Mei Xu, the co-founder and CEO of Pacific Trade International, makes a keynote speech on Fortune Most Powerful Women summit on February 28, 2016. Photo: Fortune
Mei Xu, the co-founder and CEO of Pacific Trade International, makes a keynote speech on Fortune Most Powerful Women summit on February 28, 2016. Photo: Fortune

It is 1979. The United States formally establishes diplomatic ties with China. A 12-year-old girl from Hangzhou, the capital of eastern Zhejiang province, along with 79 others are the lucky ones chosen from more than 10,000 children to be trained as the emerging communist nation’s future diplomatic corps.

Mei Xu was sent to the Hangzhou Foreign Language School, considered an elite institution, where an immersive English programme of education was given to prepare students as China’s diplomats.

“We used American textbooks,” Xu recalls, “so the history we learnt was divided into European, Asian, African and Islamic.” Classic readings like Great Expectations and Shakespeare’s works were on the reading list, so was American novelist Ernest Hemingway. Nothing was censored.

Fast forward 10 years later and picture a dusty warehouse in the coastal city of Dalian in northeast China. That 12-year-old is now 18, fluent in English, poised, sophisticated and with a deep knowledge of American society. But her first job is not what she expected.

“I was sent to a warehouse of a minerals exporter in Dalian and my job was to put a check mark on a clipboard when a truck came to pick up a load,” recalls Xu, now a 50-year-old women business leader. “It was very boring.”

Mei Xu, the co-founder and CEO of Pacific Trade International, which produces candles, home fragrances and decor products. Photo: Mei Xu

In 1989, Xu was about to graduate from Beijing Foreign Studies University and hoped to embark on her diplomatic career, but the Tiananmen Square Massacre ensured a different path.

On June 4, the government declared martial law and ordered the People’s Liberation Army to crack down on student protesters who had been camped in the square for seven weeks calling for democracy.

The government has officially said only 241 people died (including 36 students) that morning, but critics say the death toll has been estimated at anywhere between the hundreds to the thousands. After the incident, all graduating students in Beijing that fateful summer were sent to jobs in far-flung areas for “re-education.”

In Dalian, Xu lost any opportunity to practise her English skills and she quit a year later. She knew any hope of becoming a diplomat ended as soon as she left her assigned job and jumped out of the then heavily government-controlled employment system.

Unemployed and encumbered with a hefty financial burden from her decade of education paid for by the state, Xu felt trapped. “It was a very difficult period of time, I knew I would never be admitted back into the system again,” she said.

At that point, Xu knew there was no turning back. Once she had made the decision to go to America, she took the Graduate Record Examination.

She then sent her examination results along with an application to journalism schools in America. It turns out her major back in college in 1985, had planted the seed of an “American dream” in her heart. Eager for a fresh start and new life, Xu moved to the US and earned a master’s degree from the University of Maryland in 1993.

Igniting an idea

After graduating, Xu hoped to join the World Bank where she was once an intern, but a hiring freeze shut the door on that dream. It seems the export industry resurfaced in her career, but this time it was at a company in New York – a far cry from that dusty Dalian factory.

She soon settled into her post at a firm exporting medical equipment to China. In her spare time, she loved to explore the fashion brands lined up on the second floor of the famed Bloomingdale’s luxury department store in the US. She felt like a kid in a candy store.

However, when Xu went all the way up to the homewares department, it was like a granny’s house filled with retro products. “I just couldn’t understand how someone who liked to dress in a Donna Karan outfit, why would they wanna go back to a Lord Ashley home,” said Xu, recalling how she asked herself this question and decided to fill the void she saw.

I probably would not have been a good diplomat because following protocols is not my strength. I’m a disruptive person versus a conforming kind of person

But she couldn’t quite decide what product she should focus on. What decor item would hit the sweet spot between must have elegance and be perfect for a modest startup?

Xu decided to test a range of products to tap the only wisdom that counted – the market. She took a few sample items, including silk flowers, car accessories and music dolls imported from China to a gift fair in North Carolina. To her surprise, one product stood out among all the orders she took – candles. She had secured orders worth a total of US$90,000 with 90% of them for candles.

Pacific Trade International was born with the help of her then-husband David Wang in 1994. But the market taught Xu a tough lesson soon after launching their startup.

Candle sales plunged after Christmas. “The reason why candles were so popular in the trade show,” said Xu, “was because it was September – retailers were stocking up on Christmas gifts for their stores.”

To make her candles less seasonal and more functional, Xu and Wang were inspired by their trip to the world’s largest gift fair in Germany where unique scented candles caught their eye. This was the kind of product absent from the American market – fragrant candles in contemporary styles and modern colors.

They started to experiment mixing their own candles. In the basement of their home, using Campbell’s soup cans as molds and accidentally leaving out Vybar, the chemical needed to create a seamless satin finish.

But this created a mottled texture, like a snow fake, that would later become a signature look of their brand – the Chesapeake Bay Candle.

The business took off after Xu’s sister established manufacturing operations in Hangzhou, their hometown in China in 1995. After opening a second factory in Vietnam in 2003, which can produce 3 million candles in various shapes or sizes per month, the manufacturing plant in China has gradually turned into their sourcing, testing and design center.

Mei Xu in her factory in Glen Burnie, Maryland. Photo: Mei Xu

In 2011, a year after the company’s worldwide sales hit over US$48 million, the increasing labor costs and anti-dumpling duty in Asia led Xu to launch a US factory in Glen Burnie, Maryland. The plant now has 100 employees and produces 1 million candles a month.

Lighting the way

Competing with the 48-year-old Yankee Candle, the largest American manufacturer and retailer of scented candles, the much younger Chesapeake Bay Candle brand is now being sold in more than 10,000 stores in the US and Europe, including in department stores such as Bloomingdale’s, Kohl’s and Target. Its retail sales now account for 8% of the market share.

“I think the advantages we have, are the demographics and the changing lifestyle,” Xu said. And she has done her research. The Yankee brand is very much geared to baby boomers with its traditional glass containers, and strong and straightforward fragrances.

Chesapeake Bay Candle, however, is more attractive to younger customers, who want chic designs as well as fresh and natural fragrances, which help them to focus or relax better when doing meditation or yoga. “We will have a nicer growth curve ahead,” said Xu, aiming to become a dominant player in the next five years, with revenue growing at 15% last year.

I feel that in an unofficial way, I have returned to where I came from and it is where I am very different from many other entrepreneurs

According to the National Candles Association, seven out of 10 US households use candles. As of 2015, retail sales of candles in America came to an estimated US$3.2 billion annually.

Technology has also expanded the scope of what can be produced in the industry – products are no longer limited by one’s imagination. The use of 3D printing has already produced decorative glass containers for Xu’s business. But what’s next? Xu has been closely watching discussions boom in inanimate objects using the 5G network – known as the internet of things – and how she could apply this to her products, which could transform the conventional delivery of fragrances in candles.

“Or could we use a more powerful battery to heat up candles and download any fragrance we prefer?” asked Xu, who could not hide her tremendous excitement in possibilities for the industry.

Reflecting on the past 30 years, “there was a time I would think what kind of diplomat I would be,” Xu said, “but I would say I am playing that role in an unofficial manner.”

Xu has been working with the US State Department to assist development in African and Arab countries as well as with NGOs.

“I am mentoring entrepreneurs in poor countries, in African and Arab countries with the State Department,” she said. “I am also part of WEConnect, it is a non-profit organization that mentor and champion in women entrepreneurs around war-torn regions.

“So I do a lot of works in that area. Because I am in Washington Georgetown University, the Institute for Women, Peace, and Security that really promote peaceful dialogue through engagement. I feel that in an unofficial way, I have returned to where I came from and it is where I am very different from many other entrepreneurs.”

She added that: “I missed the fact that I don’t know what would have happened to me. But I’m most happy that this path has served me well in many ways.

“I probably would not have been a good diplomat because following protocols is not my strength. I’m a disruptive person versus a conforming kind of person, so that’s why creativity and design is more my background now than following orders.”