Billionaire Wong Kwong-yu personifies the journey China has taken since it launched sweeping economic reforms 30 years that transformed the communist country into an economic power.
But as Wong — founder and chairman of the country’s biggest appliance chain — is finding, getting rich in China is still plenty risky.
By ELAINE KURTENBACH, AP Business Writer
Born into poverty, Wong built a fortune selling appliances to a nation of consumers hankering for a modern, affluent lifestyle. Estimates of his wealth vary, but an October report by Shanghai-based researcher Rupert Hoogewerf named him the wealthiest Chinese individual, with assets worth about 43 billion yuan ($6.3 billion).
Last month, however, Beijing police confirmed that the 39-year-old Wong was the focus of an investigation into alleged economic crimes. His whereabouts are unclear. His company, Gome Electrical Appliances Holdings, has released scant information since it suspended its shares from trading in Hong Kong last month.
Scores of Chinese entrepreneurs like Wong have made fortunes by exploiting economic niches neglected by the state-run companies that still dominate many strategically vital businesses, such as banking.
But the loopholes and gray areas that are crucial assets in the early years sometimes come back to haunt those tycoons later — what some in China call the “original sin” problem. And apart from potential entanglement in corruption scandals, wealth inevitably draws unwelcome attention from the authorities. In China, the road to success often runs from rags to riches to, eventually, really big trouble.
“It’s not because the government discourages wealth, but because of the ‘original sin’ problem,” said Ge Dingkun, a professor of strategy and entrepreneurship at the China Europe International Business School in Shanghai.
“Typically, the companies grew when the relevant legal system was lacking and they had to give ‘sweets’ to officials to get anything done that was not clearly legislated at that time, the so-called gray areas,” Ge said.