BEIJING – China’s wealthy and powerful entrepreneurs were idolized by the public, tolerated by the government and courted by foreign investors. They helped build the Chinese economy into a center of power, and nonetheless became the global face of Chinese business in a freer era, amassing billions of dollars in fortunes, buying palaces overseas and setting up courthouses at international elite pools.
Now, billionaire billionaires are outsiders in an increasingly state-led economy that prioritizes politics and national security over growth. With the government cracking down on business and the economy weakening, they keep information secret, quit their companies or leave the country entirely.
In the recent exodus, two of the most famous Chinese businessmen, Pan Shiyi and Chang Shen, this week resigned as Chairman and CEO, respectively, of their real estate empire, Sohu China. Both had already moved to the US early in the pandemic and tried to run their businesses with late-night calls to China.
It has been a difficult year for their company. sale deal A controlling stake in Blackstone Group in New York collapsed when regulators failed to approve it. China’s Sohu shares have lost more than half their value in the past year.
said Michael Szoni, former director of the Fairbank Center for Chinese Studies at Harvard University. “Obviously writing is pending for these company founders.”
The couple, husband and wife, personified the broader rise of the Chinese economy from poverty to riches. Mr. Pan was born to a poor family in Gansu Province, while Mrs. Zhang worked as a teenager in a garment factory in Hong Kong.
They started their real estate business on China’s southernmost island of Hainan, a place with a reputation even by China standards for booms and busts in apartment prices. Then they quickly focused on China’s largest cities, Beijing and Shanghai, where they built luxury apartment and retail complexes in some of the most expensive neighborhoods.
Many real estate developers have set up rectangular boxes with architectural panels that are often limited to flashy options glass color and whimsical rooftops in a poor imitation of European manor houses. Instead, Mr. Pan and Mrs. Zhang brought in star architects from the West such as Zaha Hadid, a friend of Mrs. Zhang, and Created buildings With curved interfaces, but simple.
Their resignations underscore the growing concern among private sector entrepreneurs that China is veering away from the free capitalism that Deng Xiaoping and former Prime Minister Zhou Rongji pioneered. Turning to entrepreneurs in the late 1970s to rebuild the economy after the devastation of Mao’s Cultural Revolution, Mr. Zhou then led China to join the World Trade Organization and toward its role as the world’s largest exporter.
Xi Jinping, the country’s leader since 2012, has instead pushed China toward a more authoritarian and state-led society, in which national security concerns increasingly take priority over economic growth. Business leaders and human rights activists alike who dared question Mr. Xi publicly have been jailed China tightened the reins on the private sector.
Victor Xie said that very wealthy entrepreneurs used to be “able to work as they liked, as long as they did not cross certain political boundaries, but those boundaries were too loose even during Xi Jinping’s first term”, which ended in 2017. He specializes in Chinese Business and Politics at the University of California, San Diego. “All that has changed. They are no longer such stars.”
Jack MaOne of the founders of Alibaba that led it to dominance in the e-commerce sector in China, has resigned from the company’s top positions. Colin Huang, founder of Alibaba competitor Pinduoduo, Resigned as chairman of the board early last year, less than a year after he stepped down as CEO.
A year ago, Zhang Yiming, founder of TikTok’s parent company ByteDance, said he would Handing over the position of CEO To focus on the long-term strategy. And as Shanghai went into a two-month lockdown in the spring as part of China’s “zero COVID” strategy, Zhou Hang, another prominent tech entrepreneur and venture capitalist, Leave the city for VancouverBritish Columbia, where he issued a strong condemnation of China’s current policies.
Sohu Chinese troubles have accumulated. The company revealed on July 7 that police were investigating its chief financial officer for possible insider trading in Soho shares. Over the past year, Soho has also been repeatedly accused of charging tenants excessive fees for electricity and a $30 million fine.
Government efforts to rein in a housing bubble, along with frequent shutdowns of Chinese cities as part of the country’s tough approach to the pandemic, have caused the entire property market to falter — and China’s Soho fortunes with it. Soho China revealed that the average occupancy at its investment properties in Beijing and Shanghai had fallen to 80% as of June 30.
Soho China and Ms. Zhang, who have spoken frequently on behalf of the company, did not respond to calls and texts seeking comment. Two of the company’s executives who have worked with Sohu for nearly two decades, Xu Jin and Qian Ting, have been promoted to the position of co-CEO, according to a filing Wednesday on the Hong Kong Stock Exchange. The CEO of Private Equity, Huang Jingsheng, has been appointed as the company’s non-executive president.
Mr. Pan and Ms. Zhang will remain in Sohu as CEOs, Sohu China said in its filing, without specifying their executive positions.
Their resignations come as the Chinese Communist Party prepares to hold its national congress for the first time in five years, starting October 16. Charter to tighten his grip on the private sector in the country.
but China The economy is in a state of collapseTensions with the United States are high. This combination made it difficult for Mr. Xi to present himself to Congress as a successful leader.
“Here it is, six weeks of party convention, and things are strained, so that’s exactly what he didn’t want,” said Barry Naughton, a professor at the University of California, San Diego.
He noted that the problems also make China a less attractive place for wealthy investors like Mr. Pan and Ms. Zhang to keep their money. “What a good time for them to step down.”
Over the past quarter century, Mr. Pan and Mrs. Zhang have benefited from China’s rapid urbanization. When they started Soho China in 1995, the country had 352 million city dwellers – a number that more than doubled by last year. For many Chinese, housing has become their most important investment, accounting for two-thirds of a family’s wealth.
The couple catered to China’s more affluent elite with projects like Galaxy Soho and Wangjing Soho in Beijing and Sky Soho in Shanghai, all designed by Zaha Hadid Architects. These ambitious projects were emblematic of the central role in the Chinese economy played by real estate, a sector that soon accounted for nearly a third of all Chinese economic activity.
As the fortunes of Mr. Pan and Mrs. Zhang rose, so did their reputation as the faces of a new generation of sophisticated and global Chinese business leaders. On his Weibo social media account, Mr. Pan has attracted more than 18 million followers, and for years he has used his influence to advocate for changes such as cleaner air in Chinese cities. Ms Zhang, who had a master’s degree in economics from Cambridge and worked at Goldman Sachs early in her career, became one of the most sought-after speakers at the World Economic Forum in Davos, Switzerland.
The couple’s double penthouse in Beijing has become one of China’s most elegant salons for gala dinners, attracting intellectuals, artists, and government leaders from across the country and from all over the world.
But entrepreneurs in China came under pressure as Mr. Xi sought his business “Shared Prosperity” campaign Corporations and tycoons money to share more wealth with their citizens to reduce inequality. Mr. Xi asserted the Communist Party’s control of the private sector, demanding political loyalty from businesses and entrepreneurs.
Ren Zhiqiang, another wealthy real estate developer and friend of Mr. Pan, was sentenced to prison 18 years in prison After that criticized Mr. Shi. Some entrepreneurs have been silenced on social media. While Mr. Pan and Mrs. Zhang’s Weibo accounts are still active, they have been posting infrequently and stick to casual and fun topics.
“This is part of the evolution of the Communist Party,” said Drew Thompson, a visiting scholar at the Lee Kuan Yew School of Public Policy at the National University of Singapore. “Private entrepreneurs – high-profile wealthy people – are increasingly at odds with ‘shared prosperity’ and the direction taken by Xi Jinping.”
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