Forced from one’s homeland, unable to return, it is impossible to give up hope. As Greek tragedian Aeschylus put it more than two thousand years ago: “I know how men in exile feed on dreams.”
Just ask Yang Rong. In the eight years that Rong has spent away from his native China he has feasted on two dreams in particular.
First, he hoped to overturn the legal charges that forced him to flee the country. After three years of unsuccessful litigation, he decided to abandon his appeal.
So now on to the second aspiration: to mass produce green cars (hybrids running on natural gas and electric power) in the US, with components sourced from his homeland. If he is successful, Rong hopes to become a force once again in China’s automobile industry, albeit from a distance.
“After eight years, the war should be over. I should go home now,” Yang told the Economic Observer. “With years of experience and thought, I still want to do something.”
Yang was born in 1957 in Jiangsu Province. After graduating from middle school, he took a variety of jobs before joining the army. In 1979, he was seriously injured in a border battle during the Sino-Vietnamese conflict of that year.
Demobbed, Yang turned his attention to the car industry. By 1992 he had become chief executive of Brilliance China, a state-owned car company located in the northern city of Shenyang, in Liaoning province. In the same year he earned widespread recognition as a financial pioneer when he made Brilliance the first Chinese company to list in New York.
Under Yang’s stewardship, Brilliance became China’s largest producer of mini-vans. The company also branched out into passenger cars and Yang’s fortunes rose in line with Brillance’s success.
In 2001, Forbes ranked him as the third richest man in China, with wealth of $840 million.
A year later, things started to fall apart. The Ministry of Finance announced that it was going to transfer shares in Brilliance to the Liaoning government and that the shares were to come from a stockholding in which Yang was claiming a large stake. His relationship with the local authorities, and with the central government, was soon in freefall. He fled the country before a warrant was put out for his arrest. In his absence he was charged with embezzling state assets.
In 2003, Xinhua summed up the government’s stance: Yang was “not a private entrepreneur at all, but an agent entrusted by the government to run state-owned assets.”
And thus the exile began, a period during which Yang says he has focused on domestic matters. He built a house in a wealthy part of Los Angeles. He also had another child, his fourth, at the age of 48.
In some ways he sounds content with his current situation.
“For the 11 years that I was with Brilliance, I was too busy to watch the kids grow up, and I did not enjoy family gatherings,” he told the Economic Observer recently. “In recent years, I am relaxed and in good health with a happy family. So I am thankful for the last eight years.”
But not happy enough to give up on the carmaking dream completely.
In September last year, Yang’s company, Hybrid Kinetic Motors, announced plans for a factory in Baldwin County, Alabama. The goal is for 300,000 green cars to be manufactured annually, when the plant is completed in 2013. The supply chain will originate in China – with components made in production facilities to be based in Tianjin, Anhui and Ningbo.
The Alabama factory alone will require an investment of $7.8 billion. Some of the money may come from an unusual source. The idea is to ask backers to stump up a minimum of $500,000, which can then be used to apply for a visa that permits the investor to live in the US. (The US runs an immigrant investor programme in which foreigners who invest sufficient funds earn the right to live in the country).
After five years, the investment will be converted into $650,000 worth of equity in another Yang company, Hong Kong-listed Far East Golden Resources. Basically, Yang is offering a 6% annual return plus an American green card.
Yang has a short-term target to raise at least $1 billion through the scheme, so he needs to find at least 2,000 such investors to reach his initial goal.
To meet this end, he has set up a “Billionaires Club” to promote the scheme with branches in Shanghai, South Korea and Russia.
Progress seems slow: a manager at the Alabama Centre for Foreign Investment told 21CN Business Herald that the project has yet to translate into funds. The source added that he did not share Hybrid Kinetic’s optimism on take-up for the immigration investment plan.
One reason might be wider investor skepticism. The local operations of the proposed business model face some pretty significant constraints: as Yang Rong is officially still a fugitive, he cannot become a director or a shareholder in the companies established to support the Chinese operations.
Undaunted, Yang has been working to address the issue, and seems to have convinced three local development agencies (in the cities where he is proposing to locate his China-based manufacturing) to sponsor the creation of shell companies that he will then use to attract further local investment.
But the fledgling relationships that Yang is now trying to nurture could be threatened by bigger political beasts.
The governor of Liaoning Province at the time Yang fled China was Bo Xilai, who is now expected to be a key figure in the next generation of national leaders. Analysts question whether, having crossed swords with such a powerful adversary in the past, Yang’s hopes of an eventual rehabilitation might come to nothing.
More generally, Yang’s plans will see him go up against some of world’s most established auto companies, most of whom see the hybrid car market as a key future battleground.
“Why should investors bet on a man out of the auto industry for seven years, and with no production capacity, being able to beat the giants?” asks the South China Morning Post.
© ChinTell Ltd. All rights reserved.
Sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.