China Vanke

For China Resources chairman Fu Yuning, ‘patriotism pays’ amid Vanke power struggle

Analysts say he sees property as a profit engine for his state-owned company, and that China’s largest housebuilder would provide good synergy for its real estate businesses

PUBLISHED : Friday, 15 July, 2016, 9:40pm
UPDATED : Friday, 15 July, 2016, 10:34pm

Veteran businessman Fu Yuning managed to stay out of the public eye during his 15-year stint in state-owned ports-to-financial services conglomerate China Merchants Group, but investors began to take notice two years ago when he was appointed chairman of state-owned China Resources Holdings, replacing Song Lin who was placed under investigation for corruption.

The tall, urbane and low-key chief has now been thrust into the spotlight after China Resources was caught up in a widely watched power struggle at China Vanke, the country’s largest residential property developer, that set privately run property and insurance firm Baoneng against Vanke’s top management headed by Wang Shi.

Seldom, if ever, one to grant interviews to mainland or international media, the well-educated chairman, who obtained a doctorate in engineering from a UK university, is an enigma to the public and his visionare not widely reported.

But a book written by Liew Mun Leong, the founding president and chief executive of Singapore based Capitaland Group, one of Asia’s largest real estate companies, provides an illuminating character description of Fu.

In his 2007 book Building People: Sunday Emails from a CEO, a collection of what Liew calls “hobby emails” penned to his staff over a nine year period, the author writes about an interaction between Fu and himself in 1989 that showed Fu’s patriotism.

The chapter, titled “Patriotism pays” and written in May 2001, revealed how Liew wanted to headhunt Fu when he was recruiting Chinese engineers and scientists for the Singapore Institute at Standards and Industrial Research (SISIR).

Liew wanted Fu to start a vibration laboratory for SISIR.

The first meeting took place in Shekou, the logistics base near Shenzhen, just after the June 4 Tiananmen Square crackdown. Liew was confident that Fu would accept his offer to work as a senior research fellow in Singapore, with a salary many times that what Fu was then paid, combined with an unpromising conditions in China especially after June 4, 1989.

“To my surprise, Fu politely turned me down – he told me that it was fate that he had returned to China at that unfortunate time. But he would stay behind to help the country,” Liew wrote in his book.

“The ‘country needs me’ he said proudly, and he would not abandon his country because of the current political unrest,” Liew wrote about Fu’s response.

Over the next couple of years they stayed in touch, but then lost contact with each other for almost 10 years. The two men met again in around 2001 when Fu, then 44, had already risen to the position of president of China Merchants, one of largest conglomerates, encompassing shipping, logistics, banking, insurance, technology and property.

Liew concluded the chapter by saying; “ Fu was patriotic, worked hard and persevered to serve his country during its most uncertain and turbulent days. He has been rewarded and he deserves it. Patriotism pays.”

Born in March 1957, Fu graduated from China’s Dalian Institute of Technology with a bachelor’s degree in port and waterway engineering. He obtained a doctorate in offshore engineering from Brunel University in UK in 1986. Two years later, he returned to mainland China and immediately began his life long services for state enterprises from China Nanshan Development (Group) and China Merchants to China Resources.

Mainland media once described Fu as “fire captain” reflecting his leadership and problem solving ability.

Since Fu took over China Resources Holdings, he transformed the group’s Hong Kong listed flagship conglomerate China Resources Enterprise into a brewery giant, now renamed as China Resources Beer. He ordered a consolidation of businesses under China Resources Land, one of the mainland’s leading developers, shifting its focus to first-tier cities.

Core net income for China Resources Land for 2015 rose 19.2 per cent to HK$14.21 billion, constituting a major source of earnings for the group.

Analysts said Fu sees property as a healthy and good profit engine for China Resources.

Taking control of China Vanke would provide good synergy for the real estate businesses of China Resources Group, said David Hong, head of research at China Real Estate Information’s Hong Kong office.

Under the Central Government’s policies to encourage state owned enterprises to grow faster and bigger, Hong expects to see more mergers and acquisitions in the market.

He believes state owned enterprises will eventually become leaders in property and other key industries.

The confrontation between China Resources and Vanke’s chiarman Wang Shi surfaced in March when Wang proposed inviting Shenzhen Metro to join the company as a major shareholder to avoid a takeover by Baoneng. The move antagonised China Resources and Fu, who claimed they did not know of the plan.

In June, China Resources openly opposed Vanke’s proposed 45.6 billion yuan acquisition of a unit of Shenzhen Metro Group in a deal to be paid for through the sale of Vanke shares. The deal, if completed, would see the metro company become the single largest shareholder of Vanke and China Resources dropping to third largest.

China Resources has reinforced its doubts about whether Vanke management was fairly representing shareholders’ interests, claiming that the running of the developer has now been taken over by “insider control”, a phenomenon whereby controlling rights in a company are seized by management based on their own interests.

It has been suggested by an independent shareholder of Vanke that China Resources and Baoneng have joined forces to take control of Vanke – a claim officially denied by China Resources.