Rich pickings

Profiles of China's most successful businesspeople and how they succeeded


03 Aug 2012
Week in China

One way to evaluate the economic circumstances of a country is to examine its most successful entrepreneurs. The second edition of China’s Tycoons seeks to enlighten readers about the Chinese business elite. In this volume we profile 100 of the nation’s top tycoons – that’s up from the 75 featured in last year’s inaugural edition.

There are 26 new additions, in fact. Those with sharp maths skills will have realised that this also means one tycoon has been removed from this edition. The tycoon in question is Xu Ming, and his tale speaks volumes about the tricky nature of China’s business environment. Since March, the founder of Dalian Shide has been detained by the government, in connection with his dealings with purged Chongqing Party boss, Bo Xilai. It’s alleged that Bo helped Xu make his fortune when the politician ran the city of Dalian – by ensuring Xu got a lucrative contract. In the ensuing years their relationship is thought to have grown closer, and mutually profitable.

The Chinese have a term to describe this: guanxi. It denotes a series of favours used to cement a relationship and get ahead commercially. The billionaire’s rise and (rapid) fall is illustrative of Xu’s guanxi ultimately backfiring and on a fairly spectacular scale. Without doubt this cautionary tale will not be lost on the rest of China’s business elite.

However, Xu’s particular case – while eye-opening – should not blind us to the extraordinary achievements of the 100 other tycoons in this book. Their success can be put down to other traits. Most came from an impoverished background; they worked phenomenally hard and took huge risks. That may sound like the classic definition of an entrepreneur, but you’d be hard put to find comparisons to them in the US, the UK or Germany.

In some ways that’s because of the unique nature of China – a country which has gone through vast change in the past few decades and moreover at a pace unrivalled in world history. Take the example, of Zhang Dazhong and the means by which he got the seed capital for his retailing business. It’s not the sort of case study you’d read at business school. Zhang’s mother made the mistake of criticising Mao Zedong in the late 1950s and was executed as a supposed ‘rightist’. When Mao died in 1976, the new government judged that she was wrongfully killed and to make amends paid Zhang Rmb7,000 ($1,097) in compensation. He used that to open his first shop. Zhang is now worth an estimated Rmb4.9 billion.

Our analysis shows that by far the biggest percentage of entrepreneurs were born in the coastal province of Zhejiang. In this year’s edition, 16% of the tycoons are Zhejiangers.

All the tycoons in this book grew up in a country that was turned upside down, not once, but repeatedly. The most decisive moment for all of them came in late 1978 when Deng Xiaoping unleashed three decades of free market reforms – reversing years of failed state planning that had turned China into a backward economy. To modernise the country, he turned to the private sector. “To get rich is glorious,” he famously said and he was taken at his word by those you will read about in the forthcoming pages. In most cases they’ve emerged with billions.

But that took hard work and an appetite for risk. If you’re looking for an example of hard work, try Gree’s Dong Mingzhu who grew a flagging firm into an air-conditioning giant. To do so she hasn’t taken a day off in 20 years. And taking bold risks? Would you buy a bankrupt steelworks in Germany, take it apart, ship it to China, and then figure out how to reassemble it? That’s what Shen Wenrong of Sha Steel did.

It should be noted that this is not a ranking. Forbes and the Hurun Rich List annually compile their eagerly-awaited rankings of China’s wealthiest. Our purpose here is a little different: to offer 100 potted biographies as a means to better understand modern China.

One interesting conclusion we can draw from our sample – which we think pretty representative – is about where China’s most business savvy folk tend to come from. The answer is unquestionably Zhejiang province. Easily the most (a total of 16) were born in Zhejiang, followed by Jiangsu (with 11). Also noteworthy: just over half come from Shanghai and the five coastal provinces (including Zhejiang and Jiangsu) that stretch from Shandong to Guangdong (it’s actually 51, if you include Victor Koo, who was Hong Kong born but then built his firm Youku on the mainland). As such, it’s tempting to ask: are these coastal folk blessed with a more entrepreneurial DNA than their compatriots? Or did they just have greater opportunities, since the coasts were the first to benefit when Deng opened China to foreign investment?

We hope you find this book useful. And if you’d like to stay informed about news and issues impacting business in China, we invite you to become a subscriber to Week in China, compliments of HSBC.

Week in China
China's Tycoons

In Week in China's latest edition of China's Tycoons, we continue to chronicle the world's fastest-ever exercise in wealth and business creation.

Now with 100 biographies of China's leading businesspeople, the stories also offer a fresh way to understand how China has become the world's second biggest economy in just three decades.

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