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It Helps to `Be Rich Silently' in Polarized China

The top billionaire lives frugally in a society where many view the wealthy with suspicion.

April 29, 2006|Don Lee | Times Staff Writer

BEIJING — China's richest man has amassed a fortune of nearly $2 billion but lives like a frugal accountant.

After leaving his 32-story office tower at night, Huang Guangyu returns to a modest apartment he shares with his wife and two daughters in southwest Beijing. He shuns the golfing craze sweeping China, opting instead for snatches of TV. He says he has no hobbies.

"I don't know what else to do," Huang said.

In the United States, Huang's rise -- from high school dropout to China's richest man -- would be celebrated as a Horatio Alger story. But in China, where corruption is rampant, many believe that the 300,000 people who became millionaires in the last two decades did it the old-fashioned way: stealing from the masses.

The 36-year-old Huang and other nouveaux riches here find themselves at one end of the largest rich-poor gap since the founding of Communist China in 1949. Beijing has been confronted with a rising tide of riots by farmers and poor workers upset about losing their land and factories to robber barons. The protests have spawned calls by some intellectuals to stop what they say is capitalism gone amok.

"We have so many mysterious rich people. Others admire their money but they question the morality of it," said Victor Yuan, a senior analyst at Horizon Research Group in Beijing. "You've got to be rich silently."

Huang, the majority shareholder of retail chain Gome Electrical Appliances, China's version of Best Buy, knows the other side of the wealth divide. The second of four children, he was born in a predominantly Catholic village near Shantou, a coastal city in the southern province of Guangdong that is renowned for its entrepreneurs.

In an interview, Huang recalled growing up hungry. But he was fed plenty of tales by his mother, Zeng Changmin. She recounted the adventures of their ancestors who traveled to Thailand to trade sugar and beans, and share stories from the Bible.

One story appeared to have left a deep impression on him: Jesus' parable of the talents, in which a master rewards two servants who invested gifts of money but punishes a third for burying his grant in the ground.

Huang said he attended Mass weekly. He didn't pray to be rich but wanted to break free from the poverty of his village -- some 300 households that farmed rice and wheat on small plots. People who know Huang said other village children taunted him, his older brother and two younger sisters because they were poorer than their neighbors.

"There were three roads for me," he said. "Go to school, be a soldier or find your own way to survive." Studying was expensive, Huang said, and the army didn't want a scrappy kid like him.

So at age 16, he and his brother set out for Inner Mongolia, traveling for days by train in search of opportunities 1,400 miles north. They hawked radios and small electrical goods. But the pair lasted only a few months, Huang said. With a little more than $100, they headed for Beijing's bright lights.

When Huang and his brother arrived here in 1986, Mao Tse-tung had been dead for 10 years and China's embrace of capitalism was taking shape. People were permitted to start businesses, incomes rose and consumers were demanding refrigerators and washing machines.

"Coming to Beijing was a turning point in my life," Huang said excitedly.

The brothers rented a stall near Tiananmen Square. With no money to buy goods, Huang stacked empty television boxes inside to make their stall look full, said Liu Hongyan, author of a biography of Huang. When shoppers ordered an item, Huang ran out and bought it from another merchant, hauling it back in a three-wheel cycle to sell it at a profit.

Analysts say that some 17 years later, Huang would use the same cunning to catapult Gome to the top of China's $60-billion retail industry. After Huang established a chain of 120 stores, he chose about 90 of Gome's most profitable outlets to be listed in a company traded on the Hong Kong stock market. He kept the 30 laggards private so outsiders saw only the rosy side of Gome, according to Wang Jizhou, an analyst with Alliance Investment Consulting in Beijing.

"It was like Huang had two bottles -- one with wine, the other with water -- but investors believed both of the bottles were full of wine," Wang said.

With about $400 million from the listing and $150 million from U.S. private equity firm Warburg Pincus, Huang has more than doubled the number of stores in the last two years to about 460 in 131 cities. His workforce is 100,000 strong.

Often likened here to Wal-Mart founder Sam Walton, Huang aims to drive sales by offering the lowest price. He cuts out the middlemen and negotiates directly with emerging manufacturers like appliance maker Haier, buying large volumes of merchandise and slashing retail prices so deeply that rivals have trouble competing.

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