The list of 100 outstanding private entrepreneurs released on the 40th anniversary of the country's reform and the opening is a list worthy to be relished. It should be pointed that this list which received official recommendations, following endorsements by the United Front Work Department and All-China Federation of Industry and Commerce has become the "political endorsement" of China towards private entrepreneurs. Even though several parties were skeptical of the United Front Work Department's endorsement of this list (given that private entrepreneurs are still regarded as the opposing party", the list is a "list of pride". This is especially in relations to China's 40th anniversary of reform and opening up, giving the private entrepreneurs who made it to the list a historical status.
Recently, there has been endless "state-owned deteriorating with private-owned advancements" debates. However, the central government has made a clear stance on this. From General Secretary Xi Jinping to Premier Li Keqiang and Vice Premier Liu He, all have repeatedly reiterated that "the two are steadfast" and strongly encouraged private entrepreneurs, extending support to the private economy from within constitutions to government documents. According to statistics, China's private enterprises have reached 2.7263 billion. China's government has acknowledged the contribution of private economy to the nation - with its contributions towards taxation revenue exceeding 50%, GDP and fixed assets investments account contribution exceeding 60%, technological innovation and new products exceeding 70%, employment contribution exceeding 80% and the proportion of private enterprises contribution to new employment exceeding 90%.
How do we look at this private enterprises' "list of pride"? Anbound's Senior Researcher, He Jun has several perspectives. Firstly, we need to look at the entrepreneurs on this list. As this list has been officially recognized and "historically tested", the names that made it to the list belongs to a category of enterprises that can be modeled, is an industry representative and projects capability. Secondly, we need to look at the strong and influential enterprises which did not make it to the list and why they were not listed. There could be worthy connotations on why some made it to the list while some others did not. Thirdly, we should look at the industries that these listed enterprises are engaged with. Looking at the distribution of industries, we can see the direction of the government's policy support. From the list of 100 entrepreneurs, we can see that on the policy front, the current Chinese government has certain obvious policy directions for private enterprises.
The entrepreneurs that made it to the list each belongs to a certain category of entrepreneurship and has been selected based on a certain criterion. There are four different categories of entrepreneurs identified from the list. The first category entrepreneurs are those determined in initiating new businesses, bold in reforms and are representative of the current trend. For example, Nian Guangjiu, Lu Guanqiu, Liu Chuanzhi, Chen Dongsheng, etc. The second category of entrepreneurs who stayed on course in a certain industry and remained focused on its core businesses. For example, Cao Dewang, Li Shufu, etc; while the third category is those who pioneered innovations, made technological breakthroughs and promoted industrial transformation, such as Jack Ma, Ma Huateng etc. The fourth category is socially responsible entrepreneurs who are enthusiastic towards social benefits, such as Xu Jiayin. These categories can be considered as the selection criteria or the types of entrepreneurship encouraged by the nation. It should be pointed out that while some entrepreneurs fall within a single category, some span across several categories.
Of more significance are the entrepreneurs that are household names and have significant strength but failed to make it to the list. From our perspective, these entrepreneurs could also be distributed under several categories.
First are those engaged in real estate. While thousands of enterprises have ventured into China's real estate industry, there are only a few who made it to the list solely due to its involvement in real estate. According to Anbound Research's macro team's statistics, there are five entrepreneurs on the list who are engaged in the real estate industry, the biggest being Xu JiaYin. However, the reason for Xu JiaYin's listing was due to his involvement in poverty alleviation. Since 2015, the Evergrande Group has donated 110 billion yuan. Through production, relocation, and employment, it is estimated that these measures could alleviate the poverty of 103 million people of the Bijie city. There also some domestic real estate developers such as Wang Jianlin, Yang Guoqiang etc who have made significant charity and donations but are not listed here. It can clearly be seen that the real estate industry is not a promoted industry.
Second are those who solely invest and do not engage in businesses. Many people asked why wasn't Fosun Group's Gup GuangChang included under the list? While Fosun's scale is large, its core is the investment, not business. This does not comply with the central government's promoted industries nor the main themes of the businesses it focuses on. In addition, among the private enterprises that are involved in finance, only Chen Dongsheng of Taikang Life Insurance was selected. However, in our view, Cheng Dongsheng made it to the list because he is among the representative of the "92 factions" of China's reform and opening up journey's (note: a group of people who initiated business after Deng XiaoPing's southern tour) and thus embodies a representation of China's reform journey.
Third are those who are considered morally defective. Many Chinese domestic private entrepreneurs are innovative, influential and have done good businesses. By rationale, they should be on the list. However, due to bad publicity or other problems, for instance, several "big boys" within the real estate and e-commerce industries, have failed to be on the list as they are considered to have moral "defects" and thus are not suitable to be publicized as a model.
Fourth are those who have relationship issues with the government. For example, those who close relationship with problematic anti-corruption officials or those who have participated in investigations with certain departments with regards to certain problems. This is an impression that is difficult to be washed off. In fact, with regards to these kinds of issues, private entrepreneurs are somewhat in a complex situation as China's business-political relationship is so complex. It is alike to walking along the river. How could one not drench its shoes? There are times that one does not want to drench its shoes but the water still floods its feet. It is almost impossible to ensure moral purity in such a complex environment.
Fifth are those who buy from the outside. Some private enterprises invest heavily in foreign countries but are highly indebted domestically. They are seen to be transferring assets abroad or leaving financial risks to the domestic market. For instance, Wanda Group's Wang Jianlin, who used to be the richest man in China and has made large amounts of donation. Hence, he did not make it to the list as he has been regarded as having transferred assets abroad. There are also several other entrepreneurs of similar background who did not make it to the list.
There are also some who asked why the influential Haier's Zhang Ruimin, who possess historical and political status, but was not selected as an outstanding entrepreneur? In our view, Zhang Ruimin did not make it to the list due to Haier's identity. According to publicly available information, Haier is neither a state-owned enterprise nor a private enterprise. Rather, it is a cooperative. As to the nature of Haier's business, if the nation and law are not qualitative in nature, how can the private enterprise list have such "floating" tendencies?
Final analysis conclusion:
China's 40th anniversary of country's reform and opening's list of 100 outstanding private entrepreneurs has such deep significance. While this reflects a unique window of observation into China's present reality, it does not reflect the entirety of Chinese society.
