Family fortunes

Ding Shuibo: father of the bride

The doorways of traditional courtyard houses in Beijing are typically adorned with a pair of stone bearings (mendang), as well as wooden pins (hudui) for hanging lanterns. These fixtures were designed to reflect the homeowner’s status. Over time, mendang hudui has evolved into a saying for people that marry partners of similar wealth and social standing.

In economics, the rich marrying the rich is a well-researched topic. Tyler Cowen describes the phenomenon as ‘assortative mating’. Although it’s often not a conscious decision – wealthier folk are simply more likely to wed the kind of people that they spend the most time with – these types of marriages are likely to propagate generational inequality.

Rich plus rich equals super rich, perhaps. And if that’s the case for marriage prospects, investors should look out for something similar in the sprawling business interests of a few listed firms from Fujian province.

Last year we reported how a number of the Fujianese tycoons behind some of China’s best-known sportswear brands have cultivated even closer ties between their families.

This web of guanxi has just got even tighter on news that Zhou Liyuan, the second son of Septwolves chairman Zhou Shaoxiong, has got engaged to Ding Jiamin, the second daughter of Xtep’s founder Ding Shuibo.

Chat about the preparations for the couple’s wedding quickly became a hot topic on social media (and in investment analyst circles, perhaps, on expectations of the potential commercial impact of the union).

The founders of the two clothing brands both come from the city of Jinjiang in the coastal province, CBN newspaper notes, where locals often choose partners from nearby. Born in 1996 and a graduate of the University of Toronto, Zhou junior is also a board member of Septwolves. His fiancée is a year younger than him and they have known each other since they were kids, local media outlets report.

After news of the engagement broke, a photo illustrating the wider web of connections between wealthy families from Fujian also went viral. Apart from Septwolves and Xtep, children of the founding families behind listed firms such as Anta, another major sportswear firm, and Bama Tea, a tea seller that filed to go public in the-A share market last year, have also married one another. If the market caps of all these firms are added together, the entire ‘family’ is worth more than Rmb100 billion ($14.1 billion), Sina Finance calculated.

Some of these clothing brands should be keen competitors with an overlapping business focus. But more often than not, Sina Finance says, they have kept their rivalries more subdued, preferring to collaborate wherever possible. Septwolves and Xtep are both key shareholders in an investment fund that focuses on e-commerce start-ups that complement their retail businesses, for instance.

Connected transactions between these families could become more of a feature if a new round of marriages brings further commercial alliances. For example, Chinese sportswear firms have been expanding into the beverage sector recently, including Li Ning, which launched its ‘Ning Coffee’ brand in several stores in cities last year. Reportedly other players such as Anta Sports are considering a similar direction, while tea is another retail segment getting attention, following the successes of milk tea chains Nayuki and Heytea.

Perhaps Bama Tea might want to consider a combination with Anta or Septwolves, for instance, both of which it now has closer connections with by way of marriage between the Fujian families.

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