. . . while most manufacturing in China is all about economies of scale that result in the lowest price, Mr. Zhang says he doesn't compete by undercutting competitors. He says his products are more expensive than those of competitors in Japan and Korea. The equipment used is world class and imported to his Broad factory from all over the world. Mr. Zhang is also unusual in that he is focused on the long term. By contrast, "most entrepreneurs see investment as detracting from profits," says X.D. Yang, co-head of buyout firm Carlyle Group's investments in Asia. "They only draw up one-year budgets. They don't build their companies to last for years and years."

In a world where capital has never been priced realistically, and, until recently, loans were considered government disbursements rather than debt that had to be repaid, Mr. Zhang is careful about how he seeks financing. "He is the only one I have ever met in China who has not asked me to get him money through Goldman," Mr. Hu adds.

Mr. Zhang also invests time and energy in his work force. He recruits from all over China, showing visitors a list of recent recruits and noting how many come from China's top universities.

Certificates attesting to the fact that his company paid more taxes than any other private company are displayed prominently in the executive suite. Last summer Premier Wen Jiabao visited Broad, a trip recorded in glossy marketing materials. "You must be Zhang Yue. I know you!" Premier Wen exclaimed in his greeting," the material states. "Yes I am, Premier, welcome to Broad Town," Mr. Zhang is said to have replied.

Mr. Zhang insists he is a rare breed in China, since he both pays taxes and doesn't pay bribes. He also says his refusal to pay bribes is one reason why he has failed to win certain contracts. . . .