Economy

Circle of trust

Is this the most influential business club in China?

France China

Bonjour monsieur: Francois Hollande meets Liu and the CEC group in Paris

Founded in 1693, with a bar that (apparently) ‘has not shut for 200 years’, White’s is the oldest gentlemen’s club in London. And one of the hardest to join as well. Yes, the waiting list is a lengthy one and prospective members must find 35 signatories in support of their applications.

Not surprisingly, it’s pretty exclusive. White’s hosted Prince Charles’ bachelor party before his wedding to Princess Diana. British Prime Minister David Cameron was a member too, although he gave up his position in 2008 because of its strict men-only rule.

Over in China, exclusive social clubs are not exactly flavour of the month in government circles. Since President Xi Jinping launched his austerity campaign, many private member clubs have been shut down. But one influential network for tycoons has been thriving: the China Entrepreneur Club (CEC).

The CEC doesn’t have a glamorous clubhouse, instead welcoming its members at a nondescript building close to Peking University in Beijing’s Haidian district. Its membership is a powerful bunch, nevertheless. Revenues at companies controlled by CEC cardholders added up to Rmb3 trillion ($460 billion) last year.

Founded in 2006 by 31 Chinese entrepreneurs, economists and diplomats, CEC membership has only grown to 49 people (almost all men). The Beijing News says the CEC is extremely difficult to join. New members are rarely admitted unless they have a remarkable track record of success, plus they must share the CEC’s values, which include a heavy emphasis on government relations.

That’s why the CEC isn’t just a clubhouse for private sector tycoons. Liu Lefei, the chairman of the private equity arm of Citic Securities (and also the son of Liu Yunshan, one of the seven Standing Committee members of the ruling Politburo), is a member. So are some of the other influential bosses at state-owned firms, such as Sinochem’s Frank Ning.

The CEC has an official website detailing its activities. Similar to British gentlemen’s clubs, it offers a means for members to meet and share ideas, as well as provide assistance in rougher times.

The group’s key members also travel each year, meeting foreign politicians and promoting China’s business interests overseas.

“There’s little else like it anywhere else in the world,” says Steve Tappin, the presenter of the BBC TV documentary China’s Billionaires’ Club. “It’s very hard to imagine the top 50 CEOs in America or Europe happily getting together or going on foreign trips as a group.”

One reason for the camaraderie, according to Sina’s Charles Chao, is that CEC members mostly come from different industries, so they are not competing with one another.

Last week there was a change of guard at the business body. As the CEC celebrated its 10th anniversary, its founding chairman Liu Chuanzhi (the entrepreneur who established Lenovo, see WiC291) handed over his role to Alibaba’s Jack Ma.

The transcript of Ma’s inauguration speech was published by Xinhua. “Money is important,” he said, “but after a certain stage it becomes a social resource, one that’s entrusted to us [CEC members] by society to make it a better one. We gather together not because we want to create a coalition force. We have come together to create values for our society.”

“The news I dislike reading most has been about those who are going to be the richest,” Ma added, highlighting the sense of social responsibility that should come with great wealth (he used the term shoufu, where shou translates into ‘first’ in Mandarin while fu can mean either ‘rich’ or ‘responsible’).

Ma’s chairmanship comes at a time when one of his archrivals, Wang Jianlin of the Wanda Group, no longer seems to be a CEC member. (According to Liu Chuanzhi, anyone absent from three consecutive annual meetings can lose their membership status). Robin Li and Pony Ma, the chairmen of internet titans Baidu and Tencent, have never bothered to apply either.

Still, membership of the business group is coveted by many up-and-coming tycoons, and the CEC added five new joiners last month.

Two are already hailed as tech tycoons: LeEco’s founder Jia Yueting (see WiC325) and smartphone maker Xiaomi’s Lei Jun.

The other new additions are Tsinghua Holdings Chairman Xu Jinghong, who is building China’s biggest chipmaker; Cher Wang, the chairwoman of Taiwan’s smartphone maker HTC; and Zhang Yong of the hotpot chain Haidilao (see WiC212 for our first mention of the company).

In Zhang’s case his admission seems to have been linked to the example he sets at his company. For instance, Zhang bans all his employees from playing mahjong (if they do so they face instant dismissal). He says his iron-clad rule is designed to prevent his Sichuan-based staff (a mahjong-mad province) from gambling.

“Most CEC members are entrepreneurs who care for their staff a lot,” Liu Chuanzhi claims. “But in order to remind them to do better, Zhang is an inspiring example for us to follow.”


© ChinTell Ltd. All rights reserved.

Exclusively 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.