.
The end result was that quality inspectors, cooks, janitors, and low rung factory workers were able to subscribe for shares at a reasonable cost, which hopefully a majority of them decided to do. As the company grew, the stock skyrocketed and took shareholders with it – a meager 0.013% stake would have been enough to make an employee a millionaire, virtually overnight. According to Bloomberg, if you exclude the “combined 16% ownership of four directors in the trust, the average holding would translate to about $17 million per employee.” That’s not chump change.
The rise of Sunny Optical corresponds with the surging demand for cameras, but not the traditional type of cameras. Think smartphones, car cameras, and drones – all cameras that consumers are likely to demand more and more in the modern economy. Sunny Optical is poised to continue to seeing robust growth as camera demand rises, making those wealthy shareholders even wealthier.
On one hand, Sunny Optical gives a snapshot of the changing face of wealth in China, where technology companies and employees are accounting for the most growth of the country’s millionaires (much like here in the US). Credit Suisse Group AG estimates that China’s millionaires now top 2 million, a number that’s likely to continue swelling as the government pours resources into the tech sector.
But on the other hand, the Sunny Optical story also underscores how stock options or ownership of shares in a company with blistering growth can take investors for a ride to wealth. For employees and investors, it’s a matter of deciding whether it makes sense to take or purchase equity in the company, and it also matters how long the shares take to vest. But if you believe in the company’s mission and trajectory, it could be a bet worth making.
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