
90% of China's billionaires are kids of high-ranking officials - cwan
http://chinesepolitics.blogspot.com/2009/07/interesting-article-on-princeling.html
======
newy
"Guanxi" is a huge factor in dealings involving the Chinese government, and
even in day to day Chinese business. One difference between the Chinese and
American system of connections and favors may be that Chinese put a heavy
emphasis on family relations, which doesn't seem overly prevalent here. Well,
save for certain notable exceptions.

On another note, the problem of "guanxi" extends to the microlending arena.
China's lending capital for microloans is small, and even then, the funds are
generally directed to those with connections to the government. I'm working
with a nonprofit called Wokai (<http://www.wokai.org>), and we're working to
raise loan capital from people around the world for microloans to Chinese
farmers. We operate pretty similarly to Kiva, except that due to Chinese
regulations we can't return money to lenders - therefore, we solicit
contributions that turn into perpetual loan capital.

~~~
baguasquirrel
I don't think outsiders grasp how much of an impact the emphasis on "guanxi"
and family relations has on everyday life in China. On one hand, you can see
this as 90% of Chinese billionaires are the kids of high ranking officials.

Bot on the other hand, you can see this as 90% of Chinese kids of high ranking
officials are expected to marry someone who is successful/will make them look
good. Anyone who's dated an Chinese girl whose parents are relatively
successful (especially if they are East Asian themselves) will probably tell
you a thing or two about having to measure up to standards.

In Chinese society, people use their relationships to leverage life (and by
extension, business and politics) to the full. Thus, it's not acceptable to
marry below you because if you do, you may be forced to hire the relatives of
your lowly mate. It is shameful if your family is not doing well, and it is
shameful if your close relatives don't have a job. This is the cost of
sticking together, having strong friendship and family bonds-- you do not want
any relationships that are too one-sided or unsustainable.

While modernization has weakened this system nontrivially, it does feel that
it is still the norm, and we have reason to believe it will continue (at least
to a greater extent than here in the West). The reason is that China has too
many people, too many mouths to feed. China produces many more engineering
students than does the US. But most of them aren't hireable. There's a reason
why we're still "better".

Finding the right talent in China is even more formidable than it is here, and
it always has been, thanks to the fact that China has 3x more people per acre
of arable land than the average country (cited from Stratfor but I can't find
the link).

 _Now I'm not saying that the system is fair or even efficient compared to the
Western system, but using the family to extend one's goals is a byproduct of
Chinese society._

I would argue there is some wisdom in what they do. Here in the West, our HR
departments often prefer to hire people who are referrals. There's an implicit
understanding that good workers like to hang out with other people who are
good workers. In this light, the Chinese are merely extending that wisdom
beyond the workplace.

~~~
bwd
There may be some wisdom, but not a whole lot. Hiring on referrals is based on
the idea that people will not refer idiots to you for fear of depleting their
social capital, providing you with a fairly strong selection mechanism for
talented candidates. Being forced to hire the relatives of your mate
regardless of their skills does not strike me as very beneficial.

~~~
baguasquirrel
Hiring on referrals is tricky. It's like what Steve Jobs and Joel Spolsky have
said. The A ppl hire the A ppl but the B ppl hire the C ppl. So yes, it's less
than ideal when you can be already be reasonably certain that credentials mean
_something_ (i.e. someone with a degree in chemical engineering is at least
halfway capable of maintaining a part of a chemical plant), or you can look at
things like what sort of papers they've published, what OSS projects they've
contributed to, etc.

As for the hiring relatives regardless of their skill... this matters when
skill _really_ matters. When you're in a winner-takes-all field like finance
or tech, it can be very much less than ideal and we myopically don't recognize
that the rest of the world gets on without being exceptional at problem
solving.

The flip side to the hiring relatives bit is that native-born Chinese are
generally able to extract higher loyalty and work ethic from their relatives
because of these same bonds. There is the feeling that you are all together.

So for all the talk of China steamrolling the world, I just don't believe it.
You have to look at what benefits and costs this sort of culture provides. You
get high societal stability, and a caring family that will support you, but
one that can in some ways hold you back as well. Their societal structure may
have worked extraordinarily well with manufacturing, but tech? I refuse to
ever say that someone, or some group _can't_ do X, however I will say the jury
is still out on this one.

------
pegobry
What's even more "interesting" is the exception to that rule, Huang Gyangyu,
up until recently the richest man in China, its "Sam Walton", who was arrested
and is still being held for "insider trading", when arresting someone in China
for insider trading is sort of like a character on The Sopranos getting
arrested for saying fuck. With no formal education or family ties to speak of,
he started his business at 16. Of China's billionaires, Wang was the only one
who was 1- a Christian and 2- not a member of the Communist Party. And now
he's in prison.

------
olihb
As many things in life, often it's not what you know but who you know.

And I guess that if you know the big cheese, it's easier to get all the
permits, gov. contracts and financing.

------
0_o
The link is blocked by GFW, I think, I can not open it here in China.

~~~
cwan
This is what I use while I'm in China: <http://www.witopia.net/welcome.php> \-
Highly recommended given how much China is blocking these days. On other
US/European sites that aren't blocked, I often find it is faster on the VPN
than it is direct as well. Because I'm generally in Canada I can now also
access Hulu.

------
cwan
The news is from 2006, but it's a reminder following a recent scandal and but
it's also a reminder of the difficulties outsiders (both inside and outside of
the country) face in trying to become successful in China.

------
rbanffy
This is the unavoidable consequence of China's political/economic system. It's
not surprising at all.

What makes me worry is that the Chinese government has a far larger influence
on Chinese companies than most other countries and that makes economic
reliance on China a very dangerous move.

It also makes people used to totalitarian regimes to the point of making them
tolerable. They shouldn't be. Chinese people deserve better.

~~~
garply
'Chinese people deserve better.'

Really, what business is this of yours? I feel like Westerners are always
looking down their noses at the Chinese political situation but people don't
seem to take into account China's historical context. China IS getting better
(and rather rapidly). Less than 100 years ago, China still had an Emperor.
With that in mind, how many centuries has Western democracy had to mature?

My personal belief is that democracy develops very gradually, sometimes
punctuated by sharp periods of rapid change (e.g., revolutions, foreign
colonization).

~~~
rbanffy
"Really, what business is this of yours?"

Every human being deserves better, Chinese or not. We are all on the same boat
after all.

And yes. China is making some progress, but, still, it has a long way to go.
Switching from an imperial totalitarian state to a communist one (also an
unavoidable consequence of the past couple thousand years of Chinese history)
makes for not that much of a change after all. At least not much when you
consider the human condition.

And it _is_ my business as it shifts the "Overton window" towards a position
more on the totalitarian end of the spectrum. While recognizing China made a
lot of progress in the past century (making up for the couple thousand years
before) it is still unacceptable. Mind you my children will have to live in a
world where a totalitarian state ruled with iron fist by a political
aristocracy is a major commercial partner of just about every other country.
And this arrangement may start putting ideas into some minds that would be
better if left empty.

At least for me it's not acceptable.

~~~
garply
Karma for introducing me to the term Overton window. And I do agree with you
that we should encourage China to continue to liberalize. I just wanted to try
to offset what I feel is a somewhat one-sided view of the Chinese situation.

I'd also like to point out that, despite how the Western media often presents
it, the CCP isn't monolithic. Power swings between two poles: Beijing and
Shanghai (Beijing being the political and military hub, Shanghai being the
economic hub). For example, Jiang Zemin represented the South and was what we
would consider more economically liberal and now Hu is more friendly toward
the military, more focused on 'political stability', and more representative
of the North. I highly suspect the next president will be a conscious swing
back to the 'liberal' side of the spectrum.

And the power hubs tend to alternate every decade or so. I suspect when
democracy does start to trickle down to the Chinese population, the party will
split somewhere along this line. We just need to give it a few more decades.

~~~
DanielBMarkham
_We just need to give it a few more decades._

Here's hoping that world events allow them time to do so.

What is required is a way for one bunch of people to say "hell, the people
running the government right now are idiots. Idiots I say! Let's completely do
things differently!" and be able to assume power and change things without
force of arms or violence.

And do this on a regular basis.

I know I'll feel better when that day comes. Because well, sometimes the folks
running things _are_ idiots. And they have all the guns.

------
vaksel
That's because its harder to bribe people in China compared to the USA. There
you need to do a shady deal and pay a ton of money, so family gets the inside
track.

In the USA, all it takes is a 100K at election time, and its completely legal.

~~~
garply
I can't imagine that it's harder to bribe people in China than in the USA. In
fact, I think much, much more bribery per capita happens in China than in the
US. The Chinese legal system is very weak.

~~~
vaksel
not harder per se, but there its done as a backroom deal. In USA, we just call
it lobbying and campaign contributions.

~~~
varjag
Still, the U.S. political system allows for such an outlier as Obama[1] to get
on the top. It would've been impossible if it was only the issue of getting
the most lobbyist beef behind.

[1] Not idealising him here, but his ascent was both extremely untypical and
very American at the same time.

------
jacquesm
I don't see anything different in this respect in China than I do in many
western societies. Having a leg up is definitely a pre, anywhere. It may
differ in degree but certainly not in principle.

~~~
rdouble
In which western countries are 90% of the billionaires children of government
officials?

~~~
jacquesm
errm... I said 'degree' didn't I ?

I meant that in any society the number of people that will make it big that
have connections will outnumber those that do not.

It's very hard to 'make it on your own', in any society and China is
(unsurprisingly) no exception.

News would have been 90% of Chinese billionaires (or millionaires or some
other metric) had _no_ family or other connection to power.

On another note, there are only 9 Chinese billionaires in all (10 if you count
HK); see [http://www.forbes.com/lists/2007/10/07billionaires_The-
World...](http://www.forbes.com/lists/2007/10/07billionaires_The-Worlds-
Billionaires_CountryOfPrmRes_3.html)

~~~
rdouble
The news was 90% of Chinese billionaires are actually kids of government
officials. That would be like if the billionaires in the UK were children of
parliamentary officials or if the billionaires in the USA were children of
senators and representatives. It's wrong to equivocate the Chinese situation
with simply having "connections." It's a fundamental structural difference
between China and "western societies."

Also, what you're implying in the weak sense is probably wrong. Billionaire
lists are easily found on the internet and if you look at the bios of the
people on such lists, I would assert the opposite - most of the billionaires
in western countries started out with few significant connections at all.

~~~
jacquesm
Gates: son of a lawyer, Buffet: son of a politician, Slim: son of a real
estate broker and so on...

Connections help. In a totalitarian society they help more.

The only thing that stops the situation from being much worse is term limits.

~~~
nostrademons
There's a difference in degree here too though: there's a massive difference
between "son of a lawyer" and "son of a central committee member". Gates is
considered one of the more privileged billionaires, because his mother was on
the board of directors for United Way and his father was a prominent lawyer.
That seems like a crack down from his parents being President or in the
Cabinet.

It also ignores counterexamples like Steve Jobs (from a working class, blue
collar family), Larry Ellison (Jewish immigrants who worked as modest
government employees) or Larry Page and Sergey Brin (children of professors).

~~~
maigret
Hm well professor is not exactly middle class either... Actually children of
professors are probably the best prepared to make a _great_ career more than
anyone else. Parents with connections, lots of knowledge and more time than
people working in the industry - that's the perfect mix. I know a few sons of
professors, they just surf through life.

~~~
zandorg
But even so, being a Professor is earned by hard academic work, and not
connections.

~~~
dimitar
Being a _son/daughter_ of a Professor isn't earned.

