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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (363)	8/15/2003 3:58:07 PM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

Scandal in Shanghai Aug 14th 2003 From The Economist print edition Why Zhou Zhengyi's troubles continue to make China's new capitalist elite nervous Chen Yaoguo ONE of Zhou Zhengyi's mistakes may have been that he chose to flaunt his wealth. After the Forbes list of China's 100 richest people placed him a mere 94th two years ago, the flamboyant property developer complained that he should have been higher. Last year he was 11th and revelled in the media-bestowed sobriquet of richest man in Shanghai, though he probably wasn't. Mr Zhou had a collection of sports cars to match his ego and delighted scandal-hungry newspapers in Hong Kong, where he controlled two listed firms, with his sexual affairs. Now Mr Zhou, 42, is being investigated for business irregularities. According to the Chinese press, he is suspected of illegally acquiring state land and bank loans. The question is, why Mr Zhou? China's business culture sets far more store on personal connections than it does on laws and regulations. If they wanted to, China's authorities could probably find grounds for accusing most of the country's richest people of bending (if not breaking) the rules. But China's legal culture thrives on the principle of “killing the chicken to scare the monkeys”. Mr Zhou, valued by Forbes last year at $320m, was a conspicuous potential chicken. China Corporate misbehaviour China Daily The secretive handling of the case suggests that politics is at play too. Soon after Mr Zhou's arrest in late May, the official media were ordered to say no more about the affair. The government is partly worried about giving the country's financial capital a bad reputation among foreign investors. But the worry also is that investigations of land dealings on the scale of Mr Zhou's might expose high-level corruption in the city, possibly implicating protégés of China's former president, Jiang Zemin, who still chairs the powerful military commission and has close ties with Shanghai. Mr Jiang's political rivals—notably China's new leadership team of President Hu Jintao and Wen Jiabao, the prime minister—might relish an opportunity to discomfort Mr Jiang. Perhaps they chose to make an example of Mr Zhou. The gag order on the press has not been entirely effective. At least two magazines have published cover stories on Mr Zhou, whose rags-to-riches story and precipitate downfall provide salacious reading. That is a key consideration for China's increasingly market-oriented media, which are now gunning for many of China's super-rich. The Forbes rich list that Mr Zhou sought to climb has been dubbed a “death list” because several on it have been arrested on charges ranging from fraud to tax evasion. economist.com