In China, Economic Woes Stoke Tensions Between Business Leaders and Venal Officials

As China’s economy slows and a nationwide anticorruption campaign gains pace, tensions between the private sector and the government have proliferated

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Qilai Shen / Bloomberg / Getty Images

A worker mans a bottling line at one of Hangzhou Wahaha Group Co.'s bottling plants in Hangzhou, China, July 3, 2007.

During a press interview earlier this year, Zong Qinghou, the Chinese beverage tycoon and one of the nation’s richest men, stated the obvious: a successful businessman in China needs to understand politics. Five months later, Zong has discovered that his own daughter may not be up to the task. In late August, Kelly Zong, who serves as president of the Hangzhou Wahaha Group, the largest beverage company in mainland China, complained about the effort expended to maintain relations with the government and ensure the success of China’s biggest beverage maker. “I think the government needs to face our generation,” she was quoted as saying in the Communist Party’s mouthpiece, the People’s Daily. We are a different generation and cannot act like my father’s generation.” When asked whether she might even move the business overseas, the Wahaha heiress replied: “It is really possible … Why can’t I do such a thing in the future?”

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As China’s economy slows and a nationwide anticorruption campaign gains pace, tensions between the private sector and the government have proliferated. An increasing number of Chinese entrepreneurs have begun moving their assets overseas, even if their billions are also due to their cordial relations with local authorities. After all, fortunes can change hands quickly in China — and with little accountability. On Aug. 22, Li Chuntu, founder of Hunan Prince Milk Group, told local media that he was forced to hand over all his company shares to the local government for free. Li had been jailed under suspicion of illegal fundraising in 2010. After spending 15 months in prison, he was released because of insufficient evidence. “When I refused to sign the [shares] agreement, the government arrested my son, my sister and my brother, they intimidated my elderly mother and my uncle was even driven to death,” Li told a Beijing-based newspaper. “I have seen so many private entrepreneurs put into prison after they expand and strengthen their business.” (Li still has no control over his company and has told local media he wants to work as an independent economist in the future.)

In a country without a fair judicial system, many rich Chinese, especially those from the private sector, worry about the security of their fortunes. In June, Wang Shi, founder of China Vanke, one of China’s biggest real estate companies, mused: “China’s future is still uncertain … Not only the wealth but also the lives of businessmen may be deprived. Right now how to protect the wealth of entrepreneurs is still a question without answers.” In a speech during a salon hosted by Tencent, the Chinese online portal, Wang took a bold stance, calling for entrepreneurs to speak out against societal ills, even if such actions might threaten their relations with the government or even hurt their bottom lines. “As entrepreneurs,” he said, “when society backslides, when we face risks, we should stand up and say no.”

After the Wahaha heiress’s speech appeared in local newspapers, Global Times, a Communist Party–linked tabloid, issued an editorial on Aug. 30 headlined: “Do not rashly say negative words, such as ‘move business overseas.’” The commentary warned that Zong’s speech might bring unnecessary harm to her company. Soon Chinese netizens used online forums to joke at what manner of bad luck might strike Wahaha. “I guess the government will announce Wahaha’s products have serious quality problems,” wrote one person on Sina Weibo, China’s Twitter-like microblog service. Referring to a recent case in which a prominent Chinese-American blogger was arrested for soliciting a prostitute, a charge that some have dismissed as a way to silence an occasional critic of the government, another Weibo user wrote: “Maybe [Wahaha founder] Zong Qinghou will be arrested for buying sex?”

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3 comments
SalingersGhost
SalingersGhost

It's not a problem for the Chinese government. They know, deep down, it doesn't matter what happens with the economy - they can always throw another Cultural Revolution at everything and dial it all back without consequences from other countries around the world. American companies are desperate to penetrate that market - but they should really just stop. Bribes aren't going to get  you very far anymore.Those days are over...

http://mankabros.com/blogs/chairman/2012/05/03/of-course-i-bribed-chinese-officials/


DeweySayenoff
DeweySayenoff

The problem with communism is that it doesn't reward individual effort and the government controls everything.  The problem with capitalism is that it only rewards the acquisition of wealth and the elite control everything.  Individuals in both cases are exploited to the benefit of the controllers of the system used and to the detriment of the individuals.

The two economic methods are mutually exclusive.

Communism tries to control those who have wealth through ham-fisted, intrusive and patently unfair practices.  The wealthy try to control everyone else through ham-fisted, intrusive and patently unfair practices.  The exploited individuals remain safely anonymous.

In that respect, each economic system deserves the other.

tonyzhou
tonyzhou

China is a dictatorship, not a communist country that western media still likes to depict. The country is being run by a group of elitists which is the same as the US.

Also there is no 2 economic systems like how you explained it. China relies on export which is mostly dominated by individual small businesses.