Vanke’s founder Wang Shi famously sold shares in his start-up company at a wet market in 1988. And the low-profile tycoon who has been trying to take over Vanke in recent months, Yao Zhenhua of Baoneng Group, also has links to the vegetable business.
Yao was born in 1970 in Shantou, whose business clans are some of the most influential in China (Li Ka-shing in Hong Kong and Tencent founder Pony Ma in Shenzhen are also Shantou natives).
Yao graduated from South China University of Technology in 1992 and after working briefly for a Shenzhen state firm he started his own trading company which quickly became the major vendor in Shenzhen’s vegetable market – taking advantage of new rules that had opened up the business to privately-owned trading operations.
That vegetable vendor was renamed Baoneng in 2000, as the company expanded into other business areas, especially real estate development.
In 2003 Baoneng took a controlling stake in a state-owned logistics firm in Shenzhen, which was reportedly in financial trouble. Akin to Li Ka-shing’s acquisition of Hutchison Whampoa in the 1970s – after which Li converted the docks of the fading British merchant into residential towerblocks – Baoneng’s investment gave Yao cheap land and he used it to build lucrative residential real estate projects.
By 2005 the company had launched Shenzhen Taikoo City (the name was inspired by the property district developed by Swire, another British trading firm with a long history in Hong Kong) and Baoneng built it up into a highly successful residential-commercial complex.
In 2012, the China Insurance Regulatory Commission granted licences for Yao to establish Foresea Insurance (in Chinese it is called Qianhai Insurance, named after the new special economic zone in Shenzhen which is expected to deepen financial links between Guangdong and Hong Kong).
The new insurance arm will allow Baoneng to access more investor capital, suggesting that Yao isn’t content with his current ranking as a Shenzhen developer. And in the second half of 2015 Baoneng began snapping up shares in Vanke, the biggest Chinese residential property firm in terms of sales. At one stage Baoneng owned more than 24% of Vanke’s stock, and the unsolicited bid was soon being dubbed as China’s first major hostile takeover battle (see issues 308 and 317). The tussle is still going on, and local media has started to identify Baoneng in the same category as Anbang Group – an acquisitive investment conglomerate also backed by an insurance unit, and with a similar taste for big bets on property.
Need to know
Yao hasn’t portrayed any admiration for Li Ka-shing in public but he shares many of the business practices of his fellow Shantou native.
He says he encourages his staff to read widely, for instance, and he makes a virtue of prudent living, claiming that he sticks happily to a single Tissot wristwatch because he doesn’t want to be seen as extravagant or wasteful.
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