Economy

Disappearing act

Unwelcome headlines for Metersbonwe’s boss

Zhou Chengjian2 w

Zhou: briefly a missing person

As anyone who has seen the 2006 film The Prestige will know, every good disappearing act has three parts: the pledge, the turn and the titular prestige. The pledge shows the object, the turn makes it vanish, and the prestige brings it back. For the growing number of Chinese billionaires who have gone missing over the last four months, not all of their disappearing acts have yet reached the return stage, and even those that have tend to do so without the implied prestige.

The latest volunteer picked from the audience has been Zhou Chengjian, CEO and founder of fashion retailer Metersbonwe. Zhou was speculated to be missing on January 6. The Shenzhen-listed firm contested the rumours until the next day when it said the company would be “investigating reports of his disappearance”. Soon after that it suspended trading of its shares.

Famously bankrupted twice before he turned 18, Zhou in 1995 founded Metersbonwe, which now has 4,000 stores across China (longstanding readers will recall our mention of the brand in WiC116 when the 50 year-old Zhou paid for a high profile product placement in a Transformers movie).

On January 7 this year Metersbonwe admitted that it had lost all means of contact with Zhou, as well as the board secretary Tu Ke.

Many suggested that Zhou may have been picked up by the police for questioning in relation to the case of Xu Xiang: a fund manager who was arrested last November when he was about to attend his grandmother’s 100th birthday party (in a rather dashing Armani lab coat). Chinese media said Xu was arrested on suspicion of insider trading and stock manipulation (see WiC295 and WiC302).

Xu was general manager of the hedge fund Zexi Investment. The investment group made good profits on risky investments and is said to have done remarkably well from trading Metersbonwe stock. According to Thepaper.cn, Zexi Investment bought 50.55 million shares of Metersbonwe through off-the-counter trading in late September 2014 for Rmb9.82 per share; the firm was then able to sell the stocks through the Shenzhen Stock Exchange via centralised bidding at a price of Rmb17.66 in April 2015, generating a profit of Rmb396 million ($60 million).

Zhou Chengjian and Tu Ke are not the first businessmen to have gone missing as they helped the authorities with their investigations of other people. In December of last year the chairman of the Fosun conglomerate Guo Guangchang was absent for a week before appearing unexpectedly at a company event.

The company previously reported that he was “assisting in certain investigations [being] carried out by mainland judiciary authorities”. It was unspecified what those investigations were, but he has since appeared in public this month at an Israel investment summit in Beijing (see WiC309).

Another official statement from Metersbonwe announced on January 15 that chairman Zhou and the secretary of the board Tu had returned to their posts.

However, a moratorium on the trading of Metersbonwe stock is due to continue until at least February 5, as the company is planning “major asset restructuring”.

Although Zhou and Guo have both emerged from their sudden absences and are not said to have been the focus of investigations themselves, their situations have still disconcerted the country’s private sector. Previously anti-corruption investigations had primarily embroiled state-owned enterprises and government officials, as evidenced by former Wuhan Iron and Steel (Wisco) chairman Deng Qilin’s arrest and subsequent expulsion from the Communist Party – with the executive the latest to be purged this month. Authorities began investigating the head of the state-owned metals producer as early as last August on suspicion of corruption (see WiC297). Now according to the Central Commission for Discipline Inspection, Deng will stand trial accused of taking bribes, using his power to further the interests of relatives and for the “long-term occupation of hotel rooms for personal use”.

Although Deng Qilin was spared the trouble of having to disappear, he has still become one in a long list of wealthy Chinese to be denied their prestige.


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