05 Computing.FIN.qxp_Layout 1 13/9/16 4:07 pm Page 38 Week in China China’s Tycoons Computing Liu Chuanzhi and Tech Lenovo post-acquisition integration proved tough, and Lenovo became lossmaking in 2008. Liu returned to the chairman role in 2009. It’s Liu, a living the Chinese equivalent of Steve Jobs returning legend, is to Apple. Since Liu took the helm, Lenovo has regarded as the seen a strong turnaround and started godfather of grabbing market share in other emerging Chinese markets. The company is now the world’s capitalists largest PC maker. Its smartphone business, however, has not been as successful even following its $2.9 billion takeover of Motorola’s mobile handset business from Google in 2014 (which was accompanied by a $2.3 billion acquisition of IBM’s low-end server business in the same year). In 2011 Liu announced his retirement as chairman from Lenovo again. Lenovo’s parent company Legend Holdings, a property-to- investment conglomerate, went public in Hong Kong in 2015. One of Liu’s great Go to the business section of most bookstores strengths, says 21CN Business Herald, is the in China, and you are likely to find three way that he has exploited China’s state-led familiar faces on the shelves: Hong Kong’s model of capitalism. Strictly speaking Lenovo richest man Li Ka-shing, Alibaba’s Jack Ma and is still a state-owned asset because its biggest Liu Chuanzhi. Liu’s net worth is nowhere near shareholder has been the CAS. However, Liu that of the other two men. But he is widely has maintained effective control of the regarded as the godfather of capitalism in company for years despite the fact that he modern China. only owns a 3% stake (recently converted from share options). Getting started Born in Jiangsu province in 1944, Liu Chuanzhi Need to know developed his entrepreneurial instincts at a One of Liu’s other skills is an ability to blend Key info relatively advanced age; he was 40 when he with different generations of businessmen. Liu only has a 3% left the Chinese Academy of Sciences (CAS) to Until June 2016, he was the chairman of the stake in Lenovo. found Legend in 1984. The company made its China Entrepreneur Club, for instance, whose early money selling Chinese language cards membership represents the first generation of for computers. Chinese tycoons. (The club says the 46 companies owned by its members had Big break combined revenues of Rmb2 trillion last year.) Demand for personal computers boomed Thanks to a small stake in Legend Holdings, following China’s entry into the World Trade Liu finally earned an entry in Hurun’s China Organisation in 2000. Legend listed in Hong Rich List in 2015. A net worth of Rmb2 billion Imagine China Photo Source: Kong and changed its name to Lenovo in ranked Liu the 1,738 richest man in China, Year born 2004. The same year it also bought IBM’s PC which looks rather non-proportional to Liu’s 1944 division and Liu retired in triumph. But the influence in China’s business world. 38 05 Computing.FIN.qxp_Layout 1 13/9/16 4:07 pm Page 39 Week in China China’s Tycoons Computing Ren Zhengfei and Tech Huawei growing fastest in rural areas. It boomed with the growth in mobile telephony in China and soon started doing business overseas as well. Ren’s The annual report of 2010 was significant: management it was the first in which Huawei – still a private style is lifted company – revealed the identities of its board straight from a members and offered their profiles. This was military in response to problems Huawei has had in training the US. The company has twice failed to manual complete acquisitions in America, due to concerns related to the company’s alleged links with the Chinese military. The company now employs nearly 90,000 staff. In 2015 its revenues reached $60 billion. The company itself has a goal of hitting sales of $100 billion by 2020. Huawei vs Lenovo Thanks to the strong revenue growth, when Ren Zhengfei was born in 1944 in Guizhou, the All-China Federation of Industry and though his hometown is Pujiang county in Commerce published the China Top 500 Zhejiang. Ren graduated from Chongqing Private Enterprises ranking in 2016, Huawei Construction Engineering College before knocked Legend Holdings, the parent firm of joining the army as a construction engineer. Lenovo, off the top spot. After a 14-year military career, Ren landed a The rivalry of Huawei and Lenovo has not job in Shenzhen, as the vice president of a gone unnoticed among tech industry state-owned electronics firm before leaving observers in China. Ren and Lenovo’s the company after a dispute over pay. legendary founder Liu Chuanzhi were born in the same year. But it appears Ren has been Getting started winning even more acclaim in recent years. Along with five partners, Ren then founded Lenovo has gone global by buying the Huawei in 1988, doing so with just two “leftovers and scraps” from Western firms Key info multimeters plus an old oscilloscope. The (such as IBM’s server and Motorola from Huawei forecasts its company became an agent dealing in Google), according to Zhang Tingbin, a well- revenue will top $100 equipment that enabled offices to have a regarded journalist at CBN, but Huawei’s billion by 2020. private telephone exchange. growth has been driven by independent Huawei was benefitting from the demand innovations. It filed 3,442 patents in 2014 for telecommunications equipment, but Ren alone and in the past 10 years has invested realised the agency model would not sustain Rmb188 billion in R&D. over the long-term. So Huawei started to Hurun’s China Rich List puts Ren’s net develop its own line of products. worth at Rmb8 billion. Photo Source: Imagine China Photo Source: Big break Year born Ren took to heart Mao’s combat tactics to 1944 ‘surround the cities from the countryside’ by 39 05 Computing.FIN.qxp_Layout 1 13/9/16 4:07 pm Page 40 Week in China China’s Tycoons Computing Feng Jun and Tech Aigo Big Break Aigo became one the most well-known domestic brands of electronic gadgets. The His company’s company moved into making MP3 players, name means digital cameras and USB flash drives. He also ‘The Patriot’ spent big bucks on the design of a new logo, courtesy of Ogilvy & Mather, to help with the launch of Aigo products in international markets. The logo later appeared on McLaren’s Formula One racing cars. In 2009, Feng signed a deal with Manchester United to be the English football team’s global IT partner. According to 21CN Business Herald Feng would like Aigo to become “China’s Samsung”, with the newspaper suggesting that nearly everyone who grew up in a Chinese city in the 1990s has used an Aigo product. That seemed to have positioned Aigo to become a leading mobile handset maker. But in the internet era Aigo appears to have faded in tech circles. The company’s profile, for instance, is nowhere close to those of younger firms such as Xiaomi and LeEco. Feng Jun’s name doesn’t even appear in most Why? “I am not interested in making digital rich lists but when it comes to guanxi, the 47 products any more,” Feng told Phoenix News year-old could be one of the best connected in an interview in early 2016. Instead, Feng has tycoons in China. spent 99% of his time on the Aigo Entrepreneur Alliance, an organisation that Getting started helps Chinese entrepreneurs to build their Born in 1969, Feng Jun graduated from informal networks. The Alliance’s latest Tsinghua in 1992 and he was assigned to a offering, for instance is to help hotels to lease state-run engineering firm. He left on his first their underused conference rooms to small Key info day. Instead he headed for Beijing’s IT district and medium-sized enterprises. Feng is a founding Zhongguancun, where he would set up his member of the own business, and befriended China’s earliest Need to know influential China Entrepreneur Club. tech bosses (such as Liu Chuanzhi of Lenovo). Feng is one of the founding members of the Feng started out making computer influential China Entrepreneur Club, which keyboards and cases – the steel boxes that was set up in 2006. Xiaomi’s Lei Jun and cover PCs. His Little Sun keyboard soon gained LeEco’s Jia Yueting only became members in 70% of the market in northern China. By 1996, 2016, or 10 years behind Feng. knock-offs of his Little Sun goods had started to appear. So Feng decided to invest in a new Imagine China Photo Source: brand: Aigo, which means ‘the patriot’ in Year born Chinese. 1969 40 05 Computing.FIN.qxp_Layout 1 13/9/16 4:07 pm Page 41 Week in China China’s Tycoons Computing Lei Jun and Tech Xiaomi Corp thought he had missed the opportunity to build a company himself akin to domestic internet giants like Tencent, Baidu and Xiaomi was the Alibaba. world’s most As an investor, Lei proved successful. The valuable first success came with the sale in 2004 of technology Joyo.com, an online book retailer in which startup, before Kingsoft had invested in 1999, to Amazon. Uber took the This was rumoured to have brought him a title personal fortune of Rmb100 million. Lei also invested personally in Lakala, a third party payment provider, UCweb, an online game site, and Vancl, an online clothes retailer.