September 2006

Chinese Merchant Banker: A former Red Guard?

The anniversery of Mao Zedong's death went largely unnoticed in the West as well as China. There was hardly a mention of the former Chinese leader who founded modern day China in 1949 and is best known for his social experiments such as the "Great Leap Forward" and the "Cultural Revolution".

His legacy is clearly alive and an entire generation of Chinese was touched by his social re-engineering. It is never talked about.

Mao's Red Guards who were mostly the younger generation in 60's and 70s, they are now corporate leaders in China, USA and the UK.

Ying Fang is who now heads a merchant bank in London was only 11 years old when she was a red guard in 1965. Now 52 years old, the fomer revolutionary raises money for Chinese companies in England. Her story is relfective of China's 28 year transformation from communist nation (1949-1978) to a capitalist nation now.

China being a collective nation and respecting leaders (corporate or political) some would say is a fall out from the rice commune culture that was part of its history for as long as anyone can remember. It should not come as a surprise that a nation such as China can change and adapt so quickly.

We in the West say China is politically communist and economically capitalist. Communism was the tool to unite the country and fit well with China's culture. Other Asian countries had revolutions or war but one common theme is they all had a strong leader that went unopposed. This transfers down to the corporate leadership level as well; never challenge the boss.

Ying Fang says " There are many banks such as Goldman Sachs and others present in China, but very few of them are making money. It's easy to build a strategic presence but not to turn it into profit as we have done." She works for Evolution Securities in London, which her and her partners own 35% and Evolution Brokerage owns the rest.

Her job is to pick well managed companies with potential and match them with the right investors. Not an easy job by any means given the vagueness of some companies in China and the lack of reliable information available to do a good due diligence. Her background in the East and in the West makes her one of the best suited managers for the job.

So how does one go from a red guard to one of the most capitalist jobs there are?

Government support. The Chinese government educated her at the Communist Labor University and then she was sent to Beijing to work for a government policy unit pre 1978. Upon Mao Zedong's death , Deng Xiaoping encouraged the Communist Pary elite to travel abroad. Ying Fang was sponsored by the government to study economics at State University of New York and then worked as an intern at the World Bank. After the internship she transferred to the London School of Economics and a professor gave her a reference to work as an economist at Barclays Bank.

She does not talk about the past much, but her views on Mao are quite interesting. He was brand and an illustration of an effective chinese leader with alot of management and communication skills.

For those in the West we have a hard time grasping the concept of total change from one end of the spectrum to the other. For Chinese it seems they associate more with their political and corporate leaders. Exception is when the leaders lose "The Mandate of Heaven" , that is a another story.