Economy

Loyalty points

Party puts out list of ‘Top 100’ entrepreneurs – but who doesn’t feature?

Jack-Ma-w

Getting a mention: Jack Ma

The All-China Federation of Industry and Commerce (ACFIC) was founded in 1953 with 640 representatives. It was extremely difficult for private sector entrepreneurs to get an invite. They needed the blessing of the Communist Party’s United Front Work Department. And they had to have survived Mao Zedong’s brutal ‘Five-Antis’ campaign, which had terrorised the business world the year before.

The campaign had been launched in major cities to target industrialists, demanding confessions of illicit earnings pocketed from past crimes that ranged from bribery to theft of state property.

Businessmen soon realised that the more they confessed, the better their chance of getting through this merciless exercise in ‘class struggle’. Rong Yiren, China’s richest man at the time, claimed to possess Rmb200 billion of ill-gotten wealth ($1 was then worth roughly Rmb25,000, so he was owning up to $8 billion of loot). But the admission didn’t seem to harm his political career: he would become the ACFIC’s chairman and later take on more senior roles in the government.

In 1956 all private businesses became state-owned (Rong’s family was given $6 million in compensation). Because the ACFIC was created to manage the ‘non-state economy’, its role looked redundant after the nationalisations. But it grew into a more influential body again in the reform era after 1978 and today it has more than 3,400 branches with nearly 2.1 million members, including many of the wealthiest tycoons, such as Alibaba’s Jack Ma.

The role of the private sector in the Chinese economy is again a much debated topic (see WiC428), so perhaps it was fitting that the ACFIC has come up with another study to remind onlookers of its contribution.

Its list of “100 outstanding private entrepreneurs at the 40th anniversary of reform and opening up” was announced last week. According to ThePaper.cn, the United Front Work Department was heavily involved in the selection process, making it something of a guide to who is in the good books of the Chinese authorities.

Businesspeople making the list (of which only six were women) are “emblematic of the country’s private economic development”, the ACFIC insists, while they also “resolutely uphold the Party’s leadership, unswervingly go along the path of socialism with Chinese characteristics and champion the reform and opening-up policies”.

Prominently featured names include Jack Ma, Tencent’s Pony Ma, Robin Li of Baidu and Lei Jun of Xiaomi.

Real estate is the most represented sector with nine entries, led by China Evergrande’s Xu Jiayin.

Zhang Yiming, Bytedance’s 35 year-old CEO is the youngest boss in the ranking (his six year-old internet firm has just pipped Uber as the world’s most valuable start-up, according to Bloomberg).

Given that state-owned enterprises dominate the financial services sphere in China there is far less representation from that sector on the ACFIC list. Chen Dongsheng, chairman and CEO of Taikang Insurance Group (and also the grandson-in-law of Mao Zedong and the biggest shareholder in Sotheby’s) is the sole representative from the financial world to make the cut.

That means Peter Ma, the founder and CEO of Ping An Insurance, one of the most important financial firms from Shenzhen, has missed out.

Indeed, as National Business Daily notes, while most of the tycoons lauded by the ACFIC also feature on the magazine ‘rich lists’ that estimate personal fortunes every year, it is the absences on the new list that make for the more interesting reading.

For instance, Richard Liu of e-commerce giant JD.com, who was recently arrested (but not charged) on sexual assault allegations in the US, has missed out (and Liu is a senior member of the ACFIC).

Other notable absentees are Wang Jianlin of Wanda Group, HNA Group’s Chen Feng, as well as Fosun’s Guo Guangchang. The trio have led some of China’s most acquisitive conglomerates over the past five years but have come under pressure to reduce debts by selling some of their assets. Their exclusion from the rankings suggests that their shopping sprees – often overseas – haven’t earned them much kudos at home.

Also missing is Yeung Kwok-keung, chairman of Country Garden. It has grown into the country’s biggest developer in residential sales but Yeung’s absence might fuel talk that regulators have a watchful eye on his aggressive growth model, which has been blamed for stoking speculation and even fatalities on his construction sites (see WiC427).

The timing of the publication has raised its profile. Private firms complain that they are bearing the brunt of the government’s ‘supply side’ reforms and that the country’s banks are freezing them out of financing.

Xi Jinping has tried to sound more supportive: in a letter published by Xinhua last month, he wrote to a group of entrepreneurs, applauding their contribution to the country’s development as “indelible”. He rammed home a similar message during a tour to southern China last week, stressing that economic reform and opening up would “never stop”.

The mood among the tycoons remains wary of a more assertive state sector, but few think the tone comparable to what was faced during the Five-Antis campaign of 1952, when business dynasties ceded ownership.

However, today’s corporate elite does recognise that in the current mood it is no bad thing to be seen giving back to society. Wanda Group has been one of the most enthusiastic backers of Xi Jinping’s poverty-fighting campaign, for instance. The effort has been the most visible in Guizhou, the province that Xi represents as a member of the 19th Party Congress (see WiC380). During the football World Cup this summer (of which Wanda was one of FIFA’s lead sponsors) six children from a poverty-stricken county in that province were flown to the event as flag bearers.

According to Sina News, a number of Chinese universities have also received a “blowout” of donations from businessmen in the past two weeks. Most notably, Tsinghua University was given more than Rmb2.4 billion ($350 million). A huge slice of this, up to Rmb2.2 billion, was donated by a charity fund set up by Country Garden’s Yeung. It was the single biggest donation Tsinghua has ever received, Sina News reported, dwarfing an earlier Rmb200 million handout by Hong Kong property tycoon Lui Che Woo (see WiC422).


© 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.