First hailed as successes, they are toppled over shady deals
By Peh Shing Huei 9 December 2008
Don’t bother looking for the forbidden fruit when ‘original sin’ is mentioned in China these days.
It has nothing to do with Adam and Eve and the Christian belief that human beings are born sinners.
In this country, where the government is officially atheistic, ‘original sin’ is earthly, referring to private entrepreneurs who had started their businesses with shady deals.
Like an inherent sin, such dark pasts of China’s tycoons are always liable to be brought up at any time, putting them just one step away from being disgraced and punished. It is like having a Sword of Damocles over their heads.
‘Many entrepreneurs here have grown their businesses in an environment that has not been very business-friendly,’ said Shanghai-based analyst Rupert Hoogewerf. ‘So they have had to cut corners at some stage in their careers. If they are too blatant about it, they will be pulled down.’
This has led to a roller-coaster ride for the nouveau riche in China, where they are first celebrated as model success stories, before being brought down for transgressions of the law - a rise and fall that is often played up in the media.
The most recent example is appliance tycoon Huang Guangyu. Barely a month after being named China’s richest man on Mr. Hoogewerf’s Hurun Rich List, with an estimated fortune of US$6.3 billion (S$9.6 billion), news leaked that he had been detained for share manipulation. Hurun is a publishing group.
If found guilty, Huang would join a long list of fallen tycoons, the most infamous of whom is Lai Changxing, a peasant-turned-businessman in Fujian province.
Lai allegedly ran the largest smuggling and corruption racket in China in the 1990s, evading at least US$3.6 billion in duties. He even had a seven-storey building designed as a sexual pleasure palace for officials.
‘If Lai Changxing were executed three times over, it would not be too much,’ former Chinese premier Zhu Rongji famously said in October 2000, after Lai fled to Canada.
He is fighting a long-drawn tussle to avoid being extradited back to China.
Yet, with so many business magnates operating on the fringes of the law, how did one, like Lai, get chopped and not the other?
There are two popular theories. First, it is the curse of the rich list. Each year, both financial publication Forbes and Hurun release a list of the top moneybags in China.
Many speculate that making the list draws the attention of Beijing, a view that won wide credence after Mr. Zhu ordered in 2001 tax probes into Forbes’ mainland top 10.
But Mr. Hoogewerf rubbished the idea. ‘We have been compiling the rich list for 10 years, with a total of about 10,000 people listed,’ he told The Straits Times. ‘Only about 10 tycoons have been brought down. That is only 0.1 per cent.’
Second, it is political collateral damage. Most of these businessmen made their fortunes through close ties with the political elite, enjoying their patronage and greasing their palms in return.
But when their political ‘shields’ are brought down, they usually go down together.
When Shanghai party chief Chen Liangyu was sacked in 2006 for corruption, his cronies, such as Zhou Zhengyi (11th richest in China in 2003) and Zhang Rongkun (16th in 2005), were also hauled up and were given long prison terms.
The regular public cutting down of tycoons also points towards a persistent tension between the Chinese Communist Party (CCP) and businessmen in China.
On the one hand, the party welcomes some of them into its fold after acknowledging in 2002 that it represents their interests too, in addition to those of the proletariat, its traditional constituency.
But, on the other hand, the party seems eager to appease the masses, who are aggrieved that some had become so rich so fast, and presumably through illegal means - the theory of ‘original sin’.
‘The CCP needs to strike a balance between promoting growth and maintaining concern for the common people,’ said Johns Hopkins University’s Kellee Tsai, who has written two books on China’s private entrepreneurs.
To lessen the chance of being brought down, Chinese tycoons deliberately keep a low profile. Most of them rarely grant interviews to the media. ‘As a rule, keep your head down if you want to do business in China,’ said Mr. Hoogewerf.
The other strategy is to get close not only to the local authorities, but also to the central government.
According to Hurun, about 150 who appeared on its rich list are now delegates to China’s legislature and top advisory body - a fivefold jump from 2003.
Political economist Lin Kun-Chin of the National University of Singapore described the relationship between China’s party cadres and entrepreneurs as ‘symbiotic’.
Yet, it is a relationship that could be further strained because of the ongoing financial crisis, observed Professor Lawrence Reardon of the University of New Hampshire.
‘Entrepreneurs increasingly are unable to provide the lavish meals and gifts, while cadres are pressed to find new sources of funding from a contracting economy,’ he said.
‘Some entrepreneurs have closed shop and disappeared, leaving behind a very disgruntled labour force and debts that local governments are often unable to assume...As the economy slows and people become restless, the party and the entrepreneurs will re-evaluate their relationship with each other and the state.’
Given the circumstances, salvation for the Chinese tycoons, it seems, may not be near.
1 comment:
Dark Pasts Catch Up with China’s Tycoons
First hailed as successes, they are toppled over shady deals
By Peh Shing Huei
9 December 2008
Don’t bother looking for the forbidden fruit when ‘original sin’ is mentioned in China these days.
It has nothing to do with Adam and Eve and the Christian belief that human beings are born sinners.
In this country, where the government is officially atheistic, ‘original sin’ is earthly, referring to private entrepreneurs who had started their businesses with shady deals.
Like an inherent sin, such dark pasts of China’s tycoons are always liable to be brought up at any time, putting them just one step away from being disgraced and punished. It is like having a Sword of Damocles over their heads.
‘Many entrepreneurs here have grown their businesses in an environment that has not been very business-friendly,’ said Shanghai-based analyst Rupert Hoogewerf. ‘So they have had to cut corners at some stage in their careers. If they are too blatant about it, they will be pulled down.’
This has led to a roller-coaster ride for the nouveau riche in China, where they are first celebrated as model success stories, before being brought down for transgressions of the law - a rise and fall that is often played up in the media.
The most recent example is appliance tycoon Huang Guangyu. Barely a month after being named China’s richest man on Mr. Hoogewerf’s Hurun Rich List, with an estimated fortune of US$6.3 billion (S$9.6 billion), news leaked that he had been detained for share manipulation. Hurun is a publishing group.
If found guilty, Huang would join a long list of fallen tycoons, the most infamous of whom is Lai Changxing, a peasant-turned-businessman in Fujian province.
Lai allegedly ran the largest smuggling and corruption racket in China in the 1990s, evading at least US$3.6 billion in duties. He even had a seven-storey building designed as a sexual pleasure palace for officials.
‘If Lai Changxing were executed three times over, it would not be too much,’ former Chinese premier Zhu Rongji famously said in October 2000, after Lai fled to Canada.
He is fighting a long-drawn tussle to avoid being extradited back to China.
Yet, with so many business magnates operating on the fringes of the law, how did one, like Lai, get chopped and not the other?
There are two popular theories. First, it is the curse of the rich list. Each year, both financial publication Forbes and Hurun release a list of the top moneybags in China.
Many speculate that making the list draws the attention of Beijing, a view that won wide credence after Mr. Zhu ordered in 2001 tax probes into Forbes’ mainland top 10.
But Mr. Hoogewerf rubbished the idea. ‘We have been compiling the rich list for 10 years, with a total of about 10,000 people listed,’ he told The Straits Times. ‘Only about 10 tycoons have been brought down. That is only 0.1 per cent.’
Second, it is political collateral damage. Most of these businessmen made their fortunes through close ties with the political elite, enjoying their patronage and greasing their palms in return.
But when their political ‘shields’ are brought down, they usually go down together.
When Shanghai party chief Chen Liangyu was sacked in 2006 for corruption, his cronies, such as Zhou Zhengyi (11th richest in China in 2003) and Zhang Rongkun (16th in 2005), were also hauled up and were given long prison terms.
The regular public cutting down of tycoons also points towards a persistent tension between the Chinese Communist Party (CCP) and businessmen in China.
On the one hand, the party welcomes some of them into its fold after acknowledging in 2002 that it represents their interests too, in addition to those of the proletariat, its traditional constituency.
But, on the other hand, the party seems eager to appease the masses, who are aggrieved that some had become so rich so fast, and presumably through illegal means - the theory of ‘original sin’.
‘The CCP needs to strike a balance between promoting growth and maintaining concern for the common people,’ said Johns Hopkins University’s Kellee Tsai, who has written two books on China’s private entrepreneurs.
To lessen the chance of being brought down, Chinese tycoons deliberately keep a low profile. Most of them rarely grant interviews to the media. ‘As a rule, keep your head down if you want to do business in China,’ said Mr. Hoogewerf.
The other strategy is to get close not only to the local authorities, but also to the central government.
According to Hurun, about 150 who appeared on its rich list are now delegates to China’s legislature and top advisory body - a fivefold jump from 2003.
Political economist Lin Kun-Chin of the National University of Singapore described the relationship between China’s party cadres and entrepreneurs as ‘symbiotic’.
Yet, it is a relationship that could be further strained because of the ongoing financial crisis, observed Professor Lawrence Reardon of the University of New Hampshire.
‘Entrepreneurs increasingly are unable to provide the lavish meals and gifts, while cadres are pressed to find new sources of funding from a contracting economy,’ he said.
‘Some entrepreneurs have closed shop and disappeared, leaving behind a very disgruntled labour force and debts that local governments are often unable to assume...As the economy slows and people become restless, the party and the entrepreneurs will re-evaluate their relationship with each other and the state.’
Given the circumstances, salvation for the Chinese tycoons, it seems, may not be near.
Post a Comment