IT WAS only 11am, but we had already started tippling in his private dining room while he lit up his Cuban cigar. (For the connoisseurs, he drank Chateau Lafite-Rothschild Pauillac 1982, US$3,100 (S$4,200) a bottle; and smoked Cohiba Siglo V, US$30 per cigar.) Later, he proudly escorted me around his private museum, perusing his rare jades, priceless Chinese paintings and, in one corner, a bust of Mao Zedong.
I asked him why Mao.
'Because he promoted population growth right after the Revolution,' was his quick reply. 'And created the world's largest consumer market.'
I thought to myself: That says it all! Only 10 years old when the Cultural Revolution began in 1966, my friend the billionaire entrepreneur - 'No. 64 on Hurun's 100 Richest Chinese list, but I'll cross 50 in two years,' he assured me - remembered Mao for creating the world's largest consumer market so my friend's consumer electronics business and (you guessed it) property development could thrive. I had to admit that I had never thought of Chairman Mao in this light.
I have spent most of the past two months criss-crossing China to solicit investors for the Banyan Tree China Hospitality Fund. It was to be a yuan fund, targeted at what private bankers call 'high net worth' (HNW) individuals - an euphemism for the super-rich. But what began as an investment roadshow became an endless series of private dinners - a fascinating exploration into the world of the Chinese nouveau riche.
I had known the statistics, of course. There are now plenty of rich people in China. Indeed, two years ago China surpassed Britain to lag behind only the United States in the number of dollar millionaires. After the Wall Street financial meltdown last year, China may well have the most millionaires in the world today.
I was also familiar with the stereotype. Not for Chinese tycoons the heavy, diamond-encrusted Rolexes and Rolls Royces favoured by wealthy Indonesians; for them, it is the more fashionable Lafites and Lamborghinis. And almost all of them were young, between 40 and 50 years of age, as in Russia - tycoons born from the opportunism of the 1990s, whether it be in the enforced collapse of communism, as in Russia, or the voluntary abandonment of it, as in China.
But instead of finding a single stereotype confirmed, I found a more nuanced collection of archetypes. Here are a few:
In the mid-1980s, China sent annually only 100 or so elite students to US graduate schools. In those days, Chinese graduate students were among the country's most rigorously selected academic elite. For various reasons, including the aftershock of '6/4' - the infamous Tiananmen Incident of 1989 - many of them did not return to China after receiving their doctorates. Instead, they worked as assistants to their professors or got plum research jobs. Because of their intellectual brilliance, many rose rapidly.
'My supervisor was Ben Bernanke; my roommate is now Deputy Finance Minister in Beijing,' one economics PhD-turned-venture capitalist told me. And he was not bragging. Another was doing cutting-edge research in fibre optics but lost his job due to US national security concerns.
When US banks and private equity or venture capital investors began exploring the Chinese market in the 1990s, these scholars found themselves in the right place at the right time. Many became the China representatives of these Western firms, and not long afterwards, struck out on their own as partners in private equity funds.
'In my village, our household decided to sew pyjamas for sale in the local market. We did well and received enough orders for us to commission our neighbours to produce for us. Other households followed suit and soon, clothing wholesalers in a nearby city sourced pyjamas from my village. Soon everyone made pyjamas rather than farm,' explained my Pyjama King friend.
He went on to explain to me that his village - now a thriving town - is today the world's largest contract manufacturer of pyjamas.
China is the world's biggest factory for everything. It has now factory towns that flourished with a single specialisation - umbrellas, or ladies' lingerie, for example.
But the model is not uniform across China: In the south, the tendency is for Taiwanese or Hong Kong firms to set up enormous plants; in central and northern China, the prevalent model is of farming households growing naturally into industrialists.
Cynics in China generally say that if you scratch a successful developer, you will find a 'retired' army officer or bureaucrat underneath.
'China's developers have no skills, but they all have fantastic connections,' sniffed the Pyjama King, who claims that despite his lack of political patronage, his products are sought after by the world's top department stores.
Knowledge of when and where an expressway will be built; or writing the specifications for a land tender so as to exclude everyone but a particular bidder; not sending inspectors to check for compliance in construction standards, development density, or a host of other critical regulations - apparatchiks-turned-developers know who to go to for what.
FOR a country that opened up to capitalism only 10 to 15 years ago, China has already undergone one wave of corporate buyouts. One of my investors had parlayed his modest gains from selling his dairy farm into big profits by playing in the stock market. Then he made a few direct investments that became even bigger profits in initial public offerings. Finally, he got to know some party secretaries who sold him the government's stakes in some listed companies.
Now he and his fellow speculators-turned-investors own China's first Gulfstream jets and invest in companies in between golf games around the world.
Varied though their backgrounds and success stories are, China's HNW investors all have similarities worth noting. My amateur survey of a decidedly small sample group came up with a few observations:
First, all the tycoons are relatively young - in their 40s. They came of age after the Cultural Revolution and became wealthy after Tiananmen. There is no second-generation wealth in China - as in Russia.
Second, all come from poor backgrounds and, within one generation, became billionaires - faster than almost all the rags-to-riches stories in South-east Asia.
Third, none is even vaguely interested in politics except where it has an impact on his own business directly. All are keenly interested in the future of Chinese society and China's place in the world, but not in the machinations of the Chinese Communist Party (CCP). The idea of an alternative to the CCP is simply a non-issue.
Fourth, all admired the US - some even had US green cards and homes there - but none could fathom its antipathy towards China. The returned scholars, who often dress like US college professors and speak English with an American accent, have a deep appreciation of both cultures. But despite their enormous wealth, they have not thought that they might become cultural bridges.
Fifth, all had visited Singapore and liked its cleanliness, its non-corruption and its food. But they could not contemplate staying here too long, for they considered Singapore too provincial, staid and humid.
But whatever their views of others, the Chinese nouveau riche will play a profound role in shaping the new China. Most probably do not see themselves in that light, preferring to keep low profiles and remembering the Chinese saying that tall trees catch the storm winds. Most have a very limited sense of history - only of imperial China and post-Tiananmen China, with everything in between either taboo or a big blur.
They see themselves very much as supporting the status quo. But if they had studied history, they would have realised that a rising middle class with all its expectations is potentially the most destabilising force against the political status quo. Feudalism was brought down by the rising bourgeoisie - Karl Marx could have told them so.
In pursuing their own self interests, and growing every year in size and clout, the new Chinese entrepreneurial class will inevitably challenge - perhaps without even knowing it - the monolithic authority of the current political system. Entrepreneurial capitalism thrives on competition (and some cheating) in the marketplace, and is the natural enemy of monopolies.
As feudal rulers in Europe were challenged and eventually deposed by the new middle class, the rulers in China's Zhongnanhai - the Forbidden City of the CCP - will find the pressure for reforms coming not just from radicalised political dissidents, but also from the most political reactionary but economically liberal entrepreneurial class.
I was about to expound on this to my host when the sumptuous lunch started, but thought better of it. After all, if the winds of history will indeed blow that direction, why waste a perfectly good Lafite '82 and Cohiba cigar worrying about the inevitable? Much better to talk about property prices, the stock market, and how to make more money in a booming economy.
The writer is chairman of the board of trustees of the Singapore Management University. Think-Tank is a weekly column rotated among eight leading figures from Singapore's tertiary and research institutions.
Source - The Straits Times (http://www.straitstimes.com/Review/Others/STIStory_570497.html)