What next for Chinese tycoon, as he assists with probe?
Xiao Jianhua’s rags-to-riches tale may not have a fairytale ending
Xiao Jianhua, the billionaire businessman persuaded by mainland Chinese agents to leave Hong Kong and return to the mainland to assist in investigations, looked likely to become a politician until the spring of 1989. As a “student cadre” at the prestigious Peking University, he could have followed the path of Li Keqiang, now the Chinese premier, by joining China’s political aspirants and ascending the party ladder.
The pro-democracy movement of that year, with Peking University at its forefront, changed the country and also Xiao’s life path. As chairman of the government-backed student union, Xiao failed to win majority support among students, as most students preferred to pressure Beijing while Xiao tried, fruitlessly, to mediate between both sides.
A zealous reader of Mao Zedong articles, Xiao decided to stay away from politics after he saw the brutal crackdown on student demonstrations in Tiananmen Square on June 4. The possible politician made up his mind to pursue profits instead.
“But an interest in politics and the sense of doing something for the country have never really faded for him,” said a person who has talked and dined with Xiao several times. “He is very amiable, always smiles at you when talking, and he isn’t shy to share his views about life and the world in general.”
In an interview with the 21st Century Business Herald, a Chinese business newspaper, which was published in April 2013, Xiao said he gave up his political ambitions because the possible rewards are smaller than the costs.
Xiao said his preferred lifestyle was “to read books freely” and he hates office life.
“I don’t like going to the office and, in fact, I haven’t gone to an office for over a decade,” Xiao was quoted as saying. “I prefer to walk on the beach or just stroll around a hotel ... that’s my way of doing things. I don’t like formalities.”
For the past four years, Xiao has lived at the Four Seasons Hotel in Hong Kong, a city considered a safe haven for troubled Chinese businessmen seeking shelter from mainland investigators. There, he was surrounded by female bodyguards and often dressed in colourful sports clothes.
His hotel stay came to an end last Friday when agents from the mainland persuaded him to return to the mainland to assist in investigations, a source told the South China Morning Post. Another source in mainland China said Xiao’s family members were able to contact him.
Xiao’s fate is currently unknown. Judging by past cases, the process for a Chinese tycoon involved in investigations can follow several scenarios. At best, he could be freed after just a few days, as was Guo Guangchang, the chairman of Fosun International, who went missing for three days in late 2015 before reappearing. However, he could also be charged with criminal offences, as was Xu Xiang, China’s top private fund investor, who was sentenced last month to five-and-a-half years in prison for insider trading and stock manipulation.
The fifth child born in a rural village family in Shandong, Xiao’s life until now has been a rags-to-riches story.
He and his wife ranked 32nd on the Hurun China Rich List 2016, having amassed US$5.97 billion in wealth.
Xiao was talented in literature and keen to learn as a child, according to a report of him by The Time Weekly in 2013, after the mainland newspaper visited Xiao’s home town in Feicheng. In 1986, Xiao excelled in the national college entrance exam and enrolled at Peking University to study law.
After graduation, Xiao joined one of Peking University’s commercial entities before he created his own business in early 1990s. In the interview with the 21st Century Business Herald, Xiao said his “first barrel of gold” was made by trading computers in Zhongguancun – a technology hub in Beijing’s Haidian district.
With those early-day profits, the company started to invest in cheap and non-traded “institutional” shares of listed Chinese companies and made fat profits when the shares were made tradable later, Xiao said in the interview. For instance, Tomorrow Group purchased Industrial Bank stock for less than 2 yuan per share, and the share price surged to more than 50 yuan per share at its peak, he said. The latest share price of Industrial Bank was 17.07 yuan.
Xiao’s business empire attracted media attention in 2008 after a brokerage house in which Xiao had stakes made a speedy initial public offering at the end of 2007. Subsequent probes into the deal led to the arrest of Wang Yi, a former vice-chairman of the China Securities Regulatory Commission.
Xiao said later that “none of the senior executives at Tomorrow Group has ever been involved in any investigation or questioning by the Chinese authorities”.
The business deals of Xiao, who holds Canadian citizenship, are extensive and opaque. According to a New York Times report published in April 2014, Tomorrow Group has close connections with the party elite, including the family of President Xi Jinping. Quoting an unnamed source, the report said the president’s sister Qi Qiaoqiao and her husband Deng Jiagui sold their shares in an investment firm to a company founded by Xiao for at least US$2.4 million.
Xiao was also reported to have helped Zeng Wei, the son of former vice-president Zeng Qinghong, privatise a power-generating company in Shandong province a decade ago. Xiao later denied the reports.
Xiao said his wealth grew because he was correct in anticipating trends.
“In the political field ... we business people would be mediocre or even lower, but people like me, with a bit of broad thinking, can have great advantages in the business world,” he was quoted as saying in the 2013 interview.
Additional reporting by Jane Li and Kinling Lo