Chu Jian: from scientist to prisoner to tech billionaire; a very Chinese tale
The Bayh-Dole Act, signed into law in 1980, has been widely hailed as a key contributor to America’s technological leadership in recent decades. By allowing colleges to take ownership of inventions developed under federally-funded research programmes, the legislation ushered in an era where entrepreneurial professors were incentivised to take their inventions off campus and start companies of their own.
This single policy is estimated to have bolstered US economic output by $1.3 trillion – creating 4.3 million jobs and over 11,000 start-ups working on cutting edge technologies, according to a 2017 report by the Association of University Technology Managers.
If China were to have an equivalent piece of legislation, it might be triggered by Chu Jian, the scientist who founded Zhejiang Supcon Technology, an automation solutions provider that is said to have developed some of the leading technologies in its field. His dramatic life story – a renowned academic to prisoner to billionaire – has fleshed out Beijing’s changing attitude towards intellectual property rights and the importance of protecting them.
Born in Haiyan county in Zhejiang in 1963, Chu was a child prodigy who was admitted to Zhejiang University at the age of 15. He was also the first graduate from a doctoral programme in industrial automation jointly offered by Zhejiang University and Japan’s Kyoto University. Turning 30 in 1993, Chu became the youngest professor at his alma mater. He then started a company, reportedly using personal borrowings of Rmb200,000 ($30,600). Riding on the wave of market reform unleashed by Deng Xiaoping’s Southern Tour a year before, Chu hoped to turn his research at Zhejiang University into productive applications.
Chu’s venture, which later became Supcon, short for ‘super control’, focused on developing distributed control systems (DCS), which comprise networks of sensors, controllers and associated computers distributed across manufacturing facilities Working like the human brain and nervous system, a DCS is particularly useful for smart manufacturing and high-precision processes typically seen in the defence, energy and transportation sectors.
International vendors such as Mitsubishi Heavy Industries and Siemens dominated the market until Supcon broke their stranglehold by providing alternatives at competitive prices.
By 2013, Supcon had become China’s largest DCS player by market share. According to China Economic Weekly the competition it created helped cut the costs of a typical DCS by a third, translating to Rmb40 billion in savings for customers procuring equipment.
Academically Chu also did well, clinching at least eight national prizes in the field of innovative technology. Having served as the vice president of Zhejiang University for eight years, he was shortlisted as a candidate to become an academician at the Chinese Academy of Engineering, a lifelong honour. Just two weeks before Chu was supposed to take part in final interviews for the academician title, he was arrested in 2013 on charges that included embezzlement of state-owned assets.
The allegations pointed toward a deal in 2003 when an entity that owned Supcon’s IP rights was spun off from a vehicle holding various companies affiliated with Zhejiang University. Those rights were then sold at a 20% premium to what is now known as Supcon, over which Chu had majority control.
Many believe Chu was caught in a minefield that had tripped up many entrepreneurs and officials in the early days of China’s economic reforms: whether the venture established by Chu was a private sector firm or a state-owned enterprise under Zhejiang University.
Chu’s case shocked academic circles in China, prompting over 800 students, professors and members of the National Academy of Engineering to petition the central government for his release on bail. A dozen scholars in law and economics also held seminars in Hangzhou discussing the implications of Chu’s predicament.
It wasn’t until January 2017, however, that a court decided that Chu was guilty of “corruption” and “deliberate destruction of accounting documents and books” – crimes deemed less serious than embezzling state assets. Chu was sentenced to 39 months in jail. By then he had already served that much time in detention and was therefore released two days later.
Having regained his freedom, Chu set about his first and foremost task: to turn around Supcon, which had lacked leadership since he was taken into custody.
His efforts were reflected in the company’s improving financials. Between 2017 and 2019, Supcon’s net income doubled to Rmb370 million. In 2019 it saw its share of the domestic market grow to 27% (11 percentage points ahead of the second largest player). He also persuaded long-term clients such as Sinopec, Intel and Lenovo to become shareholders of the company.
Last month Supcon went public on Shanghai’s tech-heavy STAR Market raising Rmb1.76 billion. Its market debut was marked by a 204% rise in its share price, lifting the net worth of the 57 year-old – who has a 22.8% stake – to above Rmb11 billion ($1.68 billion).
That suggests a happier chapter has begun in the prodigy’s rollercoaster business career…
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