The Liu brothers from Sichuan – Yongxin, Yonghao, Yongyan and Yongmei (who is also known as Chen Yuxin) – topped Forbes magazine’s first China Rich List in 1995 with a combined wealth of Rmb600 million, or about $165 million in today’s money. It doesn’t sound like much in the context of the fantastic fortunes of China’s wealthiest people today. But their life story is emblematic of China’s emergence into the free market era. Today they symbolise the pre-internet generation of entrepreneurs, that still fetes Deng Xiaoping as a hero for reforms he introduced that allowed their rise from impoverished farmers to business leaders (the brothers’ veneration of Deng saw them fund a memorial to the former paramount leader in his home village).
Domestically the Lius are still well-known even though they started slipping down the rich list about 20 years ago. Around that time they also split up their business interests into individual entities: East Hope (Yongxing), West Hope (Yongmei), Continental Hope (Yongyan) and New Hope (Yonghao).
Today Yongxing holds 80th spot in the Forbes rankings after building a second empire in aluminium. But it is the youngest of the brothers, Yonghao, who is the wealthiest – ranking 31st – after listing half a dozen companies on bourses.
His business sectors span dairy (New Hope Dairy), investment banking and broking (Polaris Bay), animal feed (New Hope Liuhe), environmental protection (Xingyuan Environment Technology) and logistics (Shenzhen Feima International Supply Chain).
New Hope Service Holdings has just become the sixth firm to sell shares to the public, with a debut on the Hong Kong Stock Exchange late last month that raised HK$940 million ($121 million).
Yonghao has been adept at tapping into the trends of the moment across various industries. His latest push is into property management, offering services to residential and corporate clients (for more on this sector and the IPOs it is spawning see our Talking Point in WiC539). New Hope Service Holdings traded up about 5% on its debut on May 25 and has a market capitalisation of around HK$3 billion.
Yonghao’s business philosophy is to be “half a step ahead” of the competition – something he says harks back to the days when his family was so poor that he would get up at 5am to collect wood before other kids in his neighbourhood. (The family’s financial straits saw his parents give up Liu Yongmei, one of the brothers, for adoption. He then changed his name to Chen Yuxin).
In the 1970s three of the brothers decided to try their luck at assembiling audio equipment although the venture was scrapped after their local Party Secretary decreed it too capitalistic. They also came close to joining another earlier generation in the tech sector in the early 1980s when Yongyan became one of the first people in the country to write a software programme. However, he subsequently told a reporter that his brother Yongxing had talked him out of focusing on software, persuading him that the prospects were better in animal feed instead.
“Had we continued, Hope today might be famous as a software company,” Yongyan claimed.
Instead the family sold the few possessions they owned to raise funds to farm chickens and quail. Their early experiences led them into the animal feed business, where they would make their first fortune. These grassroots experiences saw Yonghao become one of the earliest advocates of the economic returns that China would reap from a flourishing private sector.
In fact, the Hope business empire was named after his debut speech to the CPPCC – the consultative body of the Chinese parliament – in 1993. His oration was titled: “There is hope for China’s private sector.”
“I explained that I was an entrepreneur from the private sector and I don’t see anything wrong in being among this group,” Yonghao later told the Global Times.
He and his brothers struggled to grow their businesses in the early days because state banks were so reluctant to lend to private companies (a problem that persists to this day for many SMEs). The brothers recall being forced to sell an entire flock of baby quails (their lifeblood in the early days of their careers) to cover their repayments to the banks. Yonghao subsequently helped to found Minsheng Bank, a lender that has been more willing to offer competitive terms to the private sector.
Every year Yonghao raises new proposals at the CPPCC and some of the more recent ones show how he has returned to his roots by lobbying for better working conditions for “green-collar workers”. Suggestions have included a wide range of agricultural subsidies and top-up salaries to attract more college graduates into the farming sector. Earlier this year Yonghao urged that China should “attach as much importance to pig breeding as computer chips”.
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