Chinese capitalism brings big money to entrepreneurs, boom to country

March 14, 1993|By Robert Benjamin | Robert Benjamin,Beijing Bureau

BEIJING -- The only thing really remarkable about Yang Zhongwei is how well prepared he was to shuck the security of state employment for the profits and uncertainties of private enterprise.

Other than that, he's just another new Chinese millionaire, moving as fast as he can to ride along the top of the country's red-hot economy without getting burned.

There are hundreds, perhaps thousands, of private entrepreneurs as successful as Mr. Yang in China these days. They're having a ball -- for now.

For the last year, China's economy has been rocketing. The boom has drawn worldwide attention and cash, enticed risk-takers from all levels of Chinese society into free-market pursuits, and sparked an explosion of increasingly upscale consumerism in every major city.

The momentum now is such that everyone -- from peasants fleeing the land to U.S. corporate giants sidestepping the worldwide recession -- seems to be trying to grab a piece of what may become the world's largest economy within the next generation.

Many Communist Party organizations and military units have jumped on the bandwagon. China's legislature, which opens its annual two-week meeting tomorrow, has been ordered by the party to change the nation's constitution to underscore the growing role of market forces in the Chinese economy.

Even academics such as Mr. Yang -- a group traditionally disdainful of commerce -- are "jumping into the ocean," as the Chinese phrase for venturing into money-making goes.

Before joining the Chinese gold rush, Mr. Yang, 42, was a respected economist who had parlayed advanced training in Germany into a research post at the prestigious Chinese Academy of Social Sciences.

But after the 1989 Tiananmen Square massacre, he had "no choice" See CHINA, but to leave state-sponsored academic life, he says. He had been an adviser to former Premier Zhao Ziyang, the reformer deposed by hard-liners after the crackdown on the Tiananmen protests. He had written letters to the government, discouraging the use of force against protesters.

Friends told him he ought to return to Germany. But Mr. Yang had another idea. He had done research for Pierre Cardin, the French fashion firm, when it set up an export factory in China, and he was convinced he could sell 10,000 of its expensive suits a year to the wealthiest of Beijing's 11 million residents.

"No one believed me," Mr. Yang says.

Nonetheless, Pierre Cardin licensed him to open its first store in China, in December 1989.

His sales exceeded his first-year forecast by 50 percent and have grown steadily since. Mr. Yang now sells about 25,000 European-cut suits a year for $400 to $600 each from his 13 stores -- 10 in Beijing and three in Shanghai.

Unlike some of China's nouveaux riches, Mr. Yang is not conspicuous in his wealth. He has a fake gold Rolex watch, drives a tiny, Chinese-made Suzuki and rents an ordinary two-room apartment. But last year he made more than $1 million, he says.

'Seize the day'

Although relatively few are yet as successful as Mr. Yang, millions of other Chinese have recently embarked down the "capitalist road" condemned for decades by Mao Tse-tung but resurrected with a vengeance last year by China's current patriarch, Deng Xiaoping.

Official reports say the total registered capital of private Chinese companies grew by 79 percent last year. Officially, there are only 139,000 of these firms. But that doesn't include millions of unregistered enterprises, from noodle stands to mini-conglomerates run from briefcases and portable phones. Also, many private firms pose as collectives or state subsidiaries for protection from official harassment.

The non-state sector of the economy -- private companies, collectives and foreign investments -- now produces the bulk of the nation's output. While most state firms are mired in red ink, non-state enterprises are leading China to spectacular growth.

Its economy last year expanded by almost 13 percent. Foreign trade and foreign investment surged, with China expected soon to join the world's top 10 trading nations, Hong Kong firms racing in to tackle huge infrastructure projects and U.S. companies lusting after China's burgeoning consumer market.

Thousands of local development zones have proliferated beyond the central government's control and compete in offering foreign firms incentives. A speculative land rush is in full swing, with cities handing out long leases for key properties at astronomical prices.

Nascent, loosely regulated stock markets in Shanghai and Shenzhen have sucked in millions of Chinese investors, as well as foreign-based mutual funds. Despite the festering Sino-British dispute over Hong Kong's future, the China fever has propelled the colony's stock market to new highs -- with the latest Chinese stock offer drawing so much interest that it was oversubscribed by 657 times.

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