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Private entrepreneurs, driving force in future economy
( 2003-09-18 15:12) (Shanghai Star)

Talking about the rich and their wealth can always be entertaining, especially in China where a large number of affluent people seem to have sprung up overnight.

Forbes Global CEO Conference in Shanghai.[newsphoto.com.cn]

Such a social context helps to explain the increasing domestic popularity of the annual selection of the top 100 rich Chinese released by Forbes, though the US publishing and media giant would rather see the list as the spearhead for its ambitious business plan in China.

Accompanying the influence built through the list, the Forbes Global CEO Conference, a high-profile international business forum, was staged this week in Shanghai, widely regarded as a symbol of China's dynamic economy.

Focusing on the theme of "Energizing Global Business: The China Factor," the three-day event - running from September 16 to 18 - drew about 400 celebrities from the business community worldwide, whose brainstorming is expected to churn out a wealth of new business ideas and opportunities.

People have every reason to believe that, despite some irregularities and scandals in the domestic private sector, the rapidly emerging population of Chinese private entrepreneurs will play a key role in turning those ideas and opportunities into prosperity, becoming a driving force in China's future economy.

Business stars

On the event's attendance list are a number of prominent figures from China's private sector, who have frequently appeared on Forbes' so-called annual "China Rich List", released regularly since 1999.

These people include real estate tycoon Hui Wing Mau, chairman of the Shimao Group and second richest on last year's list with a fortune of US$780 million, Liu Yonghao, chairman of the New Hope Group who ranked No. 6 on the 2002 list with estimated riches of US$540 million. Liu's elder brother, Liu Yongxing, chairman of the East Hope Group who ranked No. 8 in 2002, is also present.

Other famous names include Guo Guangchang, chairman of the Shanghai Fosun Hi-Tech Group, Zuo Zongsheng, president of the Zongshen Group, Xu Ming, president of the Shide Group and Tao Xinkang of the Shanghai Xin Gao Chao Group.

All these people were listed by Forbes among the top 20 richest Chinese last year, which means their personal wealth exceeded US$290 million in each case.

Alongside the eye-catching presence of those big-name private entrepreneurs, conference organizers have arranged a special session focusing on China's private sector, which is entitled "China's entrepreneurs - the growth engine."

"Chinese private entrepreneurs will play a critical role in China's future economy," said Steve Forbes, president and CEO of Forbes Inc.

"As China's economy expands, they will create future growth for this country."

The conference, in a sense, is a recognition of the role Chinese entrepreneurs are playing and will play in the future, said the president.

In the years ahead, with the emergence of a good number of domestic private entrepreneurs, people will see Chinese equivalents of global business magnates like Henry Ford or Bill Gates, he added.

Even if what Forbes envisions takes some time, the advance of Chinese entrepreneurs looks set to accelerate.

The changes in the Forbes China Rich List present a clear picture: the last name on the 2002 list corresponded to a fortune of about US$84 million, compared with US$51 million in 2001. Last year's No.50 held riches of US$145 million, compared to only US$6 million for the same position in 1999 (when only the 50 richest Chinese were listed).

According to another list released by New Fortune, the total wealth of the top 400 richest people in China reached US$36.6 billion, equivalent to three times the 2001 GDP of Guizhou Province, an underdeveloped province in Southwest China.

Such a momentum may only be a beginning.

Analyst say the thriving private sector is a testimony to the progress China has been achieving in economic development over the past two decades.

It now seems as if the way ahead for these private entrepreneurs might be smoothed further, with the central government resolved to further restructuring of the State sector, aiming to create more opportunities for private-sector interactions with the State-owned enterprises (SOEs) through a scaling-back of State ownership.

Uncertain prospects

If China's private sector does, as predicted, exert increasing influence in the nation's future economy, it is easy to forsee the Forbes China Rich List gaining even more public attention - and perhaps controversy - in the coming years.

"I don't have strong feelings about the list... it is totally unreal to me because I don't believe they (Forbes staff) can obtain correct business statistics about the enterprises they study," said Qiu Jibao, president of the Feiyue Group, a well-known private enterprise in Zhejiang Province engaged in the production of sewing machines.

Being asked whether entrepreneurs should appreciate the added public awareness attained by inclusion on the list, Qiu showed little interest.

"It's only empty reputation... an enterprise will not grow if it depends too much on public promotion (accompanying its appearance on the list); it should instead do substantial things," Qiu said.

Private entrepreneurs' might be expected to have a "cool" attitude to the Forbes list, but other people also regularly notice something strange about it.

It seems as if the presence of billionaires on the list might be rather transient - 35 of the 2001 lists are missing from the 2002 list. Of the 2000 Richest 50 list, only 29 remain, and a mere eight are left from 1999.

While the disappearance of some entrepreneurs was due to quicker business growth by their peers, scandals involving a number of once-prevailing figures, leading to their exit from the Forbes list, have also been widely noticed.

Busted by authorities for various financial and tax problems over the past few years, the has-beens include movie queen Liu Xiaoqing, flower mogul Yang Bin, car magnate Yang Rong and - most recently - real estate tycoon Zhou Zhengyi.

For this reason, the Forbes ranking is jokingly referred to as a "death list" for future criminal convictions.

In related events, only four enterprises commanded by entrepreneurs on the 2002 Forbes list have entered the top 50 tax-paying private companies nationwide, according to statistics from the State Tax Bureau.

Some 300 billion yuan (US$36 billion) worth of tax is evaded each year in China, and this evasion is usually carried out by enterprises without a transparent financial system. Such features are more frequently found among domestic private enterprises, according to tax expert Zhang Musheng quoted in the local newspaper The Bund.

"Appearing on that list doesn't mean we always approve of how you got on it. If you've broken law, you will eventually be found out and punished," said Forbes.

"The list is just a snapshot of who's made it at a particular time - and there are various ways to make it," he added.

In business, what's true today can change dramatically tomorrow. It's "interesting" to see so much change on each year's list, according to Forbes.

Shen Hanyao, director of the Shanghai Economic Development Research Institute, agreed.

"The list is a means to reveal people who have been highly successful during China's transition to a market economy model - if their money has been honestly earned they can be inspiring for others," he said.

"However, the list also has a sort of binding power on these billionaires in their business activities, since they are put under increased public surveillance," Shen noted.

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