I N T E RV I E W B Y E S T H E R YO U N G IMAGINECHINA Who Wants to be a Billionaire? Forbes Shanghai Bureau Chief Russell Flannery discusses China, ambition and the 2011 Forbes Billionaire’s List. CHINA'S NO. 1: Robin Li of Baidu R ussell Flannery is the senior editor and Shanghai bureau chief of Forbes magazine. Now in his 10th year at Forbes, Flannery compiles the Forbes China Rich List, Hong Kong Rich List, and Taiwan Rich List, and is the editorial liaison between Forbes magazine and its Chineselanguage sister edition, Forbes China. He talks to AmCham Shanghai about the recently released 2011 Forbes Billionaires List. Tell us a little about the list this year - how was the China list put together? The list was a really interesting this year for many reasons. For one, we had a new number one for China – Robin Li, founder and CEO of Baidu. We put the list together in several ways. We interview listed companies, of which we see more and more. When I started on this list – that was back in 2003 – less than 20 percent of the individuals that were on the list actually got their wealth from a listed company, and now, it’s the overwhelming majority. We also spend a lot of time ﬁnding data for companies that are not listed. That is also a good way as so many people are tracking China now – market research, investment ﬁrms, consultants. Another source is overseas stock 40 INSIGHT APRIL 2011 listings, outside of China. We also talk to a lot of industry groups, especially for companies that are getting big valuations and private equity deals. All this information is a good thing – we print 12-15 issues of Forbes in China and we want to be covering all of these companies on an ongoing basis, not just once a year on a list. We want to give readers an introduction to China. We want to be a bridge for readers who are outside China, let them know who’s interesting, who’s successful here, what industries are doing well here. Since you have this coverage about individual companies and individuals, why a billionaire’s list? Why put this together for China at all? Lists simply have a human appeal. Everybody needs a pecking order in life, in some ways, and it’s our wealth list that gets the most attention. We have lists for many things: dead celebrities, the worst places to start a business. Lists are nice in that they can boil down things that are complicated to something that you can glance at for three or four minutes but provide a good picture of what’s going on. Do you think the wealth list has gained in relevance? The billionaires list, I think, has become a window into the changing global wealth and economic landscape. On our new list, for instance, China is number two, which is consistent with what you see in terms of big macroeconomic numbers. China has just surpassed Japan to become the number two economy in the world. It’s also not only the number of individuals on the list; it’s the change every year that gives you some insight. For instance, I ﬁnd it very interesting that we have 55 individuals from India on the list, but we have 51 new people from China. The number of people coming on the list from China is larger than the entire population of billionaires from India. That means quite a bit: India has a great economy, and it’s on the move, but if you look at the overall magnitude of these two places, the heft is clearly in China. Another interesting number on the list is 12, which is the number of people who came onto the list through IPOs in the Shenzhen stock exchange. It compares to 10, which is the number of new people on the list from the U.S. from last year, bringing the total up to 413. The Shenzhen stock exchange produced more billionaires for this year’s Forbes billionaires list than the entire U.S. economy did. You can see there is a tremendous amount of wealth in the U.S.; with 413 billionaires compared to China’s 115, it’s still the biggest in the world. But when you’re looking at the ﬂow side, where things are happening – China’s the big story. Let’s look at the China list – 55 new billionaires is an impressive number. Was there something special about these entrepreneurs? Was there something that they had in common that may have fueled their success? I am lucky that I get to spend time with those in China who are very high up there – the most ambitious people in the world. Almost to a man, I think these are people who are focused on building. They are representative of an era where China as a country wants to make a mark in the world. The other remarkable thing I’ve noted from the people that I’ve met is their openness to new ideas and their interest in renewing their educational experience. When you’re in a fast paced environment like China, you can’t help but get caught up in this upgrade culture – you look for things that keep you going – and part of that is education. Is this correlated with a growth of innovation in China? I’m not sure just how much innovation there has been in China. I think that because the domestic market is so big, the reality is that you don’t have to be an innovator. You can be good at distribution and make a lot of money. I think, though, that there is deﬁnitely a structural change going on in the economy, and the days of relying on cheap exports are over. Everybody is cognizant of the growing need for innovation and upgrading. I think that many of the people that we are writing about have the resources to pursue that and have the smarts to pursue that. I would hazard a guess that many of the people on our list will have quite a bit of staying power. The Richest in China: China’s Top 10 1. Robin Li US$9.4 billion Age: 42 Organization: Baidu Source: Internet, self-made Residence: Beijing Education: BA/BS, Peking University; MA, University of Buffalo Marital Status: Married Global Rank: 95 2. Liang Wengen US$8 billion Age: 54 Organization: Sany Group Source: Manufacturing, self-made Residence: Changsha, Hunan Education: BA/BS, Central South University Marital Status: Married Children: 1 Global Rank: 114 3. Zong Qinghou US$5.9 billion Age: 65 Organization: Wahaha Source: Beverages, self-made Residence: Hangzhou, Zhejiang Marital Status: Married Children: 1 Global Rank: 169 4. Li Li & family US$5.7 billion Age: 47 Organization: Shenzhen Hepalink Pharmaceutical Source: Pharmaceuticals, self-made Residence: Shenzhen, Guangdong Education: BA/BS, Sichuan University Marital Status: Married Global Rank: 179 5. He Xiangjian US$5.5 billion Age: 68 Organization: Midea Group Source: Appliances, self-made Residence: Foshan, Guangdong Marital Status: Married Children: 2 Global Rank: 185 APRIL 2011 6. Wu Yajun & family US$5.5 billion Age: 47 Organization: Longfor Properties Source: Real estate, self-made Residence: Beijing Marital Status: Married Global Rank: 185 7. Hui Kayan US$5.1 billion Age: 52 Organization: Evergrande Real Estate Source: Real estate, self-made Residence: Guangzhou, Guangdong Education: BA/BS, Wuhan University; BA/BS, Wuhan U of Science & Tec Marital Status: Married Global Rank: 200 8. Zhang Jindong US$5 billion Age: 47 Organization: Suning Appliances Source: Retail, self-made Residence: Nanjing, Jiangsu Education: BA/BS, Nanjing Normal University Marital Status: Married Global Rank: 208 9. Ma Huateng US$5 billion Age: 39 Organization: Tencent Source: Internet, self-made Residence: Shenzhen, Guangdong Education: BA/BS, Shenzhen University Marital Status: Married Global Rank: 208 10.Wang Jianlin US$4.6 billion Age: 56 Organization: Dalian Wanda Group Source: Real estate, self-made Residence: Dalian, Liaoning Marital Status: Married Children: 1 Global Rank: 232 Source: Forbes Magazine – The World’s Billionaires INSIGHT 41 “ Everybody needs a pecking order in life, in some ways” The article related to the list emphasized the importance of technology in the rise of these billionaires. Do you think this will be a continuing trend? Yes. I think that China has beneﬁted from the mobility of capital and the mobility of technology and China very wisely spent a lot of money on infrastructure to pave the way for these things to be rolled into China. They have been responsible for all kinds of astonishing changes – hundreds of millions of people are online here, everyday, and buying mobile phones. I believe that as China’s income continues to grow, there is going to be a lot of room for wealth creation on the Internet. We’ll see more and more entrepreneurs coming from that space. Already, we have some – the number one, Robin Li. They will be highly educated, savvy and will be surrounded by very smart people. And they’ll be innovators in some sense, too. You touched on this a little already with the rise of the Internet, but are there any particular individuals or areas that you think are worth watching? Yes. I think, in the U.S., we’ve lost a lot of great American newspapers and journalists, but I think the media industry will reinvent itself, especially in China. There is simply going to be a demand for more and new ways for people to share information and enjoy themselves. The media leaders here in China – Robin Li of Baidu, Jack Ma of Alibaba – they’ll be monitoring each other closely. In the meanwhile, we have Victor Koo from Youku. To see how all these areas will intertwine will be fascinating to watch. I think the other area that will do well in China is transportation, as I think increasingly well oﬀ, intellectual, globally minded Chinese will be travelers for many years to come. Consumer spending and healthcare will also have a good way to go for growth. The 2011 AmCham Shanghai Manufacturers’ Business Council Conference Productivity: the New China Challenge May 12, 2011 | Four Seasons Hotel, Shanghai Faced with rising factor costs and government policies aimed at supporting domestic industries, foreign manufacturers are being forced to improve efficiency to protect margins. They are investing in operational improvements more common in developed markets, not China. Through a series of case studies and panel discussions, the conference, to be held Thursday, May 12, 2011, will cover key productivity issues facing manufacturers in China. Sponsorship opportunities are now available! Contact Sophia Chen at (86 21) 6279 7119 ext. 5667 or email [email protected] for details. 42 APRIL 2011 www.AmCham-Shanghai.org/2011MBC INSIGHT