CHINA'S RICHEST IS A WOMAN

HURUN REPORT RELEASES EIGHTH ANNUAL CHINA RICH LIST sponsored by Mission Hills Golf

• 49-YEAR OLD ZHANG YIN CHINA NUMBER ONE WITH US$3.4 BILLION
• RICHEST SELF-MADE WOMAN IN WORLD
• FIRST WOMAN TO TOP CHINA RICH LIST
• 15 USD BILLIONAIRES UP FROM 7 LAST YEAR
• US$100 MILLION CUT-OFF TO MAKE LIST
• LIST EXPANDED TO 500 INDIVIDUALS UP FROM 400 LAST YEAR
  

Woman on top
49-year old Zhang Yin pole-vaulted to the top spot from No. 36 in last year’s ranking on the back of the listing of Nine Dragons Paper in Hong Kong, finishing ahead of GoMe’s founder Huang Guangyu. Zhang’s personal fortune of US$3.4 billion makes her the richest self-made woman in the world and the first time a woman has topped the China Rich List.

Zhang’s fortune heralds from recycling scrap paper purchased in the US and processed in China for the thriving retail sector. Zhang (Cantonese name Cheung Yan) personally controls 72% of Nine Dragons Paper (HK 2869), listed in Hong Kong in March and which today has a market capital of US$4.6 billion. Born into a military family, Zhang, the oldest of eight, in 1985 set up a scrap paper trading business in HK, soon expanding to paper mills in Guangdong. Together with her husband, Taiwan-born Liu Mingzhong, Zhang in 1990 set up a US-based broker to secure and supply recycled paper for its mills in China. Today Zhang is the largest exporter by volume of scrap paper from the US, processing the paper in two state of the art board mill complexes in Guangdong and Jiangsu. Zhang’s US$3.4 billion fortune makes her the richest self-made woman in the world, surpassing that of Oprah Winfrey (celebrated US television hostess) and JK Rowling (author of the Harry Potter series).

Increased visibility of women in Chinese business
Women are more visible in Chinese business. 35 women are on this year’s list, amounting to 7 per cent of the 500. Led by Zhang Yin, the other top women include metal trader Chen Ningning and her mother (US$800m), and Beijing property developer Chen Lihua (US$750m). Others include TV presenter turned businesswoman Yang Lan of SunMedia Investments (US$500m), Zhai Meiqing of Kinhom a furniture retailer (US$415m) and Zhang Xin, who together with husband Pan Shiyi, is a high-profile Beijing property developer.

The role of women in China has undergone dramatic changes over the last century. Since winning equal status in the eyes of the law after 1949, women have begun to play a more active role in Chinese society, but it was not until the beginning of the economic reforms of 1978 that women really began to make their mark in business. Perhaps the highest-profile Chinese woman is Wendi Deng, wife of Rupert Murdoch.

And the Rest
Second is Huang Guangyu with US$2.5 billion, who cashed out a further US$520 million from the sale of GoMe outlets in his private holding company to his listed vehicle, making him China’s cash-richest individual. In the summer, Huang took over one of his nearest rivals in the highly competitive electronic appliance retail sector further driving his share price up. Huang gained about US$2 million a day over the past year. Huang’s brother, Huang Junqing, a property developer, also ranks on the list with a US$800 million fortune, giving the brothers a combined fortune of US$3.3 billion.

“Urbanization and ever-increasing household incomes have continued to be the key drivers for wealth creation in China,” says Rupert Hoogewerf, CEO of Hurun Report. Over the past year there has been a resurgence towards ‘traditional’ sectors, with five of the top ten making their fortunes in property and infrastructure development. For the first time since 2003 there are no IT entrepreneurs in the top ten. This is in stark contrast with the developed world where most of the top fortunes come from the technology, telecommunications, music, movies, or publishing sectors.

Environmentally-aware
Two of China’s top five have environmentally-friendly businesses, in recycling and solar energy. As well as Zhang’s paper recycling business, coming in at fifth on the list is 43-year old Shi Zhengrong, head of Nasdaq-listed Suntech Power, a manufacturer of solar panel components primarily for export to the US market. Others include Wang Yusuo (LNG distribution), Gao Jifan (solar panel components), Dou Zhenggang (green power), Rong Kemin and Wu Yang

Biggest Loser – Zhang Rongkun
Fortunes can be made and lost quickly. In the summer Zhang Rongkun, last year’s No 48 and owner of Fuxi Investments, a road toll company, was detained after being implicated in a pensions scandal which culminated in September with the sacking of Chen Liangyu, the party secretary of Shanghai. Beijing dispatched scores of investigators to Shanghai to uncover how US$400 million, a third of the city's pension fund, had been loaned to Fuxi.

Other interesting people
 Since shooting up to second place last year, Yan Jiehe has been under the media limelight courting controversy over the size of his government civil infrastructure contracts.
 Low-key Zhu Mengyi in June donated US$120 million worth of shares in his HK-listed Hopson Development to charity for use in an education fund. Last year Hopson was the second best performing overseas Chinese listed company rising 383% (year-end 30 June 2006) after strong interest from institutional investors.
 One person missing from the list is 85-year old Yu Pengnian, who last year donated US$250 million (the bulk of his wealth) to a charity doing cataract operations, topping the Hurun Report China Philanthropy List in April.
 35-year old Timothy Chen Tianqiao’s wealth fell by US$700 million since announcing last December that his Nasdaq-listed Shanda Networking was going to be offering free-play on Legend of Mir II, its top game, thereby depriving it of a major source of revenues. Last year Chen was one of the fastest risers with an increase of US$400 million.
 Gracing our list for the first time are Yanlord Property founder Zhong Shengjian (US$1.1 billion), recently listed in Singapore, Du Shuanghua of Rizhao Steel and Yangtze River Pharmacy founder Xu Jingren (US$700 million).
 Zhou Furen this year won US$50 million of investment from HSBC for his fertilizer business, sending him up the rankings at full speed.
 Low-key Shi Yuzhu of Giant Holdings went bankrupt in the nineties and has since rebounded. Since then Shi has built up and sold on a health care business, invested in commercial banks and China’s third largest online games business.
 Husband and wife team Jia Tingliang and Wang Suolan have built China’s largest coal mine investment company.
 Zhang Yupin has positioned himself well for the growth in the luxury watch retail sector with his HK-listed Wei Lung.
 Yang Xiu has spent over US$100 million on his art collection.
 Another husband and wife team, Wei Dong and Yao Quan, started a food delivery service to multinationals, which listed this year.
 Cashing out: Zhou Qingzhi sold his property holdings to Vanke for US$400 million, and Wang Shusheng cashed out to Fedex for just under US$400 million.
 Yu Minhong’s New Oriental Education has helped hundreds of thousands of Chinese students get into US universities and is China's largest English-training school, winning a listing on the New York Stock Exchange Big Board this year.
 Duan Yongping this summer paid US$672,000 for lunch with Warren Buffett at a public auction in the US.

Impact of capital markets
 Hong Kong’s capital markets dominate the fortunes of China’s richest with seven of the top ten having their main business listed there.
 A recent government reform turning the formerly non-tradable shares of Shanghai and Shenzhen into tradable shares has created a windfall for many entrepreneurs and marked a watershed in the recent frenzied buying of previously non-tradable shares. Cao Dewang, for example, saw his wealth triple after from Fuyao Glass’ shares become fully tradable. Previously companies listed on the Mainland stock markets were characterized by a split-share structure featuring one-third freely traded public stocks and two-thirds non-tradable state owned shares.

Some Background
The rich in China are getting rich and fast. Hurun Report’s list of the 500 richest Chinese are now worth an average of US$276 million, a 48% rise on the previous year, and as a group control a total of US$138 billion. It takes US$100 million to make the list – a far cry from our inaugural list of China’s richest people eight years ago, when we only ranked fifty individuals with a cut-off then of US$6 million. A flurry of listings and a booming economy contributed to the surge in wealth, combined with an economic landscape comparable to the Industrial Revolution of the UK and robber baron period of the US, when vast areas of the economy were wide open to be exploited by smart, ruthless and fast-moving entrepreneurs. The biggest number of people on the list live in Guangdong, which houses 75 of the 500, and another 74 live in Zhejiang. The profile of China’s millionaires is a 48-year old man from East China in property development or manufacturing, who started his business in 1993.

“What stands China out from the rest of the world is that China’s entrepreneurs are all first generation. The stories of these individuals tell the story of modern China,” says Hoogewerf. “There has been a revolution in China’s attitude towards wealth.”

Infrastructure and technological changes PLUS a vast undeveloped and largely unregulated (by law) economic hinterland is a vacuum entrepreneurs are filling. Making China probably the most exciting place in the world today for entrepreneurship.” The list reflects how quickly China changes.

Appendix 1 – Key Issues
Industries of China’s richest entrepreneurs
The building boom continues to be the greatest creator of private wealth in China followed by manufacturing. Property may be considered an ‘old’ industry in the Western world, but in China it is anything but. Making IT look sluggish by comparison, China’s building boom has been the key driver behind China’s explosion of wealth. It seems unthinkable that twenty years ago land had only negligible value.

Impact on China’s social and economic development
Last year the private sector contributed 50 per cent of GDP and provided eight out of ten new jobs in non-agricultural sectors, according to a September report of the Chinese Academy of Social Sciences, the country’s top think tank. Adding in overseas-funded ventures brings it up to roughly 65 per cent. Within five years, the private economy is expected to contribute three-fourths of China's GDP, when at least 70 per cent of the country's firms will be privately owned. One point to note is the exact definition of private ownership. The report does not make clear if it included a large gray zone of companies categorized as non-state- owned despite being under varying degrees of government influence.

The rich may be getting richer but are also increasingly giving back to society. The growth rate of taxes paid by the private sector has by far surpassed that of state companies. Over the past five years, taxes paid by private firms grew by at least 40 per cent a year, compared with an annual increase of less than 7 per cent by state companies. "In many a local region in China, tax revenue generated by the private sector accounts for over 80 per cent of local government revenue," the Academy report says.

China’s rich are also giving more to charity. Led by Yu Pengnian with his US$250 million donation of the bulk of his wealth, China’s top 100 philanthropists have given away US$700 million since 2003, a remarkable 48% year on year increase, according to the 2006 Hurun Report Philanthropy List.

Transparency
Some provinces are more transparent than others. During the course of our research, Hurun Report found Zhejiang the most open and North East China the least.
• Most transparent locations for researching China’s rich: Hong Kong, Shanghai, Zhejiang, Shenzhen (Guangdong), Jiangsu
• Least transparent: North East China, Dongguan (Guangdong), Beijing, Hubei, Fujian

Methodology
Valuing the wealth of China’s Rich is as much an art as it is a science. Our team of researchers has - for the eighth year running - traveled the length and breadth of the country cross-checking information with entrepreneurs, industry experts, journalists, bankers, and regulators, as well as previous years’ databases. The cut-off date for valuation of listed companies was August 31, 2006. For non-listed companies we valued by comparing them with their listed equivalents using prevailing industry P/E ratios. This list relates to Mainland China only. For the purposes of this list, we define Mainland Chinese as someone who was born and brought up in China, no matter what passport they might hold today.

Appendix 2 –Interesting facts
1. Companies that created the most individuals on the list
a) Country Garden (Chinese name Biguiyuan), a property developer in Guangdong – 10 individuals (six surnamed Yang, a popular local village name)
b) Fosun, an investment group in Shanghai – 4 individuals
2. Average wealth of Hurun Report 500 is US$276 million, an increase of 48% over last year (2005: US$187 million).
3. Total wealth: US$138 billion, which equates to 6% of China’s GDP in 2005. If comparing this year’s Top 100 with last year’s Top 100, the average wealth has increased 59% to $698 million compared with a 48% increase in 2005 and US$297 million in 2004.
4. Cut-off to make list this year was US$95 million:
　

For comparative purposes, below is a chart with the wealth figure of the Number 50 since 1999.
　

5. 24 new entrants in Top 100 (down from 33 last year)
6. Fastest risers
Wealth increase
　

7. Industries listed by entrepreneurs as one of their key industries:
Property is still king with 26% of entrepreneurs listing it as one of their key industries, followed by manufacturing. The percentage of property tycoons has diminished over the past two years from 28% last year and 45% in 2004.

100%

8. Politics: One third estimated to be CCP members. Of the Top 100, there are 19 (2005: 9) delegates to the National People’s Congress and 19 (2005: 16) to the China People’s Political Consultative Congress (CPPCC).
9. Women: 35 individuals on list led by Zhang Yin at Number 1.
10. Average age: 47.7 years, up from 46.9 years in 2005 and 46.2 years in 2004. Significant impact on education from ten year Cultural Revolution (1966-76), when they were on average 8 to 18 years old.
11. 9% estimated to speak passable English
12. Going global: China’s entrepreneurs fly to HK, US, Singapore, Australia, Japan, France, UK and Russia more than anywhere else.
13. Head office locations: Zhejiang (75 entrepreneurs), Guangdong (74), Shanghai (61), Beijing (60), Jiangsu (53), Shandong 18 and HK (18). The powerhouse of the private economy is now firmly entrenched in East China with 45% having their head office there, followed by South China 24%, North China 19%, and West China 11%. South China is loosing ground.
14. Birthplaces: Zhejiang (106 entrepreneurs), Jiangsu (60), Guangdong (58), Fujian (26), Shandong (26), Shanghai (24), Beijing (19), Liaoning (17), Sichuan (16), Shanxi (15), Hebei (13), Henan (10)
15. 26% relocated since birth (birthplace and company head office are different).
16. Average time to make the rich list is thirteen years from starting-up the company, meaning they set up their business in 1993.
17. Youngest on list. 50 individuals are under the age of 40 on the list, led by
　

For the third year running, the youngest is Li Zhaohui, who inherited his father’s iron and steel business in 2003. Li is only one of five on the list who inherited their wealth. The others being Shi Yuewu, Qiao Qiushen, Zhang Jianhua and Lu Li.

18. Ten largest companies by market cap
　

* Company not listed. Market Cap estimated by comparing with their listed equivalents using prevailing industry P/E ratios.

Hurun Report China Rich List series
On Oct 8, Hurun Report released its fourth China Power List, a ranking of the ten most powerful people from the rich list measured by their political, economic (tax paid, employees, sales), social, media and international impact.

Other releases:
1. Thurs, Oct 12 –Richest Women in China List
2. Mon, Oct 16 – China Energy Rich List AND China Property Rich List
3. Wed, Oct 18 – China Retail Rich List AND China IT Rich List AND China Financial Services Rich List

Back to 2006 China Rich List