Jeff Hirsh Read: April 2023
Inspiration: Saw on Amazon’s bestseller list; intrigued given heightened political scrutiny in the US related to Chinese businesses
Summary
Written with the help of ChatGPT, below is a brief summary to understand what is covered in the book.
“Red Roulette”, published in 2022 by author and investor Desmond Shum, is a memoir that tells the story of a businessman who worked in China during a period of economic growth and political turbulence. Shum’s book offers a unique insider’s perspective on the intricate web of power and corruption in China’s financial and political systems. He shares his experiences of navigating the complex landscape, highlighting the risks and rewards of doing business in a country known for its opaqueness and unpredictability. The book delves into the intertwining realms of politics and business, shedding light on the challenges faced by foreign investors and the immense pressures that come with trying to succeed in a high-stakes environment. Shum’s narrative weaves personal anecdotes with broader observations, offering readers a compelling account of the opportunities and perils encountered while working in China.
Unedited Notes
Direct from my original book log, below are my unedited notes (abbreviations and misspellings included) to show how I take notes as I read.
Whitney Duan disappeared in Beijing Sept 2017–her and ex husband and author Desmond were billionaires with success throughout china in logistics, real estate, hotels, etc. navigating the political environment, until Mao’s death in 1976, those with important overseas links/relatives given some benefits in treatment relative to other prosecuting for having relatives who left China (Desmond grew up in this more fortunate setting but family still forced to move and takes jobs as dictated by the Communist party), Deng Xiaoping take over ’79 and begin path to China we know today, Desmond’s family moved to Hong Kong from Shanghai where vastly different culture (and dialect) which had a shock factor, had left Beijing 1 day before ’89 Tianeman Square massacre, soon to Wisconsin for college as a swimmer, struck by “fluffiness” of american relationships—i.e., many people greet you nicely but hard to find true friends, back to HK in ’93 with first job as stock broker, 1994 joined ChinaVest—one of earliest private equity shops in HK as capitalist reforms emerge to assuage Tianeman backlash, to Beijing 1997 and consumption/materialism booming but with backdrop of political corruption throughout, Whitney connected to wife of Wen Jiabao (Vice Premier) in early 2000s having climbed up social/business ladder, Wen was focused on gvt and party while somewhat oblivious to family members using him for wealth, Wen became Premier ’03, Whitney had carefully but not too eagerly made her close friend of “Auntie Zhang” (Wen’s wife), Whitney approach China political circles with great calculus, Whitney and Wen both deft at not making enemies (Wen maintain role through 3 leaders, rare), early 2000s China business opportunities of any material scale never achieved without political kickbacks/influence, always had to calculate economic cost and political cost, Desmond and Whitney helped Auntie Zhang guide business ventures and scrutinize possible partners as well as political candidates for Wen, at that time of business boom everyone was massively in debt—2/3 of people of wealthiest 100 list replaced every year, “guanxi” is term for political connections in China, key business venture came in lead up to Beijing Olympics as massive redevelopment efforts take place—Whitney and Desmond coordinate joint venture with Beijing airport and local province for logistics/air cargo/warehousing operation, logistics hub at big urban airport idea in 2003 but take a year plus to get building—called “Beijing’s Airport City”, needed 150 gvt sign offs essentially (leverage presence of Auntie Zhang and perception of Wen support to keep moving), construction start ’06, all projects of any significance required National Development and Reform Commission approval (they developed Five Year Plan and had to show your endeavor aligned—was never capitalism), had Li Peying backing who was airport boss for gvt with 40 airports so with him as Chairman of JV, could accomplish many things, broke ground June 2006, rule in China was state owned companies required 6% return on equity annually—but, if too good then fors angle to get job of bosses, Li did too well so came under allegations of gambling habit and corruption, Mar 2007 Ping An insurance giant list on Shanghai stock exchange—Whitney and Desmond has 1% and Zhang had 2%, Whitney/Des sell for $300mm profit to keep airport afloat as Li disappear but Zhang hold, by 2004 (Zemin in charge of Communist party as Gen Secretary ’88-02 then pass to Hu Jintao ’02 where Wen Jiabao become Premier under Hu Jintao) real concerns opposition party could rise like in Taiwan ’04—see state owned enterprises as way to cement power (like listing companies on NYSE), in China top role is Party General Secretary and second fiddle is Premier, 2008 financial crisis was pivotal point for CCP as view as confirmation of superiority of their system—begin to repress entepreneurs that drove growth through 90s (private enterprise was just a means to growth when needed but never was intended as permanent capitalist shift), Desmond suggest diversify assets outside China, sell stake in Airport venture 2008, Whitney resist moving to other enterprises as want to maintain her power navigating China politics, first met Xi 2008–serendipitous rise in Shanghai, not viewed as educated, “a Chinese businessman who hasn’t been to jail hasn’t accomplished anything”, excessive gift giving was way politics/relationships worked, CCP ban most retired senior officials from leaving China once retired, 2010 continue with big Beijing real estate development—huge windfall as prices skyrocket following (massive project for hotel, office, condo, museum), 2012 approved to construct “The Bulgari”—Desmond lead with international contractors and Whitney feel being boxed out/less needed, Oct 2012 NYT piece on Wen Jiabao $3bn net worth with Whitney mentioned, Whitney cover for Wen at order of Auntie Zhang, similar NYT piece on Xi just prior, CCP/Wen block NYT and claim attack, Wen furious as was in dark with Auntie Zhang—demand divorce, Zhang back out of The Bulgari, Politburo Standing Committee is top political body in China of 9 people, 2012 was year when Xi took over as Gen Sec in Nov but prior was scandal of Xi archrival in Politburo—Xi get Wen Jiabao to side with Xi and take down Bo Xilai to clear path for Xi, Xi launch big anticorruption campaign, 2013 Auntie Zhang “donate” all assets to state in exchange for no prosecution, Xi not protect Wen, Xi mark sharp turn inwards/backwards, 2012-2014 roll back indep media, backtrack on promises of independence for HK, arrest thousands, spark Umbrella Movement in HK—counterprotestors paid to support china there, Xi anticorruption more about silencing rivals, system is so opaque that get people to believe charges, gdp growth rate also so opaque yet foreigners buy it, Sun Zhengcai was to be Xi sucessor when termed out but 2017 smeared in press and then life in prison, then 2018 Xi pass constitutional change to end term limits, reversion to Mao, Whitney disappear 2017 without a peep, Xi accelerated China reversion but not start it (2008 really start under Hu Jintao and Wen Jiabao), CCP exists for interest of its revolutionaries and descendants not for the common good
