1 Talking Point 5 Week in 60 Seconds 6 Economy Week in China 9 Property 10 China and the World 11 Chinese Character 13 Environment 31 August 2012 14 Society and Culture Issue 162 18 And Finally www.weekinchina.com 19 The Back Page Heading for the rocks? m o c . n i e t s p e a t i n e b . w w w

Shipwreck: why Zhang Zhirong’s firm faces trouble

Brought to you by Week in China Talking Point 31 August 2012

Far from shipshape Insider trading scandal signals more pain for troubled shipyard Rongsheng

or a company at the centre of an Finsider trading investigation, Well Advantage seems an apt name. The Hong Kong firm has caused some embarrassment for its owner, tycoon Zhang Zhirong. It is accused by the US Securities and Exchange Commission (SEC) of being part of a group of traders that used privi - leged information to buy stock in Canadian oil and gas company Nexen. The SEC notes that company insiders seem to have bought shares just days before Chinese oil major CNOOC announced a $15.1 billion In the red? Rongsheng’s shipyard in Nantong takeover bid. There was an immedi - ate $13 million gain in value from tions. Is heavily indebted Rong - Moreover, Rongsheng would have the spike triggered by CNOOC’s bid. sheng heading for the rocks? Can he fallen into the red were it not for a The SEC likewise noted that bounce back from the SEC allega - government subsidy. Zhang is also the controlling share - tions or will they hurt his firm’s Demand has collapsed. The holder at Rongsheng Heavy Indus - business dealings with CNOOC? Shanghai Daily points out that in tries, a company that has Could the scandal even derail the first half of 2012 Rongsheng re - “significant business activities” CNOOC’s attempt to buy Nexen? ceived orders to build just two ships with CNOOC. Rongsheng’s problems seem to (versus 24 a year earlier) “as global The SEC’s announcement proved extend over a wide area, but our overcapacity deters shipowners costly for the Jiangsu businessman. starting point is the calamitous from adding ships”. Those two or - The day after the news emerged, state of China’s shipyards. ders were worth just $55.6 million shares in Zhang’s listed companies versus $1.08 billion of business in nosedived in Hong Kong. Rong - An industry all at sea? the prior period, reports Reuters. sheng Heavy Industries, China’s The shipping slowdown won’t be The reduction in demand is lead - largest private sector shipbuilder, news to regular readers of WiC: we ing to cutthroat competition too, as slumped 16.4%. His property devel - last mentioned the “perfect storm” local shipbuilders fight to win the oper Glorious Property Holdings facing the industry in February (see limited order book on offer. South shed 10.6%. WiC137). The Financial Times has Weekend spoke to one industry The scandal comes at a terrible since called it the “worst shipping player who cited a recent bidding time for Rongsheng, a company al - downturn in 25 years”. war for a container ship contract in ready suffering from a global slow - Rongsheng’s first half results which the price dropped to $25 mil - down in demand for new ships. showed that it is feeling the pain lion – a level where the yard will Making a bad PR week worse, Rong - too. The shipbuilder announced make a paltry profit. sheng subsequently delivered a that profits fell 82% in the first six dismal set of first half results and months of 2012, versus the same pe - Zhang’s voyage into troubled wa - P h o t

o spooked investor confidence fur - riod in the previous year. That ters...

S o u r ther by backing out of a planned meant it barely stayed in the black, Zhang Zhirong is a native of Jiangsu, c e :

R e acquisition. with net income registering just one of China’s more entrepreneurial u t e r s Zhang now faces a series of ques - Rmb215 million ($33.8 million). provinces. His rise has been nothing 1 Week in China Talking Point 31 August 2012

if not rapid: still in his early forties, Zhang was ranked by Forbes as China’s 22nd richest person in 2011, with a net worth of $3 billion. He made his original fortune in real estate, primarily in Shanghai. But in 2003 he was made aware that China’s leadership wanted to see local firms take on a more domi - nant role in shipbuilding. Keen to diversify, Zhang posited that ships were like ‘offshore real estate’, says South Weekend. He decided to enter the industry, despite lacking any prior experience. Zhang rectified some of this shortfall by recruiting one of China’s most experienced shipping executives, Chen Qiang. He also had the advantage of a close relation - ship with the local government in his hometown of Rugao, part of Nantong City. He struck up a close rapport with Rugao’s Party secre - tary Chen Huijuan, persuading her that shipbuilding was a great devel - opment opportunity. Locally they became known as the ‘Three Musketeers’ as the trio sought to build China’s biggest shipmaker from scratch. Crucially, the local government official was able to secure a prime spot for the yard on Changqingsha Island, near the Yangtze River (such an impor - tant location that it required State Council approval). The Rugao gov - ernment also gave the fledgling firm subsidies and lobbied banks to provide competitive loans (since 2008 Rongsheng has been offered credit lines worth Rmb200 billion, or roughly $31.5 billion). A Hong Kong IPO in 2010 also helped to boost growth. Key clients such as Brazil’s Vale were landed, and by 2011 Zhang was boasting that Rongsheng was China’s top-ranked shipyard by new orders. Even as the Baltic Dry Index plunged, Zhang’s manner was con - fident, telling Nantong’s deputy 2 Week in China Talking Point 31 August 2012

mayor last October that “Rongsheng is leaping towards becoming one of the global shipbuilding leaders”. Planet China Strange but true stories from the new China Not waving, but drowning? Rongsheng’s CEO Chen Qiang was PULL THE UDDER ONE. Beauty pageants can sometimes be controversial in China. But officials from Shanyin County in Shanxi province notably less ebullient. He’d earlier probably had little idea that they would spark a backlash when they came admitted that hardly any orders had up with their own pageant idea. In Shanyin’s case, the goal was to find the been obtained in the most recent ‘most beautiful cow’, a move designed to promote the local dairy industry. fiscal quarter and that profit warn - Judges selected 30 of the most charming cows in the county (from 100,000 ings were likely. unknowing contenders, apparently) and then showcased them at the Aside from the general deterio - contest. However, it wasn’t just the cows on display. Perhaps to make the ration in industry conditions, Chen pageant a little more visually interesting, the officials arranged for bikini- was soon having to deal with oper - clad milkmaids. Shanghai Daily reports that this angered many of Shanyin’s ational concerns too. In March high-minded villagers who said the event was ‘promoting vulgarity’. As Rongsheng was forced to dismiss usual, the debate went viral on the internet, with one microblogger safety concerns over the huge Vale - commenting: “If they were aiming to select the most beautiful cow, why did max vessels – a new breed of dry they hire models? I don’t think it’s good for children to watch.” One model told reporters she’d been hired to represent the harmony of humans and bulk carrier – that it has been build - nature. And the county head stood by his bikini strategy: “We want to ing for iron ore giant Vale. This promote the local dairy industry to let more people drink safe milk.” came after Chinese transport offi - cials referred to the “hidden dan - gers” of these colossal 360-metre the media now wonders if that to Rmb8.02 per share. ships. To the chagrin of their Brazil - tried-and-tested route is still open. The deal’s collapse is being ian owners, the Valemax ships have In June Chen Huijuan resigned as taken as further evidence of Rong - been barred from docking in Chi - Rugao’s Party secretary. South sheng’s constrained cashflow. But nese ports. Weekend muses: “Whether Zhang minority investors in the target The row has left Rongsheng with Zhirong and Rongsheng will still ob - company are furious. According to a headache too. It won orders from tain the powerful support of the the Economic Observer, they have Vale to build 16 Valemaxes worth a government remains unknown.” applied to the CSRC, China’s stock total of $2.1 billion. But the Brazilian market regulator, to take legal ac - firm is now reluctant to take deliv - Any more bad news? tion over the debacle. ery of ships that it cannot unload in The failed acquisition of Anhui Indeed, after the Nexen insider China – the destination for which Quanchai Engine could prove an - trading case and the botched bid for they have been designed. For in - other setback for Zhang. Last year Quanchai Engine, the 21CN Business stance, Rongsheng completed the Rongsheng agreed to acquire the Herald has concluded that the ship - 380,000- tonne carrier ‘Vale Hebei’ Quanjiao local government’s 44.5% builder “is facing an unprecedented in February but Vale has yet to ac - stake in the diesel engine maker and crisis of credibility”. cept it into its fleet, offering various said it would make a formal tender reasons for the delay. Needless to offer to other shareholders in the Zhang’s top priority is... say, until a buyer takes delivery, a listed firm at Rmb16.62 per share. According to the South China Morn - large chunk of the contracted price News of the bid saw the target ing Post (SCMP), the tycoon has goes unpaid, which weighs increas - company’s shares rise in price. But hired a specialist lawyer to help him ingly heavily on Rongsheng’s bal - as the business environment wors - deal with the SEC allegations. The ance sheet. ened, the deal was repeatedly de - newspaper claimed that sources fa - Finances already looks stretched: ferred. As deadlines passed and miliar with Zhang say he is keen to as of March, the shipbuilder had Rongsheng requested more delay, avoid a fine and is looking to cut a run up Rmb35 billion in liabilities Quanchai Engine’s stock began to deal with the SEC. This could involve and is paying an estimated Rmb2 slide. Finally, on August 17 Rong - forfeiting the multi-million dollar billion per year in interest. In the sheng announced that it had with - profit that Well Advantage made past it has always been able to count drawn its offer. Investors seem to trading Nexen stock. on a supportive local government to have expected it. Since March, The SCMP adds that the busi - ensure access to bank finance. But Quanchai’s stock has almost halved nessman is “facing growing pres - 3 Week in China Talking Point 31 August 2012

sure from CNOOC, with which he supplier. And likewise why CNOOC used to have a good business rela - is publicly downplaying its rela - tionship, to settle the SEC case tionship with Rongsheng. Yes, it was quickly.” an anchor investor in Rongsheng’s CNOOC is one of Rongsheng’s IPO, the oil firm admits. But an offi - key clients. Earlier this year, Zhang cial from CNOOC told South Week - told Hong Kong media that a pipe- end that “it cannot be deduced there laying vessel made for CNOOC is intimacy between us”. After all, brought in Rmb1 billion in gross the executive pointed out, CNOOC profit. Over the past four years has seen its investment in Rong - Rongsheng has also supplied the oil sheng fall by 80%, like others who firm with floating cranes and bought shares in the IPO. That’s CNOOC has been the chief customer hardly grounds for a backslapping for its ocean engineering division. Grin and bear it: Zhang Zhirong friendship and draws attention to Significantly, local media says that why many fund managers have also this is Rongsheng’s highest-margin the regulatory approvals for the lost faith in Zhang. unit. The loss of future CNOOC or - Nexen deal. Zhang himself professes to be ders would further damage the CNOOC will be wanting to avoid unbowed, promising he’ll turn group’s profitability – especially at a humiliating rerun of its efforts to Rongsheng into China’s equivalent a time when its core shipbuilding buy the US oil firm Unocal in 2005, of Hyundai Heavy Industries, the business faces such bleak prospects. with the bid eventually withdrawn world’s top shipbuilder. He’s even The danger for Zhang is that the after strong opposition from regu - forecasting annual sales will hit insider trading scandal risks his re - lators and US politicians. $10 billion within five years, about lationship with CNOOC’s senior That might explain why CNOOC four times last year’s revenues. managers, who will be very aware has begun talks – according to the But to achieve this feat he will of the need to present themselves 21CN Business Herald – with Sany to have to survive a ‘perfect storm’ of in a good light in order to secure replace Rongsheng as an equipment business and regulatory troubles. I

French floored by China bidder

As stunts go, it was an expensive wine in China, taking advantage of one. Wine lovers might even call it subsidies to charge below-cost prices. barbaric. Last week a Beijinger bid But the controversy cuts both ways. at auction for two bottles of rare Back in France, local media is up in the Domaine Emile Beyer wine, which is arms that a Chinese buyer has outbid a produced in Alsace. He paid $30,000 French winemaker to purchase a vineyard in for the bottles, and then promptly the hallowed Burgundy region. smashed one on the floor beneath The Wall Street Journal reports that him. He then advised his audience that he did Macau casino executive Louis Ng has so as a protest, to persuade his fellow bought Chateau de Gevrey-Chambertin for Chinese to drink domestic wine rather than around $10 million, topping a bid by foreign imports. Frenchman Jean-Michel Guillon. Ng is already As we pointed out in WiC161, local getting a rough ride, with local politicians winemakers have been losing ground to accusing him of “potentially destroying France’s I l l European Union wines. European wine heritage”. The French fear that more and more u s t r a

t producers have increased their market share of their great vineyards will fall into foreign – i o n : a in China from 4.94% of sales in 2008 to and particularly, Chinese – hands. r t m a z 14.32% last year, and in the first quarter this year EU But Ng denies that his vineyard move will damage i n g c o

m imports grew a further 24% in volume terms. the industry, instead issuing a statement that he plans p a n

y Such is this growth that the China Alcoholic Drinks to “bring this enchanted property back to its full . t u m

b Association is accusing the EU of dumping its red former glory”. l r . c o m

4 Week in China The Week in 60 Seconds 31 August 2012

Merkel calling The major news items from China this week were...

German Chancellor Angela Merkel arrives in China 1this week to head the largest German business dele - gation ever to visit the country. This is Merkel’s second trip to China this year and the sixth since she became chancellor. One key item on the agenda: discussions to head-off an EU anti-dumping case against Chinese solar panel makers. China also agreed to spend $3.5 billion on 50 Airbus planes.

Electric carmaker BYD announced that first-half net 2profit has plunged 94%. Net income was Rmb16 mil - lion ($2.5 million) in the first half, against Rmb275 mil - lion for the same period last year. The company, partly “Just don’t ask me about the euro”: Merkel with Wen backed by Warren Buffett’s Berkshire Hathaway, said the loss stems from intensifying competition, the cancella - Less than nine months after it issued its maiden US tion of government subsidies for car buyers and losses in 4dollar bond, Chinese internet portal operator and its solar business. mobile services provider Tencent plans to issue a second $600 million bond at the lowest coupon yet from a pri - But not all carmakers are performing so poorly. SAIC vate Chinese corporate issuer. The five and a half year 3Motor, China’s largest domestic auto maker by sales, bond offers investors a yield of 3.421%. Analysts say the reported a 5% rise in first-half net profits to Rmb10.78 company could be raising cash for a possible bid for Ac - billion ($1.7 billion), powered by solid sales at its joint tivision Blizzard, the world’s largest video game designer ventures with GM and Volkswagen. Similarly, Brilliance whose current owner Vivendi is looking to sell the com - Auto, which has joint venture with Germany’s BMW, pany. said its first-half net profits jumped 42% to Rmb1.33 bil - lion on a year earlier thanks to strong sales of BMW Road safety made a return to the headlines this week sedans and stringent cost controls. 5after nine people were killed in a collision between a van and a truck in northwest Shaanxi province on Mon - day. That’s only a day after another accident (also in Shaanxi) in which 36 people were burned to death when a double-decker bus rammed into a tanker loaded with methanol. In another accident on Sunday, 11 people were killed when a van crashed into a truck in Sichuan. In three days, a total of 56 people died from traffic accidents.

Hong Kong has announced that it will allow more 6Chinese tourists to the city. Starting on Saturday, an additional four million visitors will be allowed to visit the city through bordering Shenzhen in an arrangement P h o t

o that may stoke local griping about mainland “locusts”

S o u r (see WiC136). Analysts estimate that the new arrange - c e :

R e ments will boost visitor arrivals from the mainland by u t e r s Flat battery: BYD’s results disappoint as much as 15%, boosting the retail sector. I 5 Week in China Economy 31 August 2012

Not working Lay-offs are on the rise as economy slows

hen Google acquired Mo - works) and Danish wind-power Wtorola last August, China’s equipment maker Vestas have all anti-monopoly regulator took its announced firing plans over the time to review the deal. Some sus - past few months. pected foot-dragging motivated by “Anecdotal evidence suggests that political factors, namely Google’s an increasing number of enterprises rocky relationship with Beijing after are laying off workers or closing its search-engine withdrawal from down factories,” HSBC economist Qu the country more than two years ago Hongbin wrote in a recent research In search of work in Wuhan (see WiC54). But no matter, the deal note. “It is time for Beijing to focus was finally signed off in May. Yet more squarely on the job market.” much workers are paid, but also on less than three months later, the Of course, rising labour costs are their productivity. And in the past, handset maker has announced that also an important factor. Just last improvements in manufacturing it is laying off 1,400 China-based week Hon Hai, one of the largest productivity have been impressive, employees. contract manufacturers of elec - with the World Bank estimating that The move is part of 4,000 global tronic products, announced that it output per worker has grown more job cuts from Motorola’s ‘mobility’ had raised basic salaries (again) by than 8% a year since the mid-1990s. division, with China the most af - 16% for its production line workers Can it keep pace with the rapid run fected region this time around. The in Zhengzhou in Henan province. up in wages? Last year the Boston Economic Observer reports that lay - On a broader basis, statistics show Consulting Group suggested that it offs will reach Shanghai, Nanjing, that the average increase of the min - would be difficult, predicting that Hangzhou and Tianjin. But the imum wage in 16 provinces was output per worker will increase at country’s capital is the hardest hit 19.7% in the first half of the year, ac - only half the pace of the rise in with about 700 out of 1,600 em - cording to government data. That’s a wages for a five-year period. A ployees in the Beijing office receiv - slower pace than the comparable pe - counter argument is that labour ing their pink slips. riod last year (when it was 22%) ac - only accounts for a small propor - That’s surprising given that cording to 21CN Business Herald. But tion of overall costs. But BCG still China has become one of Mo - the end of ‘cheap China’ is prompt - doesn’t think that this is enough to torola’s biggest markets over the ing multinationals to consider prevent costs in some of China’s last decade, prompting it to set up lower-cost alternatives. In July WiC best-known manufacturing zones extensive manufacturing and de - reported that Adidas had closed its coming close to American levels (in sign facilities in the country. But a last wholly-owned factory in China southern states like Alabama) in sluggish global economy, fast- (see WiC160). According to the Ger - productivity-adjusted terms. changing technology and disruptive man company, Chinese workers Hence the early signs that multi - market trends mean that Motorola’s making athletic shoes were being nationals are rethinking some of Chinese operations couldn’t remain paid at least Rmb2,000 ($313) a their China operations. For the laid- immune from the wave of job cuts, month, while their equivalents in off workers at Motorola, this was a Chengdu Daily concludes. Cambodia earn about 60% less. rude awakening. Hundreds were so Other multinational companies But while some analysts warn upset that they staged protests out - have been cutting staffing numbers that China could lose more business side the firm’s offices in Beijing, cit - P h o t

o in China too. Japanese electronics to rivals like Vietnam and Indonesia, ing “disrespect from the company”.

S o u r firm Panasonic, Finnish handset others have argued that the com - According to Century Weekly, many c e :

R e maker Nokia (along with its joint petitiveness of the Chinese labour have refused to sign agreements ter - u t e r s venture partner Nokia Siemens Net - force depends not only on how minating their contracts. I 6 Week in China Economy 31 August 2012

Here we go again... Local governments unveil massive new plans to spend on infrastructure

Which way next? A bridge disappears into thick fog in Harbin; another bridge collapsed in the city last week

ast week, three people died non-too-rigid bean curd: “Tofu en - time around, local governments Lwhen one of the longest bridges gineering work leads to a tofu have been jostling to reveal their in northern China suddenly col - bridge,” was one take on weibo , ac - own startling spending plans. lapsed beneath them. cording to the New York Times. Hence officials in the capital city Liu Guodong was one of the lucky The Harbin bridge was a product of Hunan province, Changsha, re - ones, surviving with only minor in - of the Rmb4 trillion stimulus pack - cently announced a plan to invest juries. He was dozing in his truck age launched in late 2008, which more than Rmb800 billion ($125.9 when it plunged 100 feet to the ushered in a huge wave of infra - billion) over the next five years on a ground below. “It was a nightmare,” structure spending to protect the wide range of projects. The infra - he told Xinhua, in one of those rare economy from the effects of the structure spend will include an air - instances when the phrase doesn’t global financial crisis. port expansion, new roads, and im - sound like hyperbole. But its subsequent collapse raises proved waste treatment. The collapse of the Yanmingtan a number of related issues – corrup - Some of this has the feel of a bridge in the northern city of tion, shoddy construction and ex - small town football chairman, an - Harbin provoked uproar among ne - cessive spending on infrastructure – nouncing crazily expensive signings tizens. Many blamed corruption for at a time when another round of designed to get his club into the the disaster, shocked that a bridge economic stimulus looks set for Champions League. Changsha’s tar - costing Rmb1.88 billion ($295 mil - launch. Again, infrastructure spend - geted spending is extraordinarily P h o t

o lion) fell apart less than a year after ing is expected to be at its core. And ambitious, for example, since it

S o u r it was first built. Others saw an op - although the central government would account for 150% of the city’s c e :

R e portunity to decry sloppy engineer - has not announced a headline fig - 2011 GDP. To put this into perspec - u t e r s ing, invoking the metaphor of the ure for how much will be spent this tive, the official stimulus package 7 Week in China Economy 31 August 2012

launched during the financial crisis represented 5% of China’s national GDP, says the Financial Times. Other cities are also announcing major investment plans. Last week, Chongqing said that it planned to invest Rmb1.5 trillion in seven major industries over the next three years, reports Reuters. Guizhou, one of the poorest provinces in China, has also published plans to direct an out - landish Rmb3 trillion on hundreds of local projects, says International Finance News. And as we pointed out last week (see WiC161), Kaifeng wants to spend Rmb100 billion rebuilding the country’s 12th century capital, Changsha says it will spend Rmb800 billion on new infrastructure thinking it can pull in millions of new tourists. swers aren’t clear. “Where will the vulnerable to sudden local policy That so many cities and regions money come from? Right now, it’s changes (for an example in Guang - should pursue such supercharged all in a disorderly state,” asks Li Yang, dong, see WiC154). investment sounds unrealistic, es - from the Chinese Academy of Social Nor is it clear that banks would be pecially when the suspicion is that Sciences, according to the FT. willing (or able) to dole out trillions many are not being fully forthcom - But Changsha officials have an of renminbi more to local govern - ing about their current levels of debt. answer – it’ll come from banks and ments. Lenders dished out more But as the FT points out, the head - local governments, suggests Xinhua. than Rmb10 trillion worth of loans line numbers are probably not an Really? Tax revenues do not seem to government-backed investment accurate account of how much offi - like a feasible option. Fiscal income vehicles during the last round of cials actually expect to spend them - in Changsha in 2011 was just stimulus. Now anxiety about bad selves but rather “very ambitious Rmb66.8 billion, reports Interna - debt is a persistent theme in the fi - projections of the investment they tional Finance News, compared to a nancial sector. hope to attract from foreign, state spending plan that now exceeds That may mean that the local and private enterprises, as well as Rmb800 billion. Nor are revenues spending plans are dependent on the central government.” from increased land sales much of a the central government’s generos - Inflated or not, the figures being fallback, as developer demand for ity. But this triggers the broader de - mentioned point to something im - fresh plots has diminished on the bate about China’s dependence on portant: “The numbers are very sig - greater uncertainty for prospects in fixed asset investment to spark nificant – the rollout of the projects the property market. growth. For instance, economist will be a significant contributor to So that seems to suggest that Lang Xianping has argued on his aggregate demand in China in the private capital will be needed to Sina Weibo that excessive invest - coming months,” one economist fund many of the infrastructure ment “is like giving a stimulant to a told CNBC. “While the marketing of projects. Again, that looks ambi - seriously ill patient. After a short pe - the packages hasn’t been done in a tious. Private investors will won - riod of stimulation, he will sink into way that would excite investors, like der about returns on projects like a deeper crisis.” back in 2008, the impact will be sim - toll roads. Local governments Another economist, Sun Lijian, ilar,” he added. haven’t been seeing much of a re - told International Finance News that Even if officials are only able to turn on the last round of spend - government intervention is the secure a fraction of these bloated ing, for instance, with debt dead - wrong approach. Instead he recom - P h o sums, it looks as though local gov - lines rolled over on talk that the mended cutting corporate taxes and t o

S o u ernments intend to use slowing commitments will have to be met promoting wider competition. r c e :

S growth as an excuse to start on an - over the longer-term. Foreign in - “Only in this way can the economy h u t t e r other frenzied bout of spending. But vestors will be even more cautious, gain continuous market vitality,” s t o c k how will it be funded? Here, the an - when some projects have proved Sun suggested. I 8 Week in China Property 31 August 2012

Losing the plot Gome offloads property as it heads towards a loss

hen the Chinese refer to project, with Huang envisioning Wsomething as a ‘chicken rib’ that the Shangdu development the suggestion is that the item in would become a new economic hub. question is being given up with To realise his dream, Huang spent some regret, even though it is plain - Rmb3.8 billion on Shangdu. The tasting and unexceptional. That grand plan was to build a new city, pretty much sums up the recent centred on what he promised would sale of Shangdu by Gome. be Asia’s biggest textile and fashion Huang: “Okay then, sell Shangdu” The real estate project was the marketplace. Around this commer - brainchild of Huang Guangyu, cial hub he would also develop of - the Southern Metropolis Daily re - Gome’s founder. The tycoon was fice buildings, a convention centre, a ports that the company has warned once China’s richest man, having shopping mall, hotels and – of it will announce its first loss since it built his firm into the leading re - course – thousands of apartments. listed in Hong Kong. tailer of electronic goods. Born in But the location proved to be far The deterioration in sales mar - poverty to a family of six in the from ideal. The Fengtai district has gins – as well as a slowing economy southern city of Shantou, Huang had traditionally been an area where Bei - – has made Gome vulnerable and it 100 stores by 2005 and had success - jing’s poorer residents have lived, is looking for cash to weather the fully listed his firm in Hong Kong. and Gome struggled to turn its blue - downturn. So earlier this month a This was also the year that he pur - print for higher-end living into a re - deal was struck with HNA Group, chased the Shangdu site. Back then ality. So unsuccessful has the project the highly acquisitive parent com - he was at the height of his power and proven that its detractors in the in - pany of Hainan Airlines, to offload ambition, with little inkling that he dustry have nicknamed it ‘Huang’s the massive Shangdu site. The price was soon to be investigated for ‘eco - real estate poison’. has not been disclosed but South - nomic crimes’ that would later see But the tycoon’s emotional at - ern Metropolis Daily says insiders him jailed. tachment to his underperforming believe Gome sold Shangdu for be - At the time, Huang’s commer - development remained unabated tween Rmb5 billion and Rmb6 bil - cial approach was simple. As he and in 2009 he even valued it on lion, a significant discount to its told the media: “Once I set the di - Gome’s books at Rmb10 billion. book value. rection, get a fair idea of what I However, that same year Huang was For Gome the sale smacks of sur - want to do, and a 30% confidence jailed for insider trading. With its vival strategy. But why would HNA in the undertaking, I’ll take it on, founder behind bars Gome’s core be interested in purchasing Huang’s and go for it at full speed… I don’t business began to struggle too. The ‘chicken rib’? Analysts say that a bar - sit around for another three retailer soon lost its leading posi - gain price sweetened the deal but months until the plan is drafted tion to rival Suning. HNA’s longer term plan is to package with perfect punctuation marks.” Shangdu increasingly looked like Shangdu with other parcels of land it This was also the strategy em - a costly distraction, and this sum - owns around Beijing and flip them ployed as Huang made his bold mer Gome’s management faced a to a real estate fund. move into the property market. more immediate problem. A price But the curse of Shangdu contin - Seven years ago he paid Rmb805 war with online retailer 360buy and ues. Two weeks ago, the former gen - P h o t

o million for a 600,000-square me - Suning (see WiC161) was launched, eral manager of Gome’s real estate

S o u r tre site in southern Beijing, near the exacerbating an already deteriorat - division, Yu Jinyong – who once ran c e :

R e Fourth Ring Road. At the time it was ing financial situation for Gome. Its the ill-fated project – was arrested u t e r s the capital city’s biggest real estate first half results aren’t yet out, but for fraud. I 9 Week in China China and the World 31 August 2012

Kimboozled Mining boss says North Koreans don’t play fair

he expectation of bribes, hav - his company bought a 75% stake in Ting to foot the bill for inter - an iron ore mine on North Korea’s minable banquets with officials, west coast, built a $30 million pro - worthless contracts and – ulti - cessing plant and was then frozen mately – the expropriation of your out of its asset. assets by your local partners. After being prevented from sell - For most, the list would be more ing its ore or operating the plant than enough to put an end to any because of “new environmental consideration of doing business laws”, the asset was then seized by with the North Koreans. And that’s armed police. Welcoming Chinese investment? before you’ve even considered all “At 2am on March 2 the remain - the speeches that would be required ing Chinese personnel were themselves or put it on the hotel to mark the florid achievements of rounded up and told that the project bill, which we had to pay for,” he Kim Jong-un, the latest superhero had been cancelled by order of the lamented. from the Kim dynasty. North Korean prime minister and The Xiyang boss ends his essay But the signs are that some Chi - that they must leave immediately with an appeal for Chinese compa - nese businessmen have been ready or be treated as enemies,” Zhou nies to boycott North Korea. “We en - to persevere. Cynics might suggest wrote on his verified weibo account. tered the dragon’s lair when we that this is because they aren’t en - “Doing business in North Korea went into North Korea. Other com - tirely unfamiliar with the treatment is a nightmare. Our employees panies should learn from our mis - meted out by their Korean hosts, de - were lucky to escape with their take,” he suggests. spite dealing with a country where lives,” he added. More specifically, Zhou’s com - Chinese businesses should – in the - Zhou went on to complain about ments may dampen some of the ory – enjoy most favoured status. the lack of legal recourse, as well as Chinese enthusiasm for further in - Pyongyang doesn’t have many back - difficulties of doing business in a vestment in North Korea, at a time ers, after all. country where polices change when there are signs that Py - But for all their supposed advan - overnight. ongyang may finally be ready to tages with the regime, there is also a WiC can imagine that this might consider the economic reforms that sense of the tables having been raise a smile for a few of its readers Beijing has long lobbied for. turned in North Korea, as Chinese from multinational companies with Earlier this month Kim Jong-un’s companies venture into a market far operations in China. uncle Jang Song-thaek visited Bei - less developed and far more volatile But Zhou’s full wrath was saved jing to discuss (among other things) than their own. for an individual surnamed Ri, the construction of roads and power This month the Xiyang Group, a North Korea’s “corrupt” point man supply for two new special eco - leading mining and fertiliser com - in the deal. Zhou opted for a stream nomic zones across the border in pany, took the unusual step of going of playground invective. “He has a North Korea. And if Reuters is cor - public with its own cautionary tale fat head, an idiot’s belly and big ears. rect, Kim Jong-un wants to visit Bei - of doing business in a socialist para - He is the fattest guy in all of North jing himself in September for his dise (a real one) which culminated in Korea,” he spat. first official trip abroad since be - one of its employees being forced out He then described how Ri had de - coming leader. Could closer com - P h o t

o of the country at gunpoint in the manded – and received – kickbacks mercial ties be on the agenda? No

S o u r middle of the night. and gifts totalling more than $1 mil - doubt Xiyang’s Zhou will have a few c e :

R e In an emotional essay, Xiyang’s lion. “If we refused to provide words of advice for the North Ko - u t e r s founder Zhou Furen detailed how women they would just get them rean visitors... I 10 Week in China Chinese Character 31 August 2012

Putting his foot in it Property tycoon earns online praise for outspoken views

hat does property developer WRen Zhiqiang have in com - mon with both former US Presi - dent George W Bush and current Chinese Premier Wen Jiabao? Easy. They’ve all had shoes hurled at them in public. Ren’s close encounter with flying footwear came two years ago when he was giving a speech at a property conference in Dalian. Unlike Wen, who ignored the shoe thrown in his direction during a speech in the British city of Cambridge, Ren seemed to embrace the attack. After the incident, he joked that he had received “presidential treat - ment,” a reference to George W Bush’s own experience, after Dubya dodged a shoe thrown during a visit to Iraq in 2008. So what did Ren do to deserve his own shoeing? The property tycoon seems to enjoy stoking controversy, Feeling the heat: Ren Zhiqiang was visited by the censors once declaring that developers like him only erect apartment blocks After he was discharged in the But although he is no longer with the rich in mind. Another 1980s, Ren worked for a government managing daily operations at memorable quip urged potential agency that found jobs for young Huayuan, the former army officer buyers to “go back to the country - people returning from their “re-ed - is busier than ever. In an interview side if you can’t afford housing”. ucation” stints in rural China. He with China Entrepreneur, Ren re - “I’m a businessman. I shouldn’t helped open restaurants and tailor - vealed that he read more than a make special considerations for ing shops, printing services and hundred books last year. And when poor people,” Ren then added. even a toy factory before stumbling he’s not swotting up, he’s updating So perhaps it shouldn’t come as a into the property industry. In 1993, his personal weibo . The diligent mi - surprise that he has been named as he became the chief executive of croblogger tweets as often as 100 one of China’s most hated people; Beijing-based Huayuan Property times a day, which has earned him hence his pelting with a shoe. and in a little less than 20 years he’s 9.6 million followers on Sina Weibo, Still, like many of the entrepre - converted the company from a the country’s Twitter-equivalent. neurs of his generation, Ren hasn’t Rmb15 million business to one gen - Ren likes to use his microblog to P h o t o lived a pampered life. During the erating sales of Rmb14 billion. deliver sharp commentaries on

S o u r c Cultural Revolution, he was sent to Ren, 61, announced last year that China’s property market, as well as e :

I m

a the countryside to be “re-educated” he was stepping down as Huayuan the occasional poem. He also dis - g i n e

C and when he was 18, he joined the Property’s CEO, although he said he plays a playful sense of humour. h i n a army, in which he served for 11 years. wanted to keep the chairman’s title. When everyone was complaining 11 Week in China Chinese Character 31 August 2012

about skyrocketing home prices, Ren pointed out that the price per square metre of real estate is actu - ally less than that of a high-end bra (he says expensive lingerie costs Rmb600 for 0.02 square metres of fabric, which corresponds to Rmb30,000 per square foot – far more than the cost of an average property). To compound his point, Ren added gravely that even the most expensive bra “can’t shelter you from the wind and rain”. But these days Ren has been touching more sensitive nerves. Al - though he has been careful not to criticise China’s one-party system, he is one of the most outspoken crit - ics of the Chinese government. In July, he wrote: “If authority is more powerful than the law, people will Costs less than lingerie? A Huayan development turn to the authority for help; if the law is more powerful than authority, racy stance, saying at one point that ple have voting rights will there still then people will turn to lawyers to he had been “invited for tea”, a eu - be corruption and embezzlement?” resolve their issues. But if the au - phemism for receiving a visit from he asked. thority doesn’t answer to people, the authorities. Nor does it seem he will curtail people will turn to the triads and use News that he was no longer able his comments in future. Ren says violence to solve their problems.” to use his account then prompted a he can’t and won’t keep his mouth Needless to say, some of this mini outcry, with several high-pro - shut. His mission, he claims, is to commentary doesn’t sit well with file supporters rallying to his side. “serve the people” and his criticism officials. Prominent economist Xu Xiaonian of the government is meant to help Ren has also been raising the sub - vowed to quit using Sina’s service if the Communist Party improve its ject of democracy. In a recent weibo Ren’s account was not reinstated. rule, Ren told China Entrepreneur, post, he said: “There are many peo - Similarly, media personality Hong a magazine. ple who are interested in the price Huang urged her five million fol - His outspoken attitude has turned war [among electronic retailers; see lowers to republish their favourite some of even his harshest critics into last week’s issue] and other people posts from Ren. fans. According to Sina statistics, be - who like to talk about patriotism. If “If an extraordinary Party mem - fore 2006 most of the comments on all the people channelled this pas - ber like Ren Zhiqiang has been for - Ren’s blog were barbs and insults. But sion and enthusiasm into the fight bidden to speak out, our society that percentage has been in steady for democracy, freedom, human has come to a very dangerous decline in the last few years. rights and reforms, our world is go - place,” Wang Wei, director of the Ren maintains that the reason so ing to be a much better place.” Chinese Museum of Finance, wrote many people are said to have dis - A few days after his comment on his weibo . liked him in the past was because went viral Ren became strangely The public pressure appeared to he was misunderstood. He blames quiet on weibo . There was specula - work. On July 26 Ren was back post - the media for giving him a bad rep - tion that Sina, the operator of the ing again. “After laying down a few utation by taking his comments out microblogging platform, had sus - new rules, Sina has unblocked me,” of context. Now he says that’s why pended his account. In posts that he wrote. he posts so frequently on weibo , so were later deleted, Ren also docu - Within a few days, he was back on that he can better explain his views mented the efforts of the censors form, making further comments to the general public, as well as an - to get him to soften his pro-democ - about democracy. “If 1.3 billion peo - swer his critics directly. I 12 Week in China Environment 31 August 2012

Must do better New book dissects China’s environmental failings

“ o struggle against the earth is be open much longer.” Tendless joy,” or so goes a line This is a global problem, not just a penned by young poet, Mao Ze - Chinese one, Shapiro warns. She is dong. Those words turned out to be quick to remind readers that they prophetic. Many of Mao’s later poli - share some of the culpability for the cies led to desertification, defor - damage, recognising that consumers estation and famine. The damage in developed countries have “dis - didn’t end with his death in 1976, al - placed many of the costs and bene - though this time Mao himself can fits of manufacturing onto China hardly be held up for retribution. and the Chinese people.” Nor are all ments are often funded by the According to Judith Shapiro it was of the costs of enviromental dam - same industries that the [Environ - what replaced him that has done age borne by China alone. Crucial to mental Protection Bureaus] are the greater damage. “Globalised Shapiro’s thesis is that practically supposed to regulate, leading to all free-market capitalism [has be - everyone has a stake in China’s sus - kinds of perverse incentives,” come] an equal if not greater driver tainable development. “[A] nation’s Shapiro comments. of environmental degradation than environmental problems do not re - The staunchest supporters of pro- the Stalinist-style state,” she warns. spect political boundaries,” she environment policies, on the other Shapiro first came to China as a writes, pointing out that airborne hand, tend to be non-governmental master’s degree student in the late mercury pollution regularly crosses organisations (NGOs). But Shapiro seventies, spending several years the Pacific to the US and Canada. points out that their work is fraught teaching English at the Hunan “What China does affects global with danger and that environmental Teacher’s College in Changsha. The climate change, ozone depletion, activists without political backing experience sparked a life-long in - biodiversity loss, desertification, can pay a heavy price. She tells the terest in China and its environmen - acid rain, [etc…],” she warns. story of Wu Lihong, an advocate for tal politics. As professor of Global China’s Environmental Chal - the clean up of Lake Tai, who was Environmental Politics at American lenges warns against putting too jailed for three years in 2007 “on a University in Washington, Shapiro much faith in the notion that ris - trumped-up charge of extortion and later spent three years travelling the ing affluence will put sufficient blackmail”. Others have been country before authoring Mao’s War brakes on China’s environmental charged with “illegally obtaining Against Nature in 2001. Her latest destruction. In part that’s because state secrets”. effort – China’s Environmental Chal - action needs to be taken now, with But Shapiro is neither a pessimist lenges – brings the story up to date. Shapiro convinced that the planet nor a proponent of going green at all The new book is a primer on the is already at a “tipping point” mo - costs. She insists that China has a state of China’s environment, as well ment. The problem is that she sees ‘right to development’ and that de - as its implications for the rest of the little prospect of the tough action veloped nations must do their fair world. It outlines the major chal - required. Despite “having some of share to respond to the environ - lenges facing the country, as well as the most thorough environmental mental challenges of industrial soci - the (often floundering) efforts of the laws in the world”, Chinese offi - ety. She even ends with a positive state and civil society to provide cialdom has been ill-equipped to spin. “China could, indeed it must, remedies. Shapiro says time is run - handle the policing of pollution. be a modern laboratory for designing ning out. “The key question,” she Power remains in the hands of a new path,” she proposes, “and show writes, “is whether [China’s] un - provincial officials whose promo - the world a gentler, less destructive precedented development will be tions depend on boosting eco - way of achieving high living stan - ‘sustainable’… the window will not nomic activity. “[Local] govern - dards and human development.” I 13 Week in China Society and Culture 31 August 2012

Going Dutch Zhejiang TV pays for rights to show – and ends up with a major TV hit

China’s top rated show: The Voice’s judges are Harlem Yu, Liu Huan, Na Ying and Yang Kun

hen The Voice made its debut coaches, all well-known artists, lis - gree. Instead, the Chinese produc - Win Holland in 2010 and be - ten to songs without seeing the vo - ers plan to settle their finale by came the most popular show in the calist. Coaches then decide on the inviting media representatives to country, NBC took heed. The net - basis of this blind audition if they act as judges. The eventual winner work bought the rights to the will add a contestant to their team. If will get a recording contract. singing competition and bet big on more than one coach expresses in - So far the show is proving so suc - its success – spending $2 million to terest, the singer gets to pick the cessful that advertising slots have produce each episode. coach he (or she) prefers. sold for Rmb360,000 ($56,600) for The punt has more than paid off. In a second phase, the coaches 15 seconds – generating up to Rmb16 The show was so popular in the US themselves eliminate team mem - million a week for the one-hour that it received better ratings than bers week by week in what they call show. The slots are getting more ex - anything NBC has aired for almost the ‘battle’ rounds. They also work pensive every week, says Economic 10 years. In February The Voice even on the performing styles and look of Observer. “Every advertiser desper - displaced Fox’s long-running Amer - their team members. ately wants to squeeze in. The cost ican Idol as the America’s top-rated In the final stage, the remaining has now risen to Rmb400,000 for 15 TV series. contestants – an equal number for seconds,” says Cheng Wei, a pro - And now, after dominating rat - each coach – compete, until each ducer at Zhejiang Satellite TV. ings from Australia to Vietnam, The mentor is down to one contestant. So why is it so popular? TV critics Voice has taken China by storm too. In these stages, the Chinese for - say the show puts the focus less on The show, which is broadcast every mat has largely followed the origi - the glitz and more on the the quality Friday night on Zhejiang Satellite nal Dutch design. But a significant of the singing performance. TV, has attracted more than 120 mil - difference emerges in the final “I like the sense of honesty and P h o t o lion television viewers and 400 mil - round. Elsewhere, TV audiences respect for music shown by the con -

S o u r c lion internet users since its launch usually vote for the ultimate win - testants,” agrees one weibo user. e :

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a in July. ner. Not in China, where authorities “In the past I never watched tal - g i n e

C The format? Like its original ver - aren’t keen on empowering TV ent shows but I watch this show h i n a sion, the show sees a group of four viewers to such a democratic de - every week,” a viewer by the last 14 Week in China Society and Culture 31 August 2012

name Tong told Shenzhen Economic According to Liu, the Dutch pro - has learned this first hand. When he Daily. “The format of the show is duction company sent over a 200- parted company with his business straightforward: there’s no glossy page production manual to advise partner of more than 16 years, packaging, no tear-jerking life sto - Chinese producers. It contained Zhang took the ‘bad-boyfriend ap - ries, no rubbish-talking host and no everything from competition proach’ and just stopped picking up ‘poison tongue’ from the judges. methodology to specific details on his phone calls. And in an interview The music alone is moving.” the colour formats for the show’s with Sina, an online portal, film pro - But of course, certain contestants logo. Even the swivel chairs used on ducer Zhang Weiping (the two are have stood out. For instance, there’s set were shipped from Holland to not related) said he hasn’t heard a country girl who likes to sing UK China. from his former partner since last artist Adele’s songs despite not un - The Dutch also made suggestions September. “He [Zhang Yimou] did - derstanding any of the English about the casting of coaches. “We n’t answer my calls, didn’t reply to lyrics (her rendition of Someone wanted to have famous record pro - my short messages and I have no Like You is uncannily close to the ducers as judges. But they insisted idea where he is now,” he says. original). And then there’s a 30 year- that all judges should be singers, in - Zhang Yimou’s less than gentle - old musician who struggled for cluding a woman and a grassroots manly approach to the break-up has years to pursue his dream and cred - singer who has struggled for their made headline news. That’s because ited his girlfriend with boosting his dream for years,” says Liu. the pair have worked closely since flagging morale during the lean “We were doubtful at first, but Keep Cool (1997), in which Zhang years (naturally, he proposed to her now Yang Kun, the grassroots judge, Weiping was the producer. He was after the show). has become the most popular fig - also in charge of production for The celebrity coaches are also ure in the show. And even the shirts Zhang Yimou’s blockbuster hits fun to watch. Unlike other singing he wears on the show have become House of Flying Daggers , Hero and contests, the four mentors – a hot sales item online.” The Flowers of War . The pair pro - renowned musician Liu Huan, pop Could the show’s success con - duced the movies via their produc - diva Na Ying, singer-songwriter vince other television producers to tion company New Horizon Pictures Yang Kun and Taiwanese singer pay for copyright instead of knock - and were dubbed as “duo Zhang” Harlem Yu – participate closely in ing off other formulas, asks Econ - within entertainment circles. the weekly song selections. They are omy and Nation Weekly? But rumours started circulating also very supportive, dishing out “A lot of successful variety shows that the two had split after their more compliments than criticisms. in foreign countries may appear most recent war epic The Flowers of In fact, they seem to go out of their simple on the surface but there is a War , a bilingual offering starring way not to criticise the contestants, large amount of operational details Hollywood actor Christian Bale. Al - even those coached by their rivals. and technical skills hidden behind though the film – China’s most ex - The producers of the show, Star the scenes. Many domestic local TV pensive and internationally-ambi - China Media, reportedly paid stations take that for granted and tious to date – was the domestic Rmb3.5 million to acquire the copy - thus they have a hard time captur - bestseller of 2011, it only just broke right from the Dutch originators. ing the essence,” says Yang Ping, a even. A plan to distribute it widely in That is unusual: Chinese broadcast - TV producer. overseas markets also failed to pay ers have long been accused of ape - off. And talk that it might bring ing TV formats from elsewhere, but home an Oscar for Best Foreign Lan - rarely buying the rights from the guage Film also proved misplaced original owner. (in fact, it wasn’t even nominated). “Why did we pay for the copy - Zhangs for the Industry insiders told Xinhua that right despite the prevalence of pi - memories? this modest rather than runaway rates? Because we believe there was success marked a watershed in the much to learn and reap from a show Top film duo split up; and one previously golden partnership be - that has succeeded across the wants to know why tween the two Zhangs. world,” says Lu Wei, publicity direc - But Weiping claims he first heard tor for Star China Media. “We can reaking up is hard, even if you of Zhang Yimou’s intention to dis - avoid taking the wrong path. I think Bare the one orchestrating the solve their working relationship paying for the copyright is very break-up. Zhang Yimou, one of months before the release of the worthwhile.” China’s best-known filmmakers, film last September. “A friend said 15 Week in China Society and Culture 31 August 2012

to have moved on, his jilted busi - ness partner Weiping is still hung up on the unceremonious break- up. “The only thing I want to know, of course, is what happened be - tween us,” he says. “I don’t care about all the rumours and non - sense circulating on the internet. But at the very least give me a rea - son – if you are not happy with me, tell me why. Hiding doesn’t solve any problem. But he [Yimou] is nowhere to be found, so I think I just have to give up.”

“I want to be alone”: Zhang (centre) splits with business partner

Zhang Yimou was planning to leave givings (WiC agrees with Yimou on China’s most New Horizon Pictures after finish - this one, although we’ve noted in wanted ing The Flowers of War . I couldn’t be - the past that he seems to have lieve it. So, I tried to confirm with Yi - drifted in a more commercial direc - Chongqing’s ‘Billy the Kid’ mou on his mobile. He told me not tion himself as his career has pro - finally gunned down to believe rumours. I certainly didn’t gressed. Headlining for a private eq - take it seriously back then,” says the uity firm seems a step on from his t was the early hours of August 14 producer. artsy roots, too). Iand a police task force was ready - So what’s the reason for the split? But Zhang Yimou’s track record ing to strike. Their target was 42 It seems to have been cannily timed. also gives him enormous influence year-old gunman Zhou Kehua – one Just last week there were news re - in China’s film industry. Along with of China’s most wanted killers. Law ports that Zhang Yimou has plans director Feng Xiaogang, he is one of enforcers had been trying to catch to set up an entertainment-focused the few guaranteed box office Zhou for years, so the task force private equity fund to back large- draws. So perhaps it should come as took nothing for granted. scale film and other arts produc - no surprise that he now wants to Over the years Zhou’s armed rob - tions. Century Weekly says Zhang control every detail of production. beries became so violent that police and his investors intend to raise So much so, in fact, that he rejected - put a Rmb5 million reward on his Rmb2 billion ($315 million), and that lucrative offers from Beijing Gallop - head. Just four days earlier he had they have already received commit - ing Horse and Wanda Film (a sub - struck again: outside a bank in his ments for 10% of the funding. sidiary of Wanda Group, which native Chongqing he’d killed a There is also speculation that recently acquired AMC Theatres) to woman and grabbed her bag. The Zhang Yimou wants to exercise total collaborate on new projects. heist apparently yielded no cash. control over his future film produc - WiC has written before about ten - Police knew this because they tions. According to Southern Me - sions between directors and pro - were listening to phone calls be - tropolis Daily, despite their close re - ducers in China. In the case of tween Zhou and his alleged girl - lationship, producer Weiping didn’t Painted Skin 2 (see WiC159) the pro - friend, 20 year-old Zhang Guiying, always see eye-to-eye with his direc - ducer assumed fuller control over according to the Xiaoxiang Morn - tor partner. In fact, Yimou has com - the creative process and the film ing Herald. plained of having to make changes then struck box office gold. By con - “I’ll do another big one on the to castings or scripts based on com - trast, the director was little-known. 14th,” Zhou is said to have told her, P h o t o mercial considerations. For instance, This public spat between the two according to the newspaper. It

S o u r c Weiping is said to have pushed Yi - Zhangs seems to confirm that the added that Zhou always called e :

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a mou to insert a love scene between very top directors still hold the true Zhang before a robbery, to share a g i n e

C Bale and actress Ni Ni in The Flowers power in Chinese cinema. few details of his plans. h i n a of War , despite the director’s mis - But while Zhang Yimou appears The gunman, who had killed 11 16 Week in China Society and Culture 31 August 2012

people over the past eight years, usually tried to target people who he thought had withdrawn large sums of money from banks. But that same morning – shortly before 7am – Zhou was shot dead by two police officers. The career of China’s cold-blooded “Billy the Kid” was over. There were some similarities. Like Billy the Kid (whose real name was William McCarty), Zhou loved to read detective novels, reports Xin - hua. This contributed to turning a “smart rural kid” to an “armed rob - ber and killer”, the news agency sug - gested. The Chinese public has been fas - cinated by Zhou’s story. Just two days after his death, even the na - tionalist fervour stirred by the Diaoyu Island dispute with Japan Dead or alive: Zhou was ambushed in Chongqing couldn’t shift stories about Zhou and his girlfriend from the top of rural Chongqing. At the age of 15 he checked her identity card number Sina Weibo, China’s Twitter-equiva - was detained for two weeks for ha - and discovered that it was false. lent. For example, the term “Zhou rassing women, according to Xin - When she paid him the rent she Kehua’s girlfriend” has registered hua. Shortly afterwards he left stuck her hand out of the door but over 125,000 posts (the Diaoyu dis - home, spending the next 25 years didn’t show her face which made pute only around half that). doing casual jobs around the coun - him suspicious, he said. But unlike Billy the Kid – who is try. He married and divorced. Then Zhou’s death has led to expres - said to have shot dead a similar he spent about five years as a porter sions of relief. “Finally, we are not number of people – Zhou was con - at a railway station. afraid of going to the bank!” wrote sidered not so much charming as a Between 2000 and 2004 Zhou one blogger using the handle You - terrifying killer. lived in the southwest border re - muminyoji. The police will also be Even killers have a “bottom line”, gions and was jailed briefly in 2005 grateful that they finally got their wrote the Xinmin Weekly magazine in Yunnan province for trafficking man. But as ever in China, sections this week. Such as “not killing those firearms (from Burma). It was of the public began to wonder if who surrender. Not killing the preg - around this time that his shooting they might have been duped by the nant. Not killing children. Not and bank robbing spree began. authorities. Was Zhou really dead? killing the seriously ill… but Zhou Zhou often hid in the mountains The speculation was that the body Kehua had none.” to evade capture, media has re - photographed on the Chongqing “As a cold-blooded killer with a ported, but almost inevitably, ru - street may not really have been him scent for fresh victims, he surpassed mours have spread of a secret and that the shooting may even all our efforts to understand him,” money stash somewhere in have been staged to help local offi - the magazine wrote. “What family, Chongqing municipality. cials climb the promotion ladder. what background, what education, How about his alleged girlfriend? Next up were wild rumours that it could have produced him? The Ten minutes after Zhou’s death she was an unfortunate lookalike who doubts and suspicions surrounding was taken into police custody, ac - had been shot (ironically, a police - P h o t o Zhou Kehua are many.” cording to reports. Her Chongqing man from Changsha). But the man

S o u r c Since Zhou is now dead, we may landlord told the Xiaoxiang Morn - in question then appeared before e :

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a never find out. But the little we do ing Herald that the young girl was TV cameras to deny the claim. "I was g i n e

C know about him goes something quiet and seemed nice. But he had killed?” he scoffed. “I have nothing h i n a like this. He was born and grew up in wondered about her when he to say. It's ridiculous.” I 17 Week in China And Finally 31 August 2012

Ready for anything Yiwu inventor launches modern day Ark, targeting billionaire buyers

after the great flood, capsule himself, before it was ANoah’s Ark is said to have shoved down a 50-metre hill, come to rest on the tip of crashed through a stone wall Mount Ararat, at the far east - and dropped into a pool. Yang ern end of modern-day emerged unscathed (except Turkey. So says the Bible. But for a cut on his chin, which he for those who want to see a attributed to a “bad helmet”). modern-day version of Noah’s The designer told the Global lifeboat, Yiwu is the place to Times that he has received 20 look, after an inventor com - orders since his invention de - pleted a “Noah’s Ark for those buted on August 7, although who are worried about an the survival vessel doesn’t apocalypse”. come cheap. Yang says they Inspired partly by the dis - will be sold for Rmb5 million aster movie 2012, Yang Zongfu, ($785,000) each. has built a craft that looks little Apparently, more than a like its Biblical predecessor. few others share Yang’s But he says the yellow, spheri - Want to survive end of the world? Buy this gloomy prognosis that dooms - cal survival pod can sustain day could arrive imminently. life in everything from extreme lisions, radiation and temperatures One businessman from Shanxi weather to a nuclear meltdown. of up to 1700 degrees Celsius. province is said to have ordered 15 of Yang says of his creation: “I hope And those inside should be able to the capsules, telling Yang to use only it is useful to humans and can help survive for up to a year on the vessel’s the best materials in construction more people before the advent of biscuits, water and oxygen supply. because “money is not a problem”. catastrophic disaster in the future.” To prove the ark’s heat resist - “Customers have different re - The cheerful 32 year-old spent ance, Yang set a smaller replica quirements, but most of them ask three years and Rmb1.5 million to model on fire before proudly re - for better safety, performance and create the capsule, which can house a vealing the fully-preserved iced comfort,” Yang advised the China family of three and boasts windows lolly that he had housed inside. And Youth Daily. “So, I will triple the ar - and a complete ventilation system. to show that the ark can take a beat - mour and add some home furnish - The pod is designed to withstand col - ing, Yang decided to climb into the ing elements to the interior.” I

Second time lucky?

“It’s not necessarily the right time. That’s why we are doing it so gently and cautiously” P h o t o

S o u r Sir Paul Smith speaks of his plans to relaunch his eponymous UK fashion brand in China. He told the c e :

I m Financial Times that he plans to open 20 stores, the first in Tianjin. His company shuttered operations in a g i n China five years ago. Even now, Smith acknowledged that the luxury market has slowed, posing risks. e

C Paul Smith h i n a

18 Week in China The Back Page 31 August 2012

Photo of the Week In Numbers 4 The number of stores UK retailer Tesco has closed in China, in another example of foreign retailers slowing their expansion in the country. Tesco has 132 stores in China (Walmart, by comparison, has 267).

1 million The record number of Beijingers who

P applied for new car registration plates last h o t o

weekend. The city government, in an effort S o u r

c to control traffic, has launched a lottery to e :

R

e issue just 20,000 licence plates per month. u t e r s

Stormy weather: waves whipped up by typhoon Bolaven lash into a 60 million stranded car in Qingdao in Shandong province The number of Chinese online shoppers cheated by scam websites between June 2011 and June 2012, according to China Electronic Commerce Association. The Where is it? industry association says online scams Harbin Some of the places referred to in this issue mainly involve selling fake branded goods or advertising falsely.

Beijing Tianjin 48% Shanxi The number of respondents who said China Jiangsu Shaanxi badminton Olympic gold medallist Lin Dan Nanjing Shanghai is now China’s most popular athlete. That Wuhan Hangzhou meant that Lin surpasses hurdler Liu Xiang Hunan (24%) and retired basketball star Yao Ming Changsha (10%).

Shenzhen Hong Kong Macau

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