China’s Uneasy Billionaire 汉译

The gods clearly smile on Shantou. This once poor district in southern China is the birthplace not just of Asia’s richest man, Li Ka-shing, a Hong Kong tycoon, but also more recently of one of mainland China’s richest men, Wong Kwong Yu, founder of Gome, an electrical-appliance retailer. According to a Chinese “rich list” compiled by Rupert Hoogewerf, a British journalist, Mr. Wong is now worth $1.7 billion—enough to put him at the top of the list for two years running. This is still far short of Mr. Li’s $13 billion; but then Mr. Wong, at just 36, is younger and made his fortune in socialist China, not capitalist Hong Kong. Yet the remarkable nature of his achievement, like the wealth itself, has brought Mr. Wong scarce comfort. True, his office is presidential, complete with a stately desk and even a bedroom (he says he often works overnight). With his brother, he owns the skyscraper Eagle Plaza in north Beijing that houses it. He is driven around in a stretch Mercedes too, although only because friends advised it would be handy for meetings on the move. But Mr. Wong’s personal tastes are frugal. He and his wife and children still live in a commonplace apartment that costs a third of a Luxury one. Shyly fiddling with his mobile and lighting another cigarette, he confesses that he cannot play golf, and cut short a holiday in Canada recently because he was bored. He works 13-hour days because “I wouldn’t know what else to do,” and to relax just watches television.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

Such self-denial and workaholism partly reflect the fact that he built his wealth slowly—like Li Ka-shing, who is known for his cheap shoes and plastic watches. As a boy, Mr. Wong recycled bottles after school to supplement the income of his farming family. At 16, he and his elder brother travelled north to Mongolia to flog cheap watches, before fetching up in Beijing and opening a clothing store—Gome At 17, with urbanization, property development and incomes all on the upswing, he switched Gome into home appliances and consumer electronics, and in 1992 he split the business, keeping the stores while his brother, also on the rich list, kept the real estate.

Mr. Wong reflects, too, a sensitivity common to many of China’s young entrepreneurs who rise rapidly in private wealth. Several former members of Mr Hoogewerf’s rich list have since been jailed or forced to flee abroad. Mr. Wong says that he is not under threat: “It is transparent where I made my money.” But conspicuous consumption is still to be indulged in cautiously.

However, the main reason for Mr. Wong to feel ill at ease is the business itself. At first sight, Gome is a formidable success. With 437 stores in 132 cities and revenues of 24 billion yuan ($3 billion) in 2004, it is the clear market leader in a 500 billion yuan electrical-appliance market, growing at an enviable 12% a year. It has the best brand and product range and is less dependent on a single region than its rivals. Yet Gome’s preeminence is threatened. Sales of televisions, washing machines and the like are highly fragmented, with the top 16 chains accounting for just 22% of the market. And the competition is catching up. Of the many ideas Mr. Wong pioneered in 20 years in retail—including charging high fees for supplier promotions (a full third of Gome’s profits)—” everything is now being copied” by rivals, particularly three others with national pretensions, Suning, Yongle and Dazhong.

With China now fully open to foreign electrical chains and supermarkets, competition will only heat up. So just in case, Mr. Wong is busily working on that quintessentially Chinese escape hatch: property. While his brother flourishes in commercial real estate, Mr. Wong has recently become one of Beijing’s biggest residential developers. It seems to suit him better. He laments the loss of the days when he was the only retailer that mattered, everything sold and he didn’t have to ask favors. The beauty of property over retailing, he grins, is that “you don’t have to deal with so many people.”