List-mania: Who is the richest in China?

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Last updated at: (Beijing Time) Wednesday, October 22, 2003

List-mania: Who is the richest in China?

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"Life is like liquor-filled chocolates. You don't know which flavour you'll get." The quote is uncomfortably similar to that famous saying by Forrest Gump, the simple-minded saint from the Oscar-winning film. But it was actually uttered by the newly anointed richest person in the Chinese mainland.

William Ding Lei, founder and chief technology officer of Netease, is only 32. He holds a 58.5 per cent stake in the company, which translates into some 9 billion yuan (US$1.087 billion) since the stock reached US$70 a share on October 14. According to the cutoff date used by list maker Rupert Hoogewerf, his worth is estimated at 7.5 billion yuan (US$906 million).

At the nadir of the stock market in the aftermath of the burst Internet bubble, Netease was valued at less than one dollar and was nearly dropped by Nasdaq. But within two years, the share price has multiplied a hundred times, as has Ding's wealth. His status changed from "jail-bound failure" to "number one billionaire in the country".

"Isn't it crazy?" Ding asked when he heard the news of his canonization. "Why bother looking for all the excuses to give me this title or that title when Netease stock is flying high? When it does come down someday, you'll have to find another bunch of reasons to knock me off this pedestal."

This from someone who has been on a non-stop roller coaster ride in the amusement park of wealth. Those who can't hang on, like Zhou Zhengyi, arrested on charges of engaging in illegal financial practices, are unceremoniously dropped from the list and forgotten.

What's in a list?

Before Rupert Hoogewerf first started compiling the annual list for Forbes magazine five years ago, people could only guess who the country's richest people might be. This year, Hoogewerf is working for a European trade journal while Forbes is putting together its own list. The competition between the list makers seems sure to arouse more public interest in the nation's super-rich.

"The rich being on the list is a sign of economic vibrancy in China," Steve Forbes said in an interview with China Daily last year. "If they want to get off it, the way to do it is to go broke."

Hoogewerf obviously concurs: "It shows that Chinese people are getting more and more wealthy, and there are more and more rich people in the country. When I first did the list in 1999, we picked only 50 candidates and the last one on the list was worth 50 million yuan (US$6.04 million) in total assets. This year's 100th has 900 million yuan (US$108.75 million). Total assets of the top 100 are 30 per cent higher compared with last year."

"A top 100 list like this tells us several things," said Wang Jun, an economist at Sun Yatsen University. "It highlights the degree of wealth concentration. It sheds light on how business people have grown in this country. And more importantly, it reflects the industries that support the accumulation of wealth."

Wang analyzed that the high frequency of listees from the real estate and manufacturing sectors indicates the vitality of these industries. However, the overall picture reveals that among all the industries, there is no clear front runner. "It's true that during the transition to a market economy it's easy to make money in real estate, but that depends on a lot of factors, such as the availability of cheap land. On the whole, no one industry is functioning as the dragonhead or the locomotive for the entire economy," Wang told China Daily.

For William Ding Lei, the hot seat reserved for China's richest person is an acknowledgment of his vision. Back in 2001, when he started charging customers to play online games, the viability of his strategy was questioned. But he persisted, believing it was "a business that would bring in tens of thousands of yuan, even when one is asleep". Now charges for games and short messages are cash cows for Internet portal sites.

To address the criticism that listees do not necessarily match their contributions to society, Hoogewerf has come up with a complementary list of the top 10 most powerful and influential individuals. "It is the quality of wealth that is being measured here," he said. That includes tax contributions and political influence. Ying Wu, whose UT Starcom paid a total of 1.25 billion yuan (US$151.03 million) in domestic tax last year, is one example.

Ambivalence

Online postings responding to the richest list seem to regard it as more of a most-wanted list. The cynicism is so pervasive that the grassroots reaction can be summed up by the old saying "the rich are not kind".

The general public question how much tax these top-earners pay, how they treat their employees and how they got their "first pot of gold", their initial capital.

The attitude should come as no surprise considering that dozens of the selected disappear from the list every year, many due to legal troubles. Some have committed suicide or been killed under dubious circumstances. For a while, insiders joked that the rich list was a list of potential criminals scrutinized by investigators and hunted down by tax collection officers.

Yet it is hard to brush aside the persistent public enmity as merely a product of the behaviour of a handful of Michael-Milken imitators. In contrast to Hoogewerf's interpretation, one netizen wrote: "The list does not prove Chinese people in general are getting richer. It only shows that China's rich are getting richer."

Hoogewerf said that young people, especially those with dreams of entrepreneurship, could look up to these people as paragons of success. But it doesn't seem to be working out that way.

"These people should serve as positive role models," commented Wang Jun, the Guangzhou economics professor. "But due to problems inherent in our society, they are arousing more resentment than admiration. It says something about our system, which lacks a safety net for the most underprivileged. In this sense, it should serve as a warning of the growing wealth gap."

But Professor Wang also detected a sign of progress. "Before we had a market economy, people used to glorify politicians. At least we have some diversity now."

Perhaps heedful of public reaction, those who have made the list have become more and more humble and low-profile. In private, some still vehemently complain about the inaccuracy or the possible negative consequences the list can entail. "I'm definitely overvalued," said Huang Hongsheng, president of Chuangwei and number 76 on this year's list. "This is definitely a bad omen. Just look at what's happened to so many of those on previous lists."

Fewer of the rich are acting like Donald Trump and more have learned the diplomatic skill of balancing a public relations coup with traditional Chinese modesty. "This is neither an honour nor a form of pressure," said Li Xinghao, 91st on Hoogewerf's list. "It doesn't matter whether I, as an individual, make the list or not. What matters is the business and the industry and whether it can grow steadily."

Li, CEO of Chigo Group, an air-conditioner maker, further explained that the news had not affected him one bit. "I still ride my motorcycle to work. I get paid about 10,000 yuan (US$1,200) a month, the same as most mid-level managers here. My equity in the company is just a number. Yes, it implies power, but wealth can take more than one form. A good reputation and human relationships are also a kind of wealth."

Hoogewerf emphasized that China's media has a penchant for exaggeration. When a couple of bad apples are exposed, details tend to get blown out of proportion and nobody seems to notice that the majority of the rich still have a sense of social responsibility.

In his interviews with the candidates, Hoogewerf noted a consensus about the amount of money considered sufficient for personal consumption. "Ten million yuan (US$1.21 million) is enough. Beyond that, there is no real difference. You won't be able to spend it unless you squander it," he paraphrases some of them as saying.

The art of list-making

When the Forbes list first appeared in China in 1999, people were suspicious. As late as last year, media commentators were still laughing at the quixotic efforts of Hoogewerf and his team to pin down the facts. How can you accurately appraise the worth of an individual if the way he makes his money is murky at best? Do you take into account all the under-the-table deals and all the bills stashed beneath the mattress, they asked.

Yet the mocking is subsiding. The names Forbes and Hoogewerf have been fully established in China's business media. And this year, with their separate lists, they are creating a rivalry that has brought wealth estimation to a crescendo.

Hoogewerf, who now represents a European trade journal, and Forbes, the prestigious US business magazine, have succeeded in a realm where many Chinese media organizations have failed, by compiling lists that strive to be as accurate as possible. According to Hoogewerf, he has never accepted a single penny from any of the candidates. "You cannot imagine how many people offer me red envelopes to get on, or get off, the list," he once said.

Paradoxically, foreigners, who are supposed to have more difficulty cracking the bamboo curtain surrounding China's exclusive club of the rich, have achieved more credibility. "There is a reason," contended Wang Jun. "People are more willing to divulge secrets to foreigners. They feel there is less risk."

"For the general public, reading a list like this is like buying a lottery ticket. It gives them the sense that their dreams are not so remote," commented Wu Chongqing, a philosophy professor at the Guangzhou Academy of Social Sciences. "It appeals to a desire in the audience. But I don't think it has any function in pushing the economy forward."

List: pros and cons

'The rich being on the list is a sign of economic vibrancy in China. If they want to get off it, the way to do it is to go broke.'

- STEVE FORBES, CEO and editor-in-chief of Forbes Magazine

'It shows that Chinese people are getting more and more wealthy, and there are more and more rich people in the country.'

- RUPERT HOOGEWERF, compiler of the list

'The list does not prove Chinese people in general are getting richer. It only shows that China's rich are getting richer.'

- An online response

'Before we had a market economy, people used to glorify politicians. At least we have some diversity now.'

- WANG JUN, an economist at Sun Yatsen University

'For the general public, reading a list like this is like buying a lottery ticket. It gives them the sense that their dreams are not so remote.'

- WU CHONGQING, a philosophy professor at the Guangzhou Academy of Social Sciences

Top 10

1. Ding Lei, Netease, 7.5 billion yuan

2. Rong Zhijian, CITIC Pacific, 7 billion yuan

3. Xu Rongmao, Shimao Group, 6.8 billion yuan

4. Lu Guanqiu, Wanxiang Group, 5.4 billion yuan

5. Chen Lihua, Fu Wah International (HK), 4.8 billion yuan

5. Liu Yonghao, New Hope, 4.8 billion yuan

5. Ye Lipei, Zhongsheng Real-estate (Shanghai), 4.8 billion yuan

8. Sun Guangxin, Xinjiang Guanghui, 4.2 billion yuan

9. Liu Yongxing, East Hope, 4.1 billion yuan

10. Chen Tianqiao, Shanda Networking, 4 billion yuan

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