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Mark O'Neill

Yin Mingshan is the archetypical Chinese entrepreneur, wrenching himself up from destitution imposed on him during the 'anti-rightist' campaigns in the 1950s and the Cultural Revolution to become one of the wealthiest people in the country.

In just 12 years, he transformed a tinkering operation with nine people based in a car shed into China's biggest producer of motorcycle engines, with sales last year of 4.58 billion yuan.

Mr Yin, 66, is now taking the biggest gamble of his career, investing 750 million yuan in two car plants, aiming to produce 200,000 vehicles a year by 2010.

Two-thirds of the money is going on a new passenger car factory  being built on  what used to be rice fields in the north of Chongqing, one of four Chinese municipalities administered directly by Beijing.

The exterior of the plant is complete and hundreds of workers are busy putting down the floor in preparation for the arrival of the equipment. Production is due to start at the end of the year.

Under construction on the same road are up-market 200 square-metre villas, costing one million yuan each, where the managers of the new factory will live.

Mr Yin's factory may be arriving too late, coming on stream just as the market faces a car glut and prices are plunging.  It is a mistake many successful Chinese businessmen have made before him - diversifying from  their core  businesses into sectors in which  they lack  expertise.   The central government, which still tightly regulates the car sector, is hardly keen to welcome new domestic manufacturing entrants.

But the car is undeniably China's hottest consumer product and there is plenty of historical precedent around the world to show that car manufacturers - provided they are large enough to survive periodic shakeouts as the sector matures - can become anchor economic institutions.

Mr Yin's motivations are clear enough: 'The motorcycle industry in China is facing an unprecedented crisis,' he explains. 'The profit margin on one unit has fallen to about 20 to 30 yuan and we lose money on some models.  The car sector is an excellent alternative.

'By 2009, half of our sales of eight billion yuan will come from autos. We are following Honda and Suzuki and diversifying from motorcycles to automobiles.'

For now, Lifan remains heavily dependant on motorcycles. China's fourth-biggest producer, it has been the  No1 producer of motorcycle engines for the past four years. It earned US$203.5 million from exports last year.

Producers are being squeezed by restrictions imposed by most key Chinese cities on the use of motorcycles, leaving them reliant on the rural market where models typically sell for 4,000 to 6,000 yuan.

Like other entrepreneurs, Mr Yin  envies the success of Geely Motors, a private company in Zhejiang province that produced its first passenger car in August 1998 - without central government approval - and this year will turn out 200,000.

Of the 123 firms   with a central government licence  to manufacture cars,  17 are in Chongqing.

In August last year Mr Yin took over a money-losing state firm in the city that holds one of the  licences and renamed it Lifan Auto.

In addition, last month Mr Yin announced that he had taken a 21 per cent stake in a three-year-old private manufacturer of tractors and farm vehicles in Yunnan province. He plans to invest 250 million yuan to transform the operation into a passenger car factory producing 100,000 vehicles a year under the Lifan brand.

This is not what the planners in Beijing want. Their dream is a small number of state-owned conglomerates - much like  America's 'Big Three'  - using capital and technology from foreign firms to create an export-quality car industry.

China's new vehicle industry policy, announced on June 1,  established a minimum investment of two billion yuan for new car plants, of which the investor had to provide no less than 800 million of his own capital. At least 500 million yuan  must be earmarked for research and development.

Private companies have side-stepped the regulations by acquiring existing firms, many of them state-owned and in financial trouble.  Lifan is one of three private manufacturers of motorcycles in Chongqing that have acquired a vehicle company.

The nightmare for Beijing is that the new plants planned by private companies  all come on stream simultaneously, in  tandem with the capacity additions planned by state-owned and foreign makers. The result could be a  stubborn glut accompanied by  idle plants, laid-off workers and billions of yuan in unpaid bank debts.

After the tumultuous life  Mr Yin has had, such concerns will not trouble  his sleep.

Born  into a small landlord family in  Chongqing, Mr Yin has lost nearly a third of his life to Communist campaigns.

As a boy, he was banished with his parents to  the mountains where they lived in a straw hut. Aged 12, Mr Yin earned a pittance from selling goods by the side of the street.

When he was finally allowed to go to school, he excelled, especially in mathematics. But in 1958,  Mao Zedong launched the anti-rightist movement, which targeted families like Mr Yin's. He was expelled from school and sent to work in a plastics factory under constant supervision. His friends and his sweetheart abandoned him.

After 20 years of  internal exile, he was allowed to resume a normal life and education in the early 1980s and  set up an educational publishing firm in Chongqing, from which he made his first fortune.

In 1992,  he launched Lifan in a 40 square-metre repair shop  with eight colleagues. Last year Euromoney  ranked him as the 91st richest person in China with a personal wealth of 950 million yuan.

He is a vice-chairman of the China People's Political Consultative Conference.

Those who know  Mr Yin ascribe his drive and ambition to the fact that he lost so much of his life. While others of his age are planning their retirement, he is eager to expand and establish a global firm.



Motor millionaire spins new wheel