1 Talking Point 5 Week in 60 Seconds 6 Consumer Week in China 8 M&A 9 Property 10 Auto Industry 12 Aviation 14 China and the World 5 April 2013 16 Society and Culture Issue 187 19 And Finally www.weekinchina.com 20 The Back Page High Noon for tycoons m o c . n i e t s p e a t i n e b . w w w

Are businessmen the latest target for Xi Jinping’s anti-corruption campaign?

Brought to you by Week in China Talking Point 5 April 2013

Flying too close to the sun? Scandals at Suntech, Hanlong, Jointown and Jinye. Has a crackdown started?

Suntech’s founder Zhengrong Shi has been told by the authorities he cannot leave China

braham Lincoln earned his nick - to petition her husband for addi - merely a coincidence, or another Aname ‘Honest Abe’ for his in - tional funds from Congress. The facet of President Xi Jinping’s anti- tegrity. But as his biographer Doris president was livid and refused, corruption drive. Kearns Goodwin points out, Lincoln’s recognising that such lavish spend - wife Mary was not her husband’s ing on home improvement didn’t First Shi: what’s happened to him? equal in this regard. In fact, she was chime well with the deprivations of Last week Shanghai Securities News – prone to creative accounting. the civil war period. a newspaper run by the Xinhua News When she arrived in the White (For those curious about the out - Agency – reported that Shi would not House in 1861, Mary was dismayed come: French helped Mrs Lincoln be allowed to depart the country by how poorly the place was fur - out of her predicament by persuad - “while authorities investigate the nished. Keen to impress the Wash - ing a friendly congressman to bury state of the company’s finances”. ington elite with her own sense of $6,800 of furnishing bills in a com - Given that Shi is an Australian style, she went to New York to buy plex list of military appropriations.) citizen, this is a measure of the seri - fine Parisian wallpaper, luxury rugs Of course, Mary wasn’t the last ousness of the situation. and elegant curtains. In fact, Mrs person to spend beyond their Longer term readers of WiC will Lincoln got a bit carried away, far ex - means in seeking to realise their have some familiarity with the un - ceeding the government allowance grand vision. Fast forward to mod - folding debacle. Last August we for the First Family’s home. “Afraid ern day China, and a similar pitfall chronicled Shi’s decision to step to inform her husband, she invei - has beset Shi Zhengrong, once reck - down as CEO of the solar panel gled John Watt, the White House oned to be the country’s richest maker (see issue 161). Once a world groundskeeper, to inflate his ex - man. Shi’s solar firm Suntech leader in the solar industry, Shi’s pense accounts and funnel the extra Power is now bankrupt, making firm had run up major losses due to money over to her,” writes Goodwin. him a lead example of a number of sagging demand for its panels, cou - P h o t

o But it wasn’t enough. The bills business tycoons who have strayed pled with falling prices. Aside from

S o u r kept coming and Mary found her - into trouble in the past couple of all the red ink, Suntech further c e :

R e self asking the Commissioner of weeks. And local media is wonder - spooked investors by booking a u t e r s Public Buildings, Benjamin French, ing whether Shi’s difficulties are €560 million $724 million) hit on a 1

Week in China Talking Point 5 April 2013

loan guarantee it gave to an invest - ment vehicle named Global Solar Fund. Apart from the size of this hole, the bigger surprise was that Suntech – which controlled the fund – was accusing Global Solar of fraud. Fund managers were bemused by Suntech’s explanation: how could management not know what its own fund was doing? As WiC warned in that issue, the next crunch for Shi would come the this March, when more than $500 Detained: Liu Han of the Hanlong Group is being investigated million in international bonds were due to be repaid. Without a stun - debt was 10 times its market capi - of energy production from his solar ning return to profitability, Sun - talisation and as bankruptcy was cells and ratcheted up output, he tech looked likely to default. That is declared, the stock had plunged was wont to get philosophical. At what happened last month, leading from its once-great heights to just one point he told media that he was to Shi’s departure as chairman too. $0.39. less interested in profits than “solv - Suntech thereby achieved a dubi - For those who bought into Shi’s ing the problems of mankind”. ous honour: it became the first vision at its height, it has been pre - But what looked like such a company from the Chinese main - cipitous destruction of shareholder brave new world in 2008 soon land to default on its foreign bonds value. Bondholders now look likely began to resemble a more mun - since GITIC (an investment vehicle to take a similarly drastic haircut. dane financial mess. Why so? Shi’s reporting to the Guangdong gov - The Chinese banks are also facing rivals were building panel factories ernment) in 1998. Worse was to fol - billions of renminbi of bad loans. at a rapid clip too, leading to vast low. Eight local banks including overcapacity (Suntech’s annual ICBC and Bank of China then sought Clouds on the horizon for Shi? output reached 2.4 gigawatts last to collect Rmb7.1 billion ($1.14 bil - Shi was born in 1963 at a time when year, with other Chinese firms pro - lion) of loans owed by the firm’s China was struggling with a series of ducing 37.6 gigawatts). Anti-dump - local operation, Wuxi Suntech. famines and natural disasters. Times ing tariffs imposed by the US and When the monies weren’t repaid, were so bad that his destitute par - slowing demand in Europe then the banks petitioned a judge to de - ents gave him to another family to hurt export demand. Panel prices clare the unit insolvent, which he raise. From such inauspicious begin - collapsed, pushing firms like Sun - did on March 21. nings Shi entered university at 16. tech into losses. At this point Shi’s For Shi, the descent into bank - Thanks to his proficient English, he decision to fund his breakneck ex - ruptcy was an Icarus-like fall. In then won a scholarship to study in pansion through debt and convert - 2006, his 30% stake in New York- Australia. There, Shi charmed his way ible bonds turned into a CFO’s listed Suntech had put his personal into the laboratory of Professor Mar - worst nightmare. fortune at $1.7 billion, temporarily tin Green, a Nobel Prize winner who Industry conditions, ill fortune ranking him China’s top tycoon. has been described as ‘the father of and poor corporate finance skills all With his personal drive and impres - solar energy’. explain why Suntech faced a crisis sive engineering background, the Shi returned to China in 2001 last month. However, local media tycoon rapidly expanded, riding a and persuaded the city government reckons there could be another rea - wave of enthusiasm for clean en - in Wuxi to back his solar panel en - son why Shi has been told that he ergy. At its peak in January 2008 terprise, Suntech. With the Wuxi bu - cannot leave the country: his con - Suntech’s stock traded at $90, and reaucrats alert to the sector’s trol of a firm called Asia Silicon. Bei - Shi’s firm looked on course for commercial potential – and keen to jing’s investigation is thought to be P h o t o global domination. create a new energy cluster – Shi got looking at whether it was used to in -

S o u r c But in order to become the the nod. For much of the next appropriately funnel funds out of e :

I m

a world’s largest maker of photo - decade it looked like a win-win rela - Suntech. g i n e

C voltaic panels, Suntech had bor - tionship for both parties. Mean - In an article last year CBN de - h i n a rowed heavily. By last month its net while as Shi improved the efficiency scribed as “suspicious” that Asia 2 Week in China Talking Point 5 April 2013

Silicon had signed a long term con - tract to supply $1.5 billion of poly - silicon products to Suntech at Planet China “high prices”. It also looked odd Strange but true stories from the new China that the supplier was given inter - est free loans by Suntech as well as PLAYHOUSE PLAN. Worried about spoiling your children? Fear not, the bar a series of advance payments for has just been raised significantly by a Chinese mum who purchased a $6.5 its polysilicon. CBN reckoned that million apartment in Manhattan for her toddler. The Tiger Mom told Kevin Brown, a Sotheby’s employee in New York, that she was buying the property the Shi-owned private vehicle was so that her daughter – currently two – could live there when she gets into getting favourable treatment from Columbia or NYU. “I was shocked,” Brown told CCTV, the channel that ran the its ‘client’. report. The flat is in One57, a 90-floor skyscraper that overlooks Central The ongoing investigation will Park.The building, which is yet to be completed, features a 24-foot aquarium, a ask Shi to clarify that these con - private ‘arts and crafts atelier’ and even a special washroom for pets. nected party transactions were fair Although the woman was not named, many netizens felt they had a good idea and reasonable – in other words, of her background. “When they move that will be one more ‘naked official’ in that they did not disadvantage Sun - China,” one netizen wrote, using the slang term that describes government tech’s other shareholders or its employees who send ill-gotten gains abroad, often with their families in tow. creditors. “This is money laundering, nothing else,” wrote another.

Other tycoons in trouble? Another prominent businessman demonstrate that it has the financ - sination attempt in 1997 when his being investigated is Liu Han, boss ing in place, or approvals from former business partner Yuan Bao - of privately-owned Hanlong Group China’s economic planning agency, jing tried to have him killed (Yuan (see WiC85). Once again the Shang - the NDRC (Sundance is developing was later sentenced to death). hai Securities News broke the news an iron ore mine in central Africa). of his troubles. After much specula - Liu also has a major interest in Two more cases… tion about his whereabouts, it was General Moly, a miner of molybde - The Shi and Liu cases have grabbed reported that the Chengdu-based ty - num – a vital commodity in the pro - most of the headlines, but as the coon had been detained by police in duction of steel. Late last month Chengdu Evening News points out Beijing. General Moly had to announce it in an article entitled “The Rich Fall”, The Public Security Ministry was suspending work on a $665 mil - two other tycoons have also been then released a terse statement say - lion loan for its Mount Hope mine embroiled in scandal. ing that Liu was being investigated in Nevada. This was to be arranged One is Liu Baolin, chairman of for harbouring a fugitive as well as by China Development Bank, but pharmaceutical firm Jointown, and other unspecified “serious of - would not go ahead, reported the widely referred to as the richest fences”. In this case the fugitive that Shanghai Daily, until the firm re - man in Hubei province. Liu was not Liu is said to have harboured is his ceived “clarification from Hanlong”. detained by the authorities, but was younger brother Liu Yong. Accord - The outlook for the billionaire forced to call a press conference to ing to Xinhua, the younger Liu is “a Liu and his natural resources con - clarify why he has two different major suspect” in a triple murder. glomerate suddenly looks ominous. identity cards (a complete shock to Additionally Liu Han’s wife and Other Chinese newspapers have me, Liu claimed), as well as deny ex-wife have been detained, an - been linking his detention to the media reports that he’s been using other indicator that his problems Macau casinos. “It's either about company funds to make personal are not of the mild variety. casinos, or debts, or underground loans to others. Like Suntech’s Shi, Liu has also money laundering,” an unnamed The other boss in the spotlight is just missed a financial deadline. insider told 21CN Business Herald. Zhang Xinming, one of Shanxi Hanlong owns 14% of Australia’s “Considering frequent casino inci - province’s richest coal barons. He Sundance Resources and was in the dents related with the riches now in came to public attention when a middle of a A$1.5 billion offer to ac - China, [Liu's case] is definitely re - whistleblower disclosed a letter quire the rest of the stock in a ten - lated to cross-border capital flows.” about a complex deal Zhang had der. But with Liu apparently in Liu, of course, is no stranger to inked with China Resources Power, detention, the deal looks likely to danger. He built his empire from the state-owned giant, in which the lapse. Hanlong has been unable to scratch narrowly escaping an assas - Hong Kong listed entity was sold a 3 Week in China Talking Point 5 April 2013

package of coal assets for Rmb7.9 of guard at the top is having reper - corruption is often a blurry one in billion. According to China Busi - cussions further down the power China, with businessmen and bu - ness Journal the secretive arrange - hierarchy, disturbing many of the reaucrats in cahoots (particularly ment is now being questioned over relationships between the business when it comes to receiving kick - “serious problems” in the sale. The elite and their political patrons. This backs for government approvals or newspaper says that of the 10 as - is something that WiC has alluded access to cheap loans from state sets offloaded by Zhang’s Shanxi to before, especially in speculation sources). Jinye Coking Group, two did not that Xu Ming, a real estate billion - As one netizen commented on even belong to his company, one aire, fell swiftly from grace after his Sina.com: “Why do all these investi - held expired exploration rights, patron Bo Xilai was detained last gations target businessmen? With - and the largest mine needed its li - April. Xu has not been seen since. out the collusion of officials there cence renewed. Other mines were Because of the increasing invest - won’t be business cronies.” suspected of being sold at inflated ment overseas by Chinese firms, the Ergo, in order to be seen to be values. China Business Journal sent impact of similar cases is now more fighting graft, the administration a reporter to Gujiao City in Shanxi likely to be felt outside China too, must not only demand reform from and found that “most of the assets not least by companies like Sun - its own cadres, it must change the of the Jinye Group acquired by dance Resources. behaviour of many in the business China Resources Power are in an Ronald Wan, a professor at Ren - elite too. Examples must be made. ‘abandoned’ state.” min University, told Bloomberg that On weibo there is also the sense Zhang’s whereabouts remain un - foreign firms “have to be clear that the anti-graft campaign is esca - known, according to the press. about what kind of person they are lating. First there was the exposure China Resources also refuses to dealing with, their background, and of officials holding multiple prop - comment on the transaction. their political relationship with the erties (see WiC182, for our article on current system”. Wan added: “There ‘Sister House’). Now tycoons are What to make of it all? are different camps, different inter - being targeted. “Who will be next?” Is it a coincidence that the tycoons est groups.” one contributor asks. have had a turbulent time so soon Other analysts think the crack - More probes look likely in the after the National People’s Congress down is designed as a warning shot, days ahead. On Monday New Cen - gave its (rubber) stamp of approval part of Xi Jinping’s stated campaign tury Weekly reported that two more to the new administration? against corruption . After all, the line Sichuan business tycoons are now One possibility is that the change between private and public sector under police investigation too... n

Breakfast brawling

Losing your noodle is slang in the West for going crazy. But in Wuhan last week, a dispute over a noodle meal led to just that. The incident occurred on a morning subway train when a passenger – in violation of the no-eating rules – was munching away on a breakfast of re gan mian , or ‘hot dry noodles’. This infuriated fellow commuters and according to Sina, one passenger used her smartphone to take a photo of the chopstick-wielding offender. It didn’t go down well. “Other passengers tried to stop her from eating, but she wouldn’t listen,” The incident triggered a debate online. Most I l l says the commuter. “So I tried to take a photo of her, people blasted the woman for eating on the u s t r a t but she came up to me and threw the bowl of noodles subway, adding that she should be fined according i o n : w over my head.” to the regulations. But some defended her w w . b The victim then uploaded a photo of herself covered e aggressive retaliation, saying the passenger with n i t a e in noodles onto her Sina Weibo account. It was widely the smartphone had no right to take a photo of a p s t e i n forwarded around the country. stranger without permission. . c o m

4 Week in China The Week in 60 Seconds 5 April 2013

Bird flu (ominously) returns The major news items from China this week were...

China reported five more cases of the H7N9 bird flu 1virus on Thursday, according to the Shanghai Daily. This brings the total number of infections to 14, of which five have died. The infections have mostly occurred around Shanghai and the Yangtze River Delta, although there her also been a case in Anhui province too. Thus far the virus has not spread between humans.

China could overtake the US as the world’s largest oil 2importer by 2014, said OPEC this week. The US has held first position since the 1970s, when domestic pro - duction started to decline. OPEC also said that China’s oil imports could top 6 million barrels a day this year, while On the waterfront: a dock strike in Hong Kong the Washington-based Energy Information Administra - tion, or EIA, foresees that net US imports could fall below Korea’s repeated threats. Several leading Chinese aca - that level next year. demics have made similar calls in recent weeks.

Beijing and Shanghai both put new restrictions on Up to 100 Hong Kong dock workers have been on 3home ownership over the weekend. Under the curbs, 5strike since last Thursday demanding a pay rise from Beijing will limit single people registered as living locally HIT, a subsidiary of Li Ka-shing’s Hutchison Whampao. to one home purchase if they don’t already have a home. The workers have demanded a meeting with HIT man - Minimum downpayments for all buyers of second agement to help settle the dispute. The strike has crip - homes are also to be increased. Shanghai has also said it pled the world’s third busiest container port and caused will raise downpayments and mortgage rates for second- widespread shipping delays. home buyers. HSBC and Bank of Communications signed a mem - Deng Yuwen, an editor at prominent Communist 6orandum of understanding this week on cross-bor - 4Party newspaper Study Times, was punished with a der renminbi business. Under the MoU, HSBC and month-long suspension after he wrote an op-ed article BoCom will collaborate on cross-border flows including titled “China should abandon North Korea” for the Fi - trade finance, remittance, lending, offshore investment nancial Times in February. Deng’s case highlights the and finance, retail banking, cash management and cap - conflicted response of China’s new leadership to North ital markets activity. HSBC – which owns a 19.9% stake in China’s fifth-largest lender – has also seconded banker Ng Siu On to BoCom’s senior management team.

ICBC has announced plans to buy a 20% stake in Bank 7SinoPac, one of Taiwan’s biggest lenders, the first sig - nificant proposed investment by a mainland buyer in a Taiwanese financial group. The deal is valued at about $670 million and came just one day after Taiwan said it P h o t

o would relax some of the restrictions on Chinese invest -

S o u r ment in its financial sector. The move is widely seen as c e :

R e part of the island’s push to boost its economy by en - u t e r s More restrictions on home purchases announced couraging more investment from the mainland. n 5 Week in China China Consumer 5 April 2013

She’s in fashion First Lady’s clothes choices lead to sales bonanza

n the day that Kate Middleton power of a country. I’m glad that she Ogot engaged to Prince William chose to wear Chinese outfits and she wore a sapphire silk wrap, de- take up that role of spokesperson for signed by Issa London. The dress Chinese design,” wrote Hong Huang, was an instant sellout. Two years on, a popular weibo personality. the fashion label is still struggling Investors are also taking heed. Ex- to fill orders for the wrap. ception de Mixmind is privately “It absolutely sky-rocketed the held but many speculate that Peng’s brand on a global scale,” says owner clothing choices could herald a new Camilla Al Fayed, daughter of for- era for domestic labels – an idea mer Harrods owner Mohamed. which led to a surge in the stock Chinese clothing brand Excep- prices of many domestic apparel tion de Mixmind is now experienc- firms. Dayang Trands, a menswear ing a ‘Kate Middleton moment’ of label, saw its own stock surge so rap- Peng in Exception de Mixmind its own. Since late March the com- idly (in hope that Peng’s husband pany has been deluged by demand might opt for a sartorial makeover, the government may be frowning at for an overcoat worn by Peng Liyuan perhaps?) that market regulators the early commercialisation of during her first official visit to capped its price rise (Warren Buffett Peng’s image. The wives of other sen- Moscow with husband, President Xi is also a fan of the Chinese brand, ior officials have traditionally kept a Jinping, as well as a leather handbag see WiC32). low profile. Liu Yongqing, who was she took on the same trip. Others warn that investors married to former President Hu Jin- Shop assistants at Exception de shouldn’t get too excited. “This def- tao, rarely appeared in public. Her Mixmind told 21CN Business Herald initely presents an opportunity but predecessor Wang Yeping also chose that the coat and handbag had com- it’s not that clear. I think at the end to avoid the limelight. pletely sold out and the company’s of the day local clothing brands Li Kai-fu, a widely followed tech website also crashed under the in- need to pay more attention to their guru on weibo, then urged that Peng tense online demand. But no matter, designs. At the moment many should be judged by her accom- a flurry of copycat designs were brands have very similar styles, and plishments rather than her fashion soon appearing on Taobao, China’s this is not conducive to their devel- choices. “The greatest First Lady in largest consumer site. One vendor opment,” says Ma Gang, a promi- American hearts is not the most was offering a copy of the coat that nent commentator. beautiful one – Mrs Kennedy – but Peng was seen wearing for just The vibrant discussion sur- [rather] Mrs Roosevelt,” he sug- Rmb499 ($80.44). rounding Peng’s fashion choices gested, somewhat piously. “She For Exception de Mixmind, also seem to have created a little un- fought for women’s civil rights… Peng’s endorsement is a great boost. ease in Beijing. On Taobao, adver- participated in the establishment of WiC first profiled the brand back in tisements for black handbags like the United Nations, served as a 2009 (see Red Star in issue 39). The the one Peng carried off the plane in diplomat and led the drafting of the company, founded by designer Ma Moscow were quickly deleted even Universal Declaration of Human Ke in Guangzhou, is one of the most though “Peng Liyuan handbag” was Rights.” commercially successful labels with one of the most searched terms on Perhaps he’s right. But even the Photo Source: Reuters nearly 100 stores and retail coun- the site. A similar ad for a black coat saintly Eleanor Roosevelt got a sales ters in China. in Peng style was also deleted. discount for posing in clothes from “First ladies are ambassadors of Analysts speculate that some of one New York department store. culture and design and of the soft the more conservative members of Peng Liyuan should take note... n 6 Week in China China Consumer 5 April 2013

Not making-up Cosmetics firms in online price war

n February French cosmetics Why the success? Online cosmet - Ichain Sephora celebrated the ics retailers are quickly gaining opening of its largest store in China. ground in China by selling a wide The flagship outlet, encompassing range of brands at big discounts. Cos - 54,000 square feet and five floors, is metics site Jumei, for instance, of - located in Shanghai’s Nanjing Road fers discounts of up to 15% on about and boasts two levels of retail space, 45 different high-end cosmetic la - a training academy, and two floors bels like Dior and Lancôme. The the products the site sold were fake. for Sephora China’s new corporate company told Southern Weekend Jumei responded by issuing a state - headquarters. “I think we’ve only that revenue in 2012 reached Rmb2.5 ment saying that all of the products fulfilled a small fraction of what’s billion and is expected to reach close it carries are genuine (the person possible in this market. We are quite to Rmb10 billion this year. who spread the rumour was subse - inspired by the huge passion of Chi - “Direct sales and department quently arrested). nese woman to learn about beauty, stores are outdated,” is the blunt as - “The root cause of the dispute is be it skincare, make-up or fra - sessment of Chen Ou, chief execu - that the two sites both sell cosmetics grances,” commented Chris de La - tive of Jumei. so after they reach a certain scale it puente, Sephora’s chief executive. But competition between cos - is inevitable that they will fight over Despite the fanfare, Sephora, a metics websites is heating up too. distribution, promotion and other unit of LVMH, is struggling to com - Recently two of the country’s largest resources,” former vice president of pete in China. The company recently cosmetics e-tailers engaged in a Jumei Kan Hongyan told China closed some of its stores in the coun - price war to lure shoppers. It started News Net. try after sales of perfumes and other in late February when Lefeng of - But using underhanded tactics to cosmetics slumped. The reason? fered over 300 products on the site gain a competitive advantage will Shoppers go to Sephora to sample at discounts of as much as 70% off. only backfire, says Li Junhong, a products and then buy them from In one day, the company recorded lawyer in Guangzhou. He told internet retailers like Jumei.com Rmb122 million in sales. Southern Weekend that the antics and Lefeng.com. Not to be outdone, Jumei of both e-tailers to smear the other Sales of beauty and personal-care launched its own three-day “an - will only hurt the online cosmetics products, including cosmetics and niversary sale” on March 1. Even industry as a whole. After all, if con - shampoo, are being bought less and though the site was down for the ma - sumers are worried that the prod - less in shops. According to market jority of the first day – Jumei ex - ucts they buy online are counter - research firm Euromonitor, the per - plained that the site was under feits they may shy away from centage of cosmetics purchases on - hacker attack – it did little to dampen buying on any sites. line increased to 9% in 2011 from 4% consumers’ excitement. The com - Interestingly, this presented in 2010 – grabbing share from retail pany claims that it recorded Rmb1 Sephora with a rare opportunity. outlets (which still accounted for billion in sales during the sale period. The beauty chain told the Wall Street 74% of spending, the remainder be - The online price war soon esca - Journal it will launch a new website ing from direct sales). The research lated into a war of words. Jumei’s for its Chinese consumers this year. firm is bullish on the prospects for Chen took to his personal weibo to The site will focus on teaching cus - this e-commerce channel – it fore - insinuate that Lefeng was behind the tomers about products and trying P h o t

o casts China’s online cosmetics sales hacking attack. Even more serious, a to persuade them that they should

S o u r will reach Rmb120 billion ($19.34 bil - person who claims to be a former pay a premium for products at c e :

R e lion) by 2015 compared with employee at Jumei published a blog Sephora because of the authentic - u t e r s Rmb37.2 billion last year. post on Tianya stating that 90% of ity of their merchandise. n 7 Week in China M&A 5 April 2013

Juicy returns? Zhu hopes for second time lucky, with Huiyuan on the block again

hu Xinli founded Huiyuan Juice Zin 1992. He says he got the inspi - ration after seeing a newspaper photo of a bitter-faced peasant bit - ing into an apple. Behind him there was a cart full of rotten fruit. The caption read: “I can’t sell them, so I eat them.” Determined to give local fruit growers a more reliable outlet to dis - pose of their crops, Zhu acquired a Shandong canned fruit factory and Will Guangzhou Pharmaceutical bid for Zhu Xinli’s firm? subsequently grew it into China’s biggest fresh juice maker. Zhu suggested, would help him to eager to sell,” the newspaper said. The Shandong native may sound meet strict sales targets. Huiyuan’s strength in the juice sentimental about how he started Others took the view that Zhu was market has faced dilution from ri - his firm, but he’s a lot less senti - bulking up to sell a ‘fatter pig’, with vals in recent years, including Coca- mental when it comes to selling it. Gao Bo, a market expert, telling the Cola. It still accounts for more than Famously, Zhu argued that busi - National Business Daily last month half of fresh juice sales (i.e. not from nesses should be “raised as a son but that Zhu is still planning “a more ex - concentrate). But a Rmb5 billion sold like a pig”. He made the remark travagant marriage.” punt into the low-concentrate juice shortly before the Ministry of Com - Takeover speculation was in the market hasn’t paid off. According to merce vetoed Coca-Cola’s $2.3 billion air once more late last month after AC Nielsen, Huiyuan’s share in the buyout offer for Huiyuan in 2009. the company’s thinly-traded shares segment fell to 4.8% in 2011 from 7% Zhu would have received $1 billion in Hong Kong suddenly surged in 2009. for his 42% stake, but the lucrative more than 35% in a week. Huiyuan Last week, Huiyuan reported a exit was blocked by regulators. The then indicated in a regulatory filing 95% plunge in 2012 net profit to just landmark case was nixed by a mix of that it was in acquisition talks. Re - Rmb16 million. Worse still, it now nationalism and the country’s new ports on Zhu’s potential exit swiftly has Rmb3 billion in bank borrow - antitrust laws (see WiC7). followed, with the Hong Kong Eco - ings, compared with Rmb403 mil - With a sow’s ear made of Zhu’s nomic Journal suggesting that Zhu lion of debt when Zhu attempted to M&A bonanza, the 61 year-old is hoping to sell to Guangzhou Phar - flog the firm to Coke. vowed that if couldn’t sell Huiyuan, maceutical. The state-controlled Zhu’s 42% stake in Huiyuan is he’d make it vastly bigger. firm has just won a court verdict worth $250 million at current mar - In the wake of the failed deal, over the labelling rights to ket value, which probably factors in capital expenditure surged to Wanglaoji – China’s best selling a takeover premium. Investors sus - Rmb772 million ($124 million) in canned beverage – in a long-running pect he would like to redirect the 2009 from a budgeted Rmb200 battle with Jia Duo Bao Group (see sale proceeds into upstream assets million. Employee numbers also WiC103). It may now see further syn - including fruit-growing businesses P h o t o tripled to 17,111 from a year before, ergies in selling both herbal tea and that he still owns personally. But if

S o u r c with more than half of the new staff fresh juice. But 21CN Business Her - he can’t sell Huiyuan this time, com - e :

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a demobilised soldiers hired to man ald has also reported that Zhu is mentators might wonder if condi - g i n e

C Huiyuan’s expanded distribution talking to Jia Duo Bao. “Every man tions will ever be as ripe as when h i n a network. Their military training, on the street knows Zhu is always Coke came calling. n 8 Week in China Property 5 April 2013

A stock called Wanda Backdoor listing for Chinese property giant

alian Wanda chairman Wang two companies? Wanda has DJianlin hates being compared achieved all this as an unlisted firm, to Chelsea owner Roman while Simon Property has been Abramovich. “We aren’t on the bankrolling its expansion through same level,” Wang told reporters in the capital market since going pub - 2011, rebuffing comparisons of a lic in 1992. Such a feat has led some shared interest in football, back - analysts to query how Wanda’s grounds in the military and respec - growth has been financed. “As these tively huge fortunes. (Wang has also Plazas keep breaking new ground Wang: admires Melvin Simon implied that he didn’t get rich via nationwide, questions on Wanda’s the sale of state assets.) cashflow have never stopped,” says both candidates in the lengthy Instead there are other foreign ty - Talents Magazine. queue awaiting Chinese listing ap - coons that Wang prefers to cite as Late last month, Wanda took its proval and Wang has also talked up equals. One is the late Melvin Si - first steps towards a market listing. the prospects of spinning off mon, founder of Simon Property Hong Kong-listed Hengli Commer - Wanda’s department store segment. Group. The former soldier and cial Properties said it has agreed to But why can’t Wanda stay pri - owner of the Indiana Pacers basket - sell a 65% stake to Wanda for an vate? The answer: even more ag - ball team pioneered suburban malls undisclosed consideration. By ac - gressive growth may lie ahead. in the United States. He was ar - quiring the controlling stake of a rel - The Economic Information Daily guably the first developer to bring atively obscure firm with a market reckons that Wanda’s total assets cinemas into shopping complexes value of just $100 million, Wanda have grown by 450% over the past and would even become a Holly - could have obtained a new financing three years. But in order to surpass wood producer himself. Simon window. China Vanke, Gemdale and Simon Property, Wanda needs to al - Property is now the world’s largest China Merchant Properties have all most double its property portfolio property firm by floor area, owning performed a similar exercise over over the next two years. Last week, it or controlling 325 retail complexes the past six months. But Wanda’s announced another Rmb45 billion across 242 million square feet. move is worthy of particular atten - ($7.2 billion) investment plan in Simon Property is the model for tion given it is the only property Guangzhou, where it is going to much of Wanda’s own activity, Wang heavyweight previously without a build three more Wanda Plazas. But told China Daily last May. His con - prior listing platform. with cashflow reliant on rental in - glomerate is already China’s biggest Wanda is being forced into this come and sales of peripheral prop - cinema owner, introducing itself to ‘backdoor listing’ in Hong Kong as erty units, Wanda’s current business American screens last year by ac - China’s own IPO market remains model can’t sustain its growth story, quiring the 346-theatre AMC chain resolutely shut, says CBN (see China Enterprise News suggests. (see WiC151). Wanda’s property port - WiC177). If Wang uses Hengli in the If things turn out well, Wanda folio, with 55 Wanda Plazas in opera - way speculated, it will become one projects $45 billion in assets and $32 tion and more in construction, mim - of the biggest reverse takeovers, or billion in annual income by 2015. If ics Simon Property’s huge regional asset injections, in Hong Kong’s cap - achieved, Forbes may need to recal - P h o t o malls, carrying a floor area of 135 mil - ital market history. But Wanda is culate Wang’s personal worth too,

S o u r c lion square feet. Wang aims to sur - unlikely to put all of its assets into which stood at $8.6 billion as of e :

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a pass its peer as “the world’s biggest one basket by listing in a single en - March (Roman Abramovich is worth g i n e

C fixed asset developer” by 2015. tirety. Its commercial property unit $10.2 billion, in case you are won - h i n a The main difference between the and cinema operations in China are dering…) n 9 Week in China Auto Industry 5 April 2013

Wei’s way or the highway A disciplined, militaristic culture has led to success at Great Wall Motors

Can you guess what it is? Models unveil a new Great Wall SUV at a Guangzhou motor show

ack in WiC182, we mentioned wolves, workers must be ready to at - ries, priced at the lower end of the Bthe media stir when Terry Gou, tack any opportunity. But like rab - market in the $13,000-$24,000 chairman of electronics manufac - bits, they must be alert to every dan - range. While wealthier Chinese have turer Foxconn, called in the head of ger, ready to trigger their survival opted for foreign models, Haval is Taipei’s zoo to talk about his man - instincts at any moment. the dominant entry-level brand for agement techniques. Great Wall is doing much better local buyers, an audience that Great Gou’s critics insisted that the re - than merely surviving. In January Wall courts assiduously. This is part quest revealed a lot about how Fox - the Hebei-based carmaker an - of a plan developed in conjunction conn thought of its employees. His nounced sales of almost 625,000 ve - with a strategy consultancy set up PR team quickly sought to explain hicles last year, making it the fastest by Al Ries, a marketing guru from that the tycoon’s reference to the growing of China’s native car pro - the United States. Ries argues that “one million animals” in his work - ducers. Deliveries were up a fraction companies lacking a dominant po - force was meant in jest. But Wei Jian - over 28%, well above the industry sition in an industry must find an jun, company chairman at Great average, and net profit for the year unoccupied space in which they can Wall Motors, is notably unabashed increased by almost two-thirds to establish a leadership role. Then the in outlining his views on how the $934 million. task is to focus on securing a unique animal kingdom equates to his own All three of its vehicle divisions position for their brands in con - labour force. have been showing growth. But sumer perception, Ries says. Com - In particular, Wei would like to see while sales of passenger cars in - panies who offer a simple and con - plenty of wolves and rabbits at work creased by just 2.8%, it was pickup sistent message have a better chance on the factory floor. According to trucks (up almost 13%) and sports of achieving this. Global Entrepreneur magazine, Great utility vehicles or SUVs (up by 71%) Like much marketing spiel, that Wall’s training programme explicitly that really drove performance. all sounds pretty straightforward, P h o t

o seeks to develop an animalistic in - WiC first mentioned surging Chi - although executing on the philoso -

S o u r tensity at the company, in which the nese demand for SUVs a year ago in phy may be less so. Great Wall c e :

R e “spirit of the wolf and the rabbit” is issue 148. Great Wall has found its started out with a focus on pickups, u t e r s

demanded of employees. Like own success in selling its Haval se - a trend that has led to its Wingle se - 10 Week in China Auto Industry 5 April 2013

ries becoming top seller for 14 years Wall employee accepts a cigarette in a row. But establishing itself in from a business partner, he will be this niche was almost accidental – as immediately dismissed, and the a privately-owned producer, Great partner put onto a blacklist of com - Wall couldn’t get a licence to make panies with whom Great Wall will sedan cars in the early days, so it no longer cooperate,” Global Entre - opted for pickups instead. preneur suggests. More recently, the focus on an As a privately-owned firm com - underserved segment has been ap - peting against state-owned rivals plied more deliberately, this time and powerful international brands, for SUVs. Again, Great Wall has Great Wall has also sought to cast it - been able to establish a leadership self as an outsider, struggling to sur - position and the Haval series has vive in the face of its more weighty been China’s bestseller for 10 con - competitors. Whether that classifi - secutive years. cation is accurate is open to debate. Five years ago Great Wall tried to Hard-driving guy: Wei Jianjun Wei was one of the privileged few to compete more expansively in the vote on the new leadership line-up sedan segment. But it had a change name Jianjun denotes a man with a at the 18th National Party Congress of heart, choosing to concentrate military background (Jian means “to last October, making him one of a more of its energies where it was al - build” or “to construct”, while Jun rare breed of billionaire business - ready ahead, particularly SUVs. means “army”). But Wei has ex - men with direct access to the high - “We could fully see the size and tended his military bearing to Great est echelons of power (here he com - potential of the Chinese market and, Wall’s corporate culture. “We feel pares to Liang Wengen at Sany in 2010, it seemed like a company like an army,” one staff member Group, see WiC170). could succeed making any kind of confided. “We work as if we are go - Nonetheless, Wei seems keen to vehicle. But that might not be the ing to war”. Preferring to hire locals keep his employees alert to the po - case long-term,” Great Wall’s presi - from the Hebei countryside, Great tential for disaster. For instance, dent Wang Fengying explained to Wall puts its new recruits through a Great Wall has erected a “shame col - Advertising Age last month. “So we month of “devil training” before umn” at Baoding that seems intent focused our resources on creating they start work – it’s a programme on recording the failures of the past, Haval SUVs and pulled back on other designed to foster a commitment to with the implicit warning that they products, losing sales in the short- “obedience” and “execution”. must never happen again. One of term. But our main objective was to Daily operations on the produc - the entries etched into the concrete build long-term brand value.” tion line sound regimented in the rap sheet highlights the poor sales This decision to “put all its eggs extreme, with employees moving of a compact sedan launched in into one basket” had another key around the factory at a designated 2007. ”Because of an inadequate benefit, says Xinhua Auto, as sales of speed (“seven steps in five sec - identification of customer value, mass market SUVs and pickups got a onds”) and risk punishment for get - [the car’s] positioning was faulty”, boost from a series of purchase sub - ting out of elevators on the wrong the inscription recalls darkly. “These sidies offered by local governments. floors. There’s also more than a failures were the errors of the deci - What is unusual about Great hint of a Big Brother presence with sion-making team,” company pres - Wall’s approach is its combination a mysterious ‘spy department’ ident Wang Fengying explained to of the kind of marketing theory es - monitoring daily operations. It has the reporter. “It warns the employ - poused by strategists like Ries sweeping powers, fining workers ees that however rapidly an enter - alongside the homespun wisdom who forget to switch off their com - prise develops, the results are only of ‘wolf and rabbit’ encouraged by puters at night or punishing staff temporary. The enterprise is at risk Wei himself. who ride motorbikes into work at any time.” So says Global Entrepreneur, without their helmets. Signposts around the headquar - P h o t o which took a detailed look at Great Employees on business trips can ters (‘Risk Road’ and ‘Lean Lake’) of -

S o u r c Wall’s headquarters in Baoding last also expect to get text messaged re - fer a similar warning against com - e :

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a month. Like a number of self-made minders of strict company rules on placency. “Great Wall’s introspection g i n e

C businessmen in China, Wei culti - accepting gifts from clients. “It is no is based on a sense of crisis,” com - h i n a vates a militaristic style. Even his exaggeration to say that if a Great pany boss Wei concludes. n 11 Week in China Aviation 5 April 2013

Come fly with me Motorbike tycoon wants to become a higher-flier in plane industry

hen Zuo Zongshen was pro - Wfiled for a documentary by the New York Times about the de - velopment of modern China, the man behind the Zongshen Motor - cycle Technology Corporation char - acterised his own life as a rags to riches story. “My family and I were ordinary people. In the eyes of West - erners we would be considered very poor. When I had the opportunity I cherished it and worked hard,” he told his interviewer. If his background sounds mod - est, Zuo’s latest ambitions are any - thing but. Already one of China’s richest men (see WiC131), Zuo thinks he can reinvent one of the world’s most complex industries. Indeed, the motorbike tycoon’s plans to move into the world of aviation have created a fair share of disbelief. China Entrepreneur, in an article about his vision, asked simply “Is Zuo Zongshen crazy?” The magazine describes how Zuo’s epiphany came during a visit to the Zhuhai Air Show. After re - turning to his home in Chongqing, he announced that his company Zongshen had reached a strategic agreement with two partners to build private jets under a new com - pany, Chongqing Southwest Aircraft Manufacturing. The plan is to invest Rmb2 billion ($322.4 million) into The Chinese have cars, now they want planes says Zuo the project. Success seems to rest on two con - case is simple. He points out that “Now the Chinese have cars and tingencies. On the one hand, there China is well behind the US in num - houses, the next growth point of P h o t o has to be sufficient demand for pri - bers of planes, something that he consumption will be in aircraft,”

S o u r c vate aircraft; on the other hand, expects to change. Zuo is not alone, Zuo told China Entrepreneur. e :

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a China has to open up more of its with forecasts suggesting that num - In another piece of supporting g i n e

C skies to private flights. bers of aircraft will soar in coming evidence, the China Daily is report - h i n a When it comes to demand, Zuo’s years (see WIC153). ing that two dealerships selling light 12 Week in China Aviation 5 April 2013

aircraft opened in Beijing and Wuhan last weekend and that three aircraft have already been ordered. The new planes will also need more sky to fly in. For this, Zuo can point to plans made by the State Council two years ago that lower-al - titude airspace will be opened up and senior officials say fuller liber - alisation will start from 2015 (cur - rently airspace is hogged by the mil - itary). Reforms are being piloted in Guangdong, Hubei and Guangxi, al - though the timetable for allowing more low-level flying is still unclear. But in preparation for a fuller move, Zuo has announced an investment in a company linked to the national air traffic control commission, which is carrying out research on how best to expand access to the country’s domestic airspace. Even if both trends turn in Zuo’s favour, why should a man famous for making motorbikes be able to Dreaming of getting airborne: Chongqing Liangjiang New Area carve a space for himself in avia - tion? Some scepticism still seems bine propeller engines deployed in (owing to new standards restricting warranted, not least because Zuo civil aircraft manufactured in the emissions and limits on sales in wants to participate in several dif - region. And Pilatus, a Swiss aircraft many Chinese cities), as well as ferent parts of the aviation indus - manufacturer, has also signed an weaker export demand (see WiC132). try. Building aircraft is not enough, agreement with the development Motorbike production fell 11% in the as Zuo sees himself getting involved zone envisaging an investment of first half of 2012 to the lowest levels in a wide range of other activities, $400 million in a company engaged in six years. Chongqing has three such as airport construction, flight in production, assembly and main - main manufacturers (Zongshen and training and even tourism. But Zuo tenance of general aircraft, as well its local peers Lifan and Loncin) explains that he will start by using as the relocation of some of Pilatus’ have each has been trying to invest manufacturing, the core strength of production lines from Switzerland outside their core activities. Usually his motorcycle business, to expand to Chongqing. that has meant property (Loncin into aviation as a supplier. Zuo says he wants to act as a has turned real estate into its sec - A key part of the plan is his in - bridge between the private sector ond business) although Lifan has volvement with Chongqing and the local government’s aviation dabbled in a diverse range of indus - Liangjiang New Area, a 10-square ambitions: “Government invest - tries including clothing, media and kilometre zone already described as ment needs to see performance, so football. “Aircraft City” by the city’s govern - they need me, because I have the ex - At least Zuo’s aviation plans ment. perience and resources in the man - stand out as an attempt to build The park has already attracted in - ufacturing sector, so can directly un - from Zongshen’s roots as an engi - ternational attention. Honeywell dertake the production of general neering company, something that signed a memorandum of under - aviation parts and power systems,” a real estate strategy clearly fails to standing last year promising to help he told China Entrepreneur. address. But aviation looks like a develop Chongqing into an interna - The move might also make more high-risk pick and one that will re - tional aviation centre. Part of the sense against a background in quire substantial investment, as deal is that Honeywell will work which motorcycle sales have had to well as consistent government sup - with local companies to get its tur - contend with policy headwinds port. n 13 Week in China China and the World 5 April 2013

War by other means Why a rash of anti-Japanese dramas is a boon for Hengdian

“ f you want to learn how the tra - But Fan still throws himself Iditional Prussian goose-step wholeheartedly into his role. “I’m works, you have to watch British tel - acting the part of a shameful Japan - evision, because in Germany no - ese soldier in the way that when body knows how to perform it,” people watch they feel he deserves Joschka Fischer complained to the to die,” he explained. “I want to BBC when he was German Foreign show the viewers the kind of Japan - Minister eight years ago. ese soldier that is really, really evil.” His concern was the way that WiC has covered anti-Japanese stereotypes about Germany seem to sentiment before and how it mani - thrive among British audiences. It fests itself in many Chinese dramas is a gripe echoed by German diplo - (for a selection, see WiC81 for the mats too, fed up with the dispro - kung-fu remake in which the hero portionate focus on Nazi Germany beats up scores of Japanese; or in Britain’s history syllabus, its love WiC135 for local hopes that Zhang affair with war films, and the en - Yimou’s The Flowers of War – a story during popularity of anti-German told against the backdrop of the jibes in comedies like Fawlty Towers Nanjing Massacre – would be a and Blackadder . Zhang Yimou’s anti-Japanese epic worldwide hit; or even the mention Quite how a similar conversation in WiC138 of a series that raised eye - might go between a Japanese for - soldiers were being killed in every brows for looking at a Japanese char - eign minister and executives from possible way you could think of. acter in a more nuanced, less nega - Chinese TV is open to question, es - Many of them needed to rush to sev - tive light). pecially as war films and spy dra - eral different production teams a But there is also a sense today of mas are flooding the schedules like day, dying in different scenes from an increasing intensity in much of never before. Their common theme day to night. It has been a festive the anti-Japanese fare. Southern is Japan’s wartime behaviour be - New Year and everyone is busy Weekend says that, until 2004, an tween 1937 and 1945. shooting the Japanese.” average of three dramas a year were Hengdian Film Studios in Zhe - All that bayoneting and bludg - choosing the War against Japanese jiang province, where much of the eoning is proving lucrative, not just Aggression (as it is usually known footage for the current crop of for the extras but for other busi - in China) as their narrative context. shows is shot, is a major beneficiary nesses in Hengdian. Laundry outlets The tempo then picked up notably of the trend, as well as the 300,000 have to work through the night to in 2005, for the sixtieth anniver - extras who have been hired for the scrub fake blood off uniforms, for sary of the victory over Japanese films made there, says Southern instance, while local technicians are forces, when Wan Rong’s Drawing Weekend. Of this total, about 60% in demand to prime an arsenal of Sword was a huge hit, and one of 20 are playing the parts of Japanese. replica rifles and hand grenades. similar dramas broadcast. Since The studio’s weibo account of - One of the extras making his liv - then the number has increased fered an insight into why so many ing as a Japanese soldier is Fan Jing - substantially again, with anti- extras were required, posting this tao, who is shot, stabbed and blown Japanese series making up at least item over Chinese New Year. “Just up for daily pay of around Rmb200 70 of the 200 shows broadcast in took a walk around,” it relayed. (Fan’s record is 31 fatalities in a sin - primetime by China’s satellite TV “Everything looked great. Japanese gle day, says Reuters). channels last year. 14 Week in China China and the World 5 April 2013

Take Anti-Japanese Hero (sub- production. “The cruelty of the studio also offers microfilms in heading: You’ve got bullets? I’ve got Japanese soldiers should be high - which visitors can play star roles. kung-fu! ). It topped the ratings in lighted,” he was instructed, “but the Many have an anti-Japanese theme, Shanxi, Jiangsu, Guangdong and military qualities of the Japanese including the local favourite Beijing, and was so profitable that a army cannot be displayed.” “Hands Up”. second series was rushed into pro - According to the China Digital Films about fighting the Japan - duction. Times, there was similar meddling ese have also become more popular The first run delighted its more in the leaked set of demands made as tensions grow over disputed is - bloodthirsty viewers with scenes in of Jiang Wen’s Devils on the lands in the East China Sea. Some which the Japanese enemy was liter - Doorstep , a runner-up at the visitors have even been bringing ally ripped apart by Chinese hands. Cannes Film Festival 12 years ago. banners to Hengdian with them, Some viewers are more uncom - Despite the international plaudits, and shouting “The Diaoyu Islands fortable with the violent mood. it was refused a domestic release belong to China!” during the filming “There’s too many anti-Japanese se - of their own productions [the Japan - ries,” one weibo contributor com - ese call the islands the Senkakus]. plains. “If you count how many Such a hostile mood has been a Japanese have died, there would be bittersweet experience for Yano no one left in Japan. Our anti-Japan Koji, a Japanese actor who arrived in shows are even more powerful than China more than a decade ago and is the atom bomb.” now the most recognised Japanese Others laugh the genre off as Tom actor in China, says the Japan Times. and Jerry style violence or say that That has meant many years playing the plots are so ridiculous that they an enemy soldier, often in roles that insult their audience. it has disturbed Yano to play. “In “If we’ve got so many heroes like China’s anti-Japan soap operas, all these, why bother building aircraft Japanese faces virtually carry the carriers?” scoffs another weibo critic. same stereotype. I understand why A third claim is that it is the profit and I could only follow the script as potential of the dramas that leads an actor,” he told Hong Kong’s Apple to so many being made, although Daily last month. this raises questions about why Made career in China: Yano Koji Perhaps ironically, Yano’s career such material continues to be so choice has seen him come under popular. Normally this is left unan - without revisions. One of the main greatest threat from his own coun - swered, just as the role of China’s deficiencies, the regulators in - trymen, some of whom have ac - educational system in promoting sisted, was that the film failed to cused him of demonising his home - demand for Japan-bashing content express “the hatred and opposition land. Five years ago he was assaulted rarely comes up for debate in the of the common Chinese people back in Japan. Some of his Chinese domestic media. against the invasion”. fans then took the unexpected step Another suggestion is that it is The censors added: “It promi - of expressing concern at his well- easier to make war films than other nently displays and exaggerates [the being. “The Chinese audience entertainment genre, which period - Chinese public’s] ignorance, apathy thought that I was one of them. I ically come under the scruting of and servility… and has not fully re - was really touched,” he recalled. the television regulators (the show - vealed the Japanese imperialist and At least Yano, who now has a Chi - ing of time travel dramas and dating his aggressive nature.” nese wife and daughter, has man - shows have been blocked from time With this kind of guidance, it’s aged to graduate to other work, in - to time). Nonetheless, the censors less of a surprise that so many of cluding a spot on a light still show a keen eye and are wont to the shows seem to foster enduring entertainment show on Hunan TV. make sure that military action prejudices among their audiences. It’s a trend that he would like to con - P h o t o meets their required standards. This nationalistic mood is reflected tinue. “I hope people don’t label me

S o u r c Southern Weekend tells how one di - in Hengdian too with attractions in guizi (devil) again. I am trying to e :

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a rector was driven to exasperation which tourists can spend a day take part in other entertainment g i n e

C by the number of changes that he “shooting the Japanese fascists to shows and remake myself on h i n a was expected to make to his own death”, says Southern Weekend. The screen,” he told the Apple Daily. n 15 Week in China Society and Culture 5 April 2013

Move over chaps A new wave of female film directors has suddenly emerged in China

fter Kathryn Bigelow’s film K- A19: The Widowmaker made a $34 million loss in 2002, Holly - wood’s powerbrokers gave her a wide berth. In macho Tinseltown, Bigelow’s treatment seemed to un - derscore that it was doubly-hard to bounce back from a box office flop if you were a female director. In fact, Bigelow didn’t get the chance to make another film until 2008, this time with a budget of just $15 million. But the film in ques - tion– The Hurt Locker – would go on to make Oscar history, winning six gongs and announcing Bigelow as the first woman in history to win an Academy Award for directing. Only 9% of the top 250 films at the US box office last year were made by female directors, says the New York Times. That’s already sub - stantially higher than the 2011 fig - Gui Lun-mei: stars in Charlie Yeung’s flick Christmas Rose ure of 5%, but like Hollywood, there is also a dearth of women behind director Stanley Kwan as the film’s and Taiwan’s Gui Lun-mei. Senior the camera in China. No official sta - executive producer. So Young is also filmmakers Tsui Hark and Jacob Che - tistics are available, but by WiC’s her graduation project, with the for - ung are the producers of the film. own calculation only three films mer actress set to complete a mas - When asked about her experi - made in China last year were di - ter’s degree in directing at the Bei - ence directing, Yeung admits that it rected by women. jing Film Academy, the country’s wasn’t easy: “This is my first time Could this be the year that the most prestigious film school. being a director and all the chal - trend changes? Between March and Also this month actress-turned- lenges I encountered were beyond April, eight female filmmakers will director Charlie Yeung will make her my imagination. In the beginning I be showcasing their work in China directing debut bringing Christmas didn’t even know how to film,” she and Hong Kong. Small wonder Rose to the Hong Kong International told the Chongqing Morning Post. then, that China Vogue has declared Film Festival. Unlike Zhao, who Christmas Rose will be one of six it the “Season of Chinese Women picked the romantic comedy (an Chinese-language films directed by Directors”. area where female filmmakers have women at this year’s Hong Kong fes - First comes Zhao Wei’s So Young , enjoyed success), Christmas Rose is a tival, which started this month. P h o t o a coming-of-age story about a young courtroom drama revolving around They include: Emily Tang’s All

S o u r c woman’s emotional struggle when a sexual harassment case. Apologies , Quan Ling’s Forgetting to e :

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a she reconnects with two men years Yeung, too, has lured a strong cast Know You , Song Fang’s Memories g i n e

C after a university love triangle. Zhao for her first feature, including Hong Look at Me , Yang Lina’s Longing for h i n a put her Rolodex to good use, hiring Kong singer and actor Aaron Kwok the Rain and Huang Ji’s Trace . An - 16 Week in China Society and Culture 5 April 2013

other director from Hong Kong, Ann him got many more minutes of air - Bawang denied it (suing the maga - Hui, says that female filmmakers are time than coverage of any Chinese zine that made the allegation) but making progress in China. When she medal winner. the perception looks to have stuck started out in the industry, Hui told Chan endorses so many products with consumers. Sales have steadily reporters in 2011, there were less that there is no agreed total in the faltered and Bawang announced in than half a dozen female directors. media for the number of brands March that net losses had widened She now estimates there are at least that he represents. Because of the to Rmb617 million ($99.4 million) in 10 young female filmmakers in wide range of his endorsements, a 2012, compared with Rmb559 mil - Hong Kong alone. number of products bearing Chan’s lion in the previous financial year. Many of them are starting to en - seal of approval in China have Lacklustre demand for its flag - joy commercial success. The latest turned out to be duds. An air condi - ship shampoo range has clearly feature from Xue Xiaolu – Beijing been a major factor, as the category Meets Seattle – hit the big screen in contributes the majority of China two weeks ago (see WiC183) Bawang’s revenues. A sales man - and has led the box office since re - ager told Qianjiang Evening News lease. Asked about the contrast be - that supermarket sales were down tween male and female directors, dramatically to just 10 bottles a Xue said: “I don’t think there is any month in some stores. Many difference. Perhaps female film - chains have shrunk Bawang’s shelf makers focus more on the emo - space. Tesco only carries four of its tional aspect of the film and pay shampoo varieties compared with closer attention to details. But these 10 two years ago. are good things.” Bawang, which makes shampoo Judging from the takings for Bei - with Chinese herbal extracts, has at - jing Meets Seattle , Xue’s feminine tempted to resuscitate its business perspective could also turn out to by promoting its own brand of be a very profitable one. Industry herbal tea. And perhaps worried observers say the film could gross about the “Jackie Chan curse”, it at least Rmb250 million ($40.3 mil - The endorser: Jackie Chan hired another kung-fu star, Donnie lion), rendering it one of the best Yen, to endorse that product. To be performing romantic comedies yet. tioner that Chan espoused report - fair to Jackie, the switch has done edly blew up. An auto repair school little to lift sales. In its most recent plugged to aspiring Chinese me - financial statements the company chanics was enmeshed in a diploma admitted that the tea operation is scandal. And a maker of video com - also bleeding cash. Mane man? pact discs went bankrupt and saw “A shampoo maker selling herbal Jackie Chan’s endorsements its manager jailed for fraud. tea is obviously a mistake. It is a se - don’t always work out so well As a result, netizens joke that rious brand dilution and opera - when it comes to endorsement, tionally, herbal tea also has little ou have seen him flip, swivel there is a “Jackie Chan curse”. Or as synergy with shampoo,” an industry Yand jump, bamboozling hun - a Nanjing newspaper wrote rather observer told CBN. “Bawang is now dreds of opponents in his kung-fu sarcastically in an editorial: “He has finding out that the business model comedies. But for most Chinese, become the coolest spokesperson of selling a bottle of Rmb60 sham - there’s no need to go to the cinema in history. A man who can destroy poo is different from selling a Rmb3 to catch Jackie Chan in action. anything.” can of herbal tea.” Forget his fast-moving feet and Few of Chan’s promotional ef - Bawang must now hope that it fists. Instead it is Chan’s face doing forts have cratered as publicly as avoids the fate of Fenhuang Cola, most of the work nowadays, adorn - Bawang International. In 2010 the another beverage that Chan has en - ing brands as diverse as Canon Guangzhou-based firm was accused dorsed but which has since gone out P h o t

o cameras and frozen dumplings. of allowing carcinogens (cancer- of business.

S o u r During Chinese broadcasts of the causing chemicals) into its hair Chan’s critics say the ‘curse’ c e :

R e 2012 London Olympics, Chan was products (the shampoo in question stems from his willingness to pro - u t e r s ubiquitous. Commercials featuring was supposed to prevent hair loss). mote just about anything, from 17 Week in China Society and Culture 5 April 2013

well-known global brands through that he dispensed. to more obscure regional products. His work in Kunming was held in Many celebrities limit their en - such high regard that a senior offi - dorsements to products that they cial in the city later sought his coun - know well or that enhance their own sel when he was transferred to Yuxi reputation as stars. Chan’s less dis - as Party secretary. criminatory approach probably But what seems to have appealed guarantees that he’ll pitch the occa - to Zhao’s business partners most of sional clunker. all was that he didn’t seem to be on “When you have someone with the take, or at least not as much as so many brands, the probability of they expected. things going wrong is markedly “We thought he would try to get higher,” agrees Saurabh Sharma, a more money out of it, but he did - strategic planning director for n’t,” the Nanfang Daily quoted one Ogilvy & Mather Beijing. “It’s rare official from a Hunan car factory to be in the industry for so long and The impressive imposter: Zhao as saying. be clear of controversy.” So despite a series of newspaper But, Chan reckons he’s been treated news filtered back to Beijing that he editorials reminding people of the unfairly by the press. “I have always had been touring the southern seriousness of Zhao’s subterfuge, been very careful with the products I province of Yunnan with the new many netizens have refused to con - endorse,” he told media shortly after Party secretary of Yuxi city and demn him, persisting instead in call - Bawang’s shampoo crisis broke. “But making promises to stimulate local ing him the “new Lei Feng” (see there are some media who are gun - agriculture. WiC186) and a “valiant knight”. ning for me and a few other artists – I Stung by the news, the State “A real director that does noth - am not sure why – as though it is bet - Council then issued a statement ing but wants money or a fake di - ter that we all just died.” saying, “We have recently received rector that does things but wants reports that Zhao Xiyong is pre - nothing? I know which I would tending to be the head of the State rather have,” a weibo user wrote. n Council Research Office and an offi - cial of vice-minister level. Our unit The big lie employs no such person and no re - Keeping track The incredible tale of Zhao search team has ever been sent to Xiyong, the ‘fake official’ Yunnan province.” In issue 186 WiC reported that CCTV Realising his predicament, Zhao had accused Apple of unfairly treat - ith his corpulent physique, instantly disappeared. Two weeks ing China’s consumers. After two Wbouffant hairdo and pen - later he was found holed up in his weeks of heated attacks by the chant for long speeches and short- home province of Liaoning, where country’s state-run media (People’s sleeved white shirts, Zhao Xiyong he began his working life as a man - Daily subsequently called the tech looked every inch the Communist ager at a mattress factory. firm “arrogant”), this week Apple’s Party official. But the man who He has now been shipped back to chief executive Tim Cook finally claimed to be the director of the Yunnan to face trial on charges of caved to the pressure and issued a powerful State Council Research Of - fraud. (rare) statement of apology. “We re - fice was actually an imposter. With One might assume that this alise a lack of communication in this considerable verve, Zhao has spent would be the end of the story but process has led to speculation that much of the last three years ex - Zhao has become something of a Apple is arrogant and doesn’t care ploiting his fantasy role, capitalis - folk hero, not least for executing about or value consumers’ feed - ing on the desire of lesser officials such a successful prank on the rul - back,” wrote Cook. “We sincerely to curry favour with the central gov - ing elite. apologise for any concern or misun - P h o t o ernment. Moreover, the Nanfang Daily has derstanding this has brought to cus -

S o u r c Zhao was wined, dined and of - reported that many of the people tomers.” Bill Bishop, a China e :

I m

a fered well-paid consultancy work on who had interactions with Zhao in commentator, described Cook’s ges - g i n e

C the basis of his assumed status. But his ‘official capacity’ were im - ture as Apple’s first iKowtow. h i n a his downfall came last month when pressed by him and by the advice 18 Week in China And Finally 5 April 2013

Broken plates Netizens in unlikely win in battle with the PLA

o foreign eyes, the sight of a plates speeding down a busy road: Tblack Maserati Quattroporte “Where is he off to in such a rush? To driving through the streets of Bei - liberate the Diaoyu islands? [the dis - jing probably looks innocuous puted territories that Japan calls the Strictly for military purposes? enough. But one irksome detail Senkakus]” would jump out for most Chinese How do cars like the Porsche get seems so. Last week Zhao Keshi, the onlookers – that the luxury Italian their plates? This is a question that head of logistics for the People’s Lib - saloon is sporting military li - netizens have been posing, often ap - eration Army, announced that the cence plates. pealing to the wisdom of Yu Jian - military will be issuing new licence Taken over Chinese New Year, the rong a widely admired professor plates as of May 1 and that certain photo of the car in question is one of with the Chinese Academy of Social brands of car – including Mercedes, scores of images uploaded to weibo Sciences. As Yu puts it there are sev - Bentley, Jaguar, Porsche and BMW – and other social networking sites in eral possible explanations. One is will be banned from using them. protest over this very visible form of that the army is buying these cars at Audi, still the car of choice for corruption. vast expense – Bentleys, BMWs and most Chinese officials, will be eligi - How so? Mercedes and the like – for its top ble, as long as the vehicle is of A6 Military plates confer an aura of officers. Another explanation is that class or lower. untouchability for drivers, allow - some members of the military are In addition the new plates will be ing them to run red lights, speed somehow wealthy enough to buy equipped with a computer chip, the though heavy traffic and park on the luxury cars. In theory, they Beijing News reported, so that they yellow lines without punishment. shouldn’t be able to afford them. are harder to fake. Other official perks include not A third possibility is that the While many netizens were scep - having to queue (or pay) at high - plates are simply faked, either with tical that the new rules would actu - way toll booths. the connivance of someone in ally result in changes, some cele - In recent years the plates – very the army or manufactured inde - brated the fact that the photo distinctive because of their white pendently by enterprising civilians. campaign on Sina Weibo had forced background and red and black letter - Of course, none of the above op - the government to act. ing – have been seen on vehicles that tions have improved the mood of “This is the development of so - can make no claim to a military func - most ordinary citizens. cial democracy,” cheered one user. tion. As one weibo user quipped af - But is the government listening “People Win!” was the simple mes - ter spotting a Porsche with military to the public frustration? Yes, it sage posted by another. n

No strings attached

“We get on well and treat each other as equals”

P * Xi Jinping addresses African leaders in Tanzania. He added that “China will continue to offer, as al - h o t o

ways, necessary assistance to Africa with no political strings attached”. Xi also called Africa the “conti - S o u r nent of hope and promise” and countering disquiet about a new era of Chinese colonialism insisted that c e :

R “Africa belongs to the African people”. e Xi: on safari in Africa u t e r s

19 Week in China The Back Page 5 April 2013

Photo of the Week In Numbers Rmb30 trillion The amount made by Chinese local governments from appropriation of land from farmers over the past decade, says Wu Jinlian, an economist at the Development Research Centre. Local governments often buy from farmers at cheap rates and then charge developers much higher prices for land parcels. The figure equates to $4.83 trillion. P h o t o

$14 million S o u r

c The amount that Long Beach, California, e :

R

e has paid for BYD’s electric buses. To satisfy u t e r s purchase preconditions the Chinese

automaker will also build a factory in Five people have died from a new H7N9 strain of bird flu in China’s nearby Lancaster. The first batch of buses Yangtze River Delta region. A total of 14 infections have been reported will be delivered in June 2014.

Rmb500 million Wal-Mart’s planned investment to upgrade Where is it? Chinese stores. The retailer also said it is Some of the places referred to in this issue on target with new store openings, contradicting Chinese media reports that closures were derailing growth in one of its Beijing most important markets. Hebei China 24% Nanjing Percentage increase in China’s exports to Anhui Shanghai the US of high-tech electronics, auto parts Chengdu Wuhan and optical devices, reaching $129 billion. Chongqing Hunan Jiangxi Exports of clothing and footwear rose just 5% to $47 billion. Guangdong Guangzhou Hong Kong

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