Buffett Zhao

Zhao Bingxian was born in Beijing in 1963. Prior to obtaining a Master’s degree in finance from Shanghai’s Jiaotong University in 1991, he’d served briefly in the army, where he met his future wife and business partner Lu Juan. After graduating, Zhao founded his own company with Lu – China Capital Investment Group, aiming to build an investment banking business. He held 80%, she the remainder.

“The first five years was tough,” Zhao told Capital Weekly, saying it was hard to find clients. Company folklore says he’d steel himself by swimming in an icy river every day in winter. “I was fighting with myself: don’t give up, never.”

Big break

Lu Juan’s grandfather was an investor in pre-1949 China, and gave Zhao an elementary education in how stock markets work. After the Shanghai Stock Exchange was set up in 1990, he and his wife bought special certificates that enabled them to trade shares. Their first fortune was made speculating in these.

But Zhao really came to prominence in 2000. As the financial advisor to Tong Ren Tang, a well-known maker of traditional Chinese medicine, he invested Rmb5 million when it listed in the A-share market. He also advised splitting Tong Ren Tang Technologies from the rest of the business.

In the same year, Tong Ren Tang Technologies went public in Hong Kong. The share price increased 30 times, and as the second largest shareholder, Zhao’s fortunes snowballed. He has since invested in seven companies, in which three are controlled by him or his company, and six are profitable. The total assets of China Capital Investment now exceed Rmb2 billion.

Setbacks

In 2010, one of Zhao’s firms, Wohua Pharmaceutical reported losses when its main product, a drug to counter high blood pressure, failed a government tender process. But it was Zhao’s personal life that caused more of a stir, with his high-profile divorce. His wife Lu Juan told newspapers that Zhao had extramarital affairs “and beats me up frequently for small things”, demanding an equal split of the family’s assets in what has been termed ‘China’s most expensive divorce’. The case has been suspended, with Zhao not showing up for hearings, citing sickness or business trips.

Need to know

As an investor, Zhao lives by the maxim: “Cashflow is the lifeblood of a company.” His office is full of photos and quotes by Warren Buffet and Zhao thinks there is a likeness. “Yes, we are alike, both are calm on the outside, but inside is fever. We only invest in the companies we like,” he reckons. Zhao even met Buffett in 2007 in Dalian, because they’d both invested in a local textile firm. The Wall Street Journal then gave him a new name – “Buffett Zhao”.

© 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.