Chinese Millionaire is Versed in Sayings of Chairman Iacocca: Top Tycoon of Reform Era Eschews the Dialectical, Pursues the Materialism”
by Adi Ignatius
Wall Street Journal
1988 or 1989
YUJIANG COUNTY, China.
Zhang Guoxi slips behind the wheel of his gleaming Nissan sedan. He puts a rock-music cassette in the tape deck, turns the volume up full blast and drives along the dirt roads of his native village, edging slowly around donkey carts and water buffalo.
At a vast construction site, a factory complex that will double his output of Buddhist-motif ((Me: NOW JADE!)) woodcarvings, he steps out of the car. “It’s all mine,” Mr. Zhang says, extending his arms as if to embrace his property. Mr. Zhang, a short, bald, junior high-school dropout is believed to be the richest businessman in all of China.
Not so long ago, greed was not good in China. In Mao Tse-tung’s day, equality was the aim, even if that meant a billion people sharing poverty equally. Today, after 10 years of tinkering with market-oriented economic reforms, new, often enormous gaps have opened in personal wealth. China has hundreds of millionaires. But it has only one Zhang Guoxi.
Mr. Zhang is a modern warlord, his fief an international woodcarving, furniture-making and real-estate empire. At his beckon call are two secretaries, a driver, a bodyguard and two state policemen who keep his teacup filled and run his errands. Virtually everyone in Jiangxi province, from the lowliest worker to the highest ranking official, refers to the impish, 37-year-old entrepreneur as “Boss Zhang.”
By Chinese standards, Mr. Zhang is insanely rich. He guzzles Remy Martin cognac at mealtimes and spends $550 a month--about what a factory worker makes in a year--on a five-pack-a-day cigarette habit. He has spacious homes, each stocked with the latest in imported electronic gadgetry, in several cities. His hero is Chrysler Corp.’s Lee Iacocca, whose autobiography, translated into Chinese, is the only book Mr. Zhang has read in years.
“Buddha has been kind to me,” says Boss Zhang, adopting a tone of seriousness. “Actually, I don’t believe in Buddhism. I believe in Marxism-Leninism,” he says, collapsing in a fit of giggles.
Mr. Zhang won’t reveal his exact worth, though he says a classified government document lists him as China’s wealthiest entrepreneur. Various clues suggest his net worth is at least $30 million. “In the U.S., I’d be about as rich as a middle-sized entrepreneur,” he says. “But I can’t compete with the big guys [in the U.S.]”
His ego, on the other hand, is world-class. On the wall of his tidy office hangs a towering, framed color photo of himself in a sports jacket and tie. “This county is poor, but my world is rich--the richest in the province,” says Mr. Zhang. “My living standard is First World.”
The new Chinese phenomenon of extremely rich private businessmen has created some ideological problems. Though China’s constitution was amended last year specifically to protect private business, it remains a controversial concept in this socialist nation. Last year, a Chinese farmer-turned-entrepreneur named Li Xigui tried, without success, to join the Communist Party. His effort set of a raging debate in the national press: Are wealth and party loyalty mutually exclusive?
Boss Zhang mostly has side-stepped such controversy. He joined the party back in 1972, when he was still penniless. He has cultivated friends in high places. And, to muffle potential critics, he has donated more than $1 million to various government projects and charities. (He, not the state, brought running water to the county.) Far from exhibiting scorn for this multimillionaire, provincial party elders now lavish praise on him and even helped him obtain a seat on the National People’s Congress, China’s parliament.
Still, to survive as a millionaire in Communist China requires some gymnastics. Mr. Zhang, playing the role of a good party member, stresses that virtually all of his money is plowed back into the business “to raise the living standards of his workers.” But when he adopts the part of a private businessman, his instinct is to flaunt it, bragging about his wealth, his cards, his houses, his regulation-size English pool table, his Aiwa stereos, his Sony TVs.
When a visitor suggests that Mr. Zhang talks socialism while practicing capitalism, he responds, “I don’t dare agree. But I can’t disagree.”
In addition to the ideological hurdles, Mr. Zhang also must face the problem of resentment from the have-nots. On the advice of provincial officials, Mr. Zhang retains a 24-hour bodyguard, armed with an automatic rifle. “So far,” according to a staff assistant, “no one has actually attacked him.”
Actually, on the streets of impoverished Yujiang County, people seem comfortable with Mr. Zhang’s wealth and even praise his acumen. “Boss Zhang used to have nothing, and now he’s rich,” says Jin Rinsheng, 34, a state-employed cook who makes $225 a year. “I admire him.” Tan Jincheng, 28, who runs a tiny private retail stall, agrees: “In China today, the more ability you have, the more money you can make. Boss Zhang has loads of ability.”
Mr. Zhang’s life story is a rags-to-riches classic. His parents tilled the soil of this still-backward area of Jiangxi, an inland southeastern province. IN 1966, as the Cultural Revolution began turning school into ideological battlegrounds, Mr. Zhang dropped out to learn carpentry. After five years, as a precocious 19-year-old, he had mastered the skill and was named head of his rural workshop.
In 1973, Mr. Zhang began his entrepreneurial maneuvering--about six years ahead of the rest of the country. At that time, Deng Xiaoping, still languishing in political disgrace, could only dream of the measures he would introduce as senior leader years later to reform China’s static, state-controlled economy. Mr. Zhang, meanwhile, was already starting to try them out.
First, he quit the failing workshop and, with 21 co-workers, set up a collective furniture-making enterprise. Mr. Zhang put up the entire start-up capital of about $400, which he raised by selling his family’s house. At that time, he was making only 30 yuan, or $8, a month. “Of course the yuan was still worth something back then,” he recalls, laughing wildly.
His move to the big time was helped in the early stages by a resourcefulness that some refer to as petty theft. IN 1972, he traveled to Shanghai to study woodcarving, which promised bigger profits. A week at a factory proved he was in over his head. But before leaving, he stole several designs from a factory wastebasket. Arriving home, he and his colleagues deciphered the designs, consulted experts and eventually began producing good-quality woodcarvings. An empire was born.
Mr. Zhang soon had big export orders, through Shanghai trading companies, for ornately carved chests made from camphor wood. Later, he hooked up with Japanese buyers to make what eventually would become the most lucrative part of his business: wooden household Buddhist shrines that retail for more than $90,000 apiece, almost exclusively in Japan. Since 1973, Mr. Zhang asserts, the company’s growth has averaged 75% a year.
In the meantime, Mr. Zhang somehow maneuvered to gain private control over his enterprise, which had been set up as a collective. Today, he alone decides how to use its profits, which have financed rapid expansion as well as diversification into clothing, food, film-making and real estate. He runs 30 factories in China, employing more than 3,000 workers. He also has a stake in a woodcarving and painting joint venture in Osaka, Japan. To handle his money, he recently set up a joint venture bank at his Yujiang headquarters with Bank of China.
“There isn’t another business like this in all of China--built from scratch without a penny from the state,” says Mr. Zhang.
The workaholic entrepreneur has faced rough patches along the way, of course. In the mid-1970s, before Chairman Mao’s death triggered the demise of socialist orthodoxy, Mr. Zhang was labeled Yujiang County’s most notorious “tail of capitalism.” He had to endure endless criticism sessions. Only his friendship with certain high-ranking provincial officials saved him from ruin.
Today, he has become a local hero and, increasingly, a national model. “Some of the people who once criticized me as a capitalist now praise me as an entrepreneur,” says Mr. Zhang. “I’m not bitter toward them. Like me, they were victims of the system.”
In January, Mr. Zhang was cited by the government in Beijing as one of China’s top 20 entrepreneurs. During a speech to party elders at an award ceremony in Zhiangxi, Boss Zhang quoted liberally from Lee Iacocca’s book, stressing the need to draw lessons from the bitter experiences of the past. “Iacocca is a real man,” says Mr. Zhang. “He built up Chrysler from nothing.”
Mr. Zhang has unbridled confidence in the future. He believes the private sector will develop rapidly, to serve China’s modernization. For himself, he dreams of a mushrooming international empire, a private jet and perhaps his own golf course. Ultimately, he says, he would be happy if people referred to him as “China’s Iacocca.” After a pause, he adds, “Maybe someday people will call Iacocca ‘America’s Zhang Guoxi."
Wall Street Journal
1988 or 1989
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