Mr. China Read online

  The General came in to see us. He told us that in China there are two parallel systems in the media. One system, which gives the filtered version and concentrates mostly on good news, is for public consumption. The clearer picture of the Chinese reality is reserved for nei can. This nei bu can kao – ‘internal reference material’ – is a summary of the unvarnished truth to be read in private by the top leaders of the country. All the major newspapers produce a weekly pamphlet for circulation to the State Council and the ministries in Beijing. Local officials do not like their names appearing in nei bu can kao in connection with anything scandalous.

  ‘This,’ said the General, ‘is the weapon you must choose.’ Making a sudden gesture, as if to swipe something off my head, and using a reference to the formal clothing worn by Tang dynasty ministers, he said, ‘That Old Secretary, he’ll soon back down if you try to knock off his official’s hat!!’

  We put together a booklet describing our story in simple terms. The General said that we had one chance only so we had to be absolutely clear. The Chinese partner would exploit any hint of complication in order to confuse the issue. Over the next fortnight, we embarked on a campaign of saturation bombing. Every day, for two weeks, we sent faxes to thirty or forty officials in the Provincial Government.

  Then Pat arranged a dinner with several journalists in Beijing and gave them our story. It was one of those times when his skills for explaining complicated stories were put to the test; I knew it went well because the journalists had already heard of Mayor Shang. He had been involved in a case where some investors from Macau had lost a lot of money in Jingzhou and a lengthy and messy dispute had finally ended up on television. They were non-committal but I was encouraged when they said that the Central Government had recently started one of the periodic campaigns to track down cases of corruption involving government officials. We finished the dinner and they left with smiles but no promises.

  Three journalists from the Economic Daily and the Guangming Daily arrived in Jingzhou the following week. Whereas we had been kicking our heels in Jingzhou for six weeks, they managed to arrange a meeting with the Government within an hour of arriving and spent the afternoon with Mayor Shang and Chen Haijing. Chen appeared from the shadows for the first time, apparently having staged a miraculous recovery. He gave lots of complicated explanations, but no one was taken in.

  That evening Secretary Liu invited the journalists to a dinner. When I heard the news, I knew that the fight was drawing to a close. His personal attendance at a dinner meant that the Government was seriously rattled. The General had been right. Liu was worried about losing his official’s hat.

  On Christmas Day at about three o’clock in the afternoon I received a call from Chen Haijing. He had arrived in Beijing and he wanted to meet. I tried to explain that immediately after lunch on Christmas Day wasn’t an ideal time for a business meeting, so Ai Jian went to see him instead. He told us that they’d like to settle the dispute and wanted to know when Pat would be back in Beijing.

  Two weeks later, Secretary Liu himself came to Beijing in the cold. He sat irritably across the table as Chen and I went through all the tedious details. It was a long haul, but eventually the land went back in, Chen agreed to resign from managing the joint venture and we sent a new finance manager to Shashi who had to sign every cheque.

  Several weeks later we went down to Jingzhou to tour the factory. The trip was uneventful and operations were back to normal. I noticed one of the workers who had been in the stormy meeting with the Union, on his lathe in the little workshop. I waved at him and he returned a wide smile. It was business as usual.

  In the early evening, we shook hands with the new managers and drove out of the factory. The car left the city, passing under the gateways and over the moats, winding its way through the knot of hooting trucks and ringing bicycles. As it sped along the highway through the marshes, the sun set behind us. I looked at Li Wei and said, ‘Do you really think that Chen was ill, or do you think the whole thing was staged to try and push us out?’

  I couldn’t see his expression as he turned his face to gaze out of the window. He thought for a moment and then said,

  ‘Ey-aah, jiutouniao, jiutouniao! Nine-headed birds, nine-headed birds!’

  I didn’t know what he meant.

  ‘Don’t you know the expression? Up in the sky, there are nine-headed birds, but down on the earth there are people from Hubei!’

  The saying rhymes in Chinese and has a resonance to it. It went round and round in my head. I’ve never found anyone who could really explain what it meant. But for me, the nine-headed bird is a potent image of something strange and unknowable, with all the wildness, cunning and unpredictability that I had found in those marshlands in central China.

  Eleven

  The Bottle Finally Bursts:

  Nineteen Thousand Catties Hanging by a Single Hair

  Han Dynasty literary idiom; 202 BC-AD 220:

  a hundredweight hanging by a single thread

  or a moment of imminent peril.

  The fight with Shi up in the hills had revealed a powerful and explosive character. He was a man whom I couldn’t help but admire but the skirmishes with Chen had left a very different impression. After four years in a joint venture, Shi had felt that we were hopelessly bogged down in problems at our other businesses that were not of his making. It seemed to him that we had lost the ability to deliver on our promise; the chance to build the leading components company in China. Shi was stuck; other entrepreneurs all around him were raising capital on the newly opened stock markets, but Shi had already sold a majority of his shares to us so that route was closed. Shi felt that we’d changed our deal, so he came straight out and told us that he wanted to change his. This brings into sharp focus a core difference between Chinese and Western business: for a Westerner, a contract is a contract, but in China it is a snapshot of a set of arrangements that happened to exist at one time. When he tried to change the terms, Shi’s mistake was that he underestimated our determination to fight. He hadn’t realized that we had no option: there was nowhere else for us to go.

  Shi had been upfront but Chen just helped himself to our assets. Shi had stood his ground and fought for what he had built but Chen fled into the sidelines and manipulated events from the safety of his hospital bed. Shi had built something from nothing. Chen just climbed the bureaucrat’s ladder. In that sense, Shi’s fight was more honest.

  In the next battle, the final rout with its headlong tumble into chaos, we were repulsed and forced into a tactical withdrawal. The final showdown took place in China’s capital where we had invested heavily in three state-owned breweries.

  Shortly after we bought up three breweries in Beijing, just as the sounds of celebration started to die away I received a note from Xu. It was in poor English but seemed to be asking for ‘understanding that he had made some urgent payments while Chairman Pat was out of the country.’

  Xu was the Factory Director of the Five Star Brewery that we had just acquired. I didn’t take much notice at first, but asked someone to get me a cash balance from the joint venture. I was told that there were only a few million left in the accounts. It couldn’t be true. We had wired over sixty million dollars into the account in early February so I asked again. The answer was the same so I called the brewery. Xu was not there, but his finance manager told me that a number of large payments had gone through the account and that there was now only five million left. About fifty-eight million had been transferred out over the previous three days. I was speechless. How could that have happened? The signature cards lodged at the bank required signatures from our side before payments could be made. It couldn’t be true. As I tried to understand what had happened, Pat called in from the States. After I had gone through it with him and explained that fifty-eight million appeared to be missing, there was a long pause and then: ‘We gotta find that fucking money or it’ll be time-out from the investors!’

  The beer market in the early 1990s
produced a great deal of froth. Multinational brewers piled into China, mesmerized by the prospect of a billion thirsty beer drinkers. The market was already the second largest in the world and the signs were that it was about to explode.

  I knew that China had a long tradition of distilling spirits from grain and sorghum and I had been well trained by Mayor Huang in the art of weathering raucous banquets where the initial formality quickly collapsed under a deluge of baijiu. In imperial times these banquets, with their elaborate drinking rituals designed to push the guests to the point of mental disintegration, were reserved for the rich and cultured.

  Drunkenness was almost considered a virtue. It was said that the best poetry and calligraphy came from artists in a state of deep inebriation. The story inevitably came up at banquets of Li Bai, a Tang dynasty poet who wrote a thousand years ago:

  How many great men are forgotten through the ages?

  Great drinkers are better known than sober sages . . .

  I only want to drink and never wake up.

  His wish was shortly fulfilled when he drowned in a pond. Blind drunk, he toppled in during a conversation with the moon’s reflection. His accident was invariably billed as the ultimate sacrifice in pursuit of art rather than as an idiotic thing to have done. Despite these ancient alcoholic traditions, beer for the masses is a recent development.

  The Germans were the first to introduce beer into China at the turn of the last century when they built a brewery at Tsingtao on the Shandong coast. First tastes of the new drink confirmed the local suspicion that the foreigners were incomprehensibly barbarian: beer was bitter, sent clouds of stinging gas up the back of the nose, and bloated up the stomach painfully before reaching the head. But gradually it became more popular. The Russians followed shortly afterwards and in 1915 set up a brewery in Beijing called Five Star. They built a strangely-shaped oast house with turrets, Gothic arches and a kiln for drying and storing hops. An image of the building was still used as the trademark of the beer produced in Beijing the last time I looked.

  Over the following decades beer gradually became more popular. Hops were brought in from Xinjiang in the far west of China and the local barley malt was adapted for brewing. More and more locals acquired the habit, but even in the 1970s beer was a luxury. As the Chinese economy opened up during the 1980s beer gradually became popular and hundreds of small breweries sprang up all over China. A brewery was a status symbol for the local Party Secretary. It not only provided employment but also implied subtly that the water was pure and that there was enough money around to indulge in modest luxuries. By the beginning of the 1990s there were over eight hundred breweries all over China churning out beer of dubious quality, mostly on a tiny scale that was hopelessly inefficient. But these problems were hidden and, on the surface, the market appeared to be huge. Government statistics showed explosive growth; China overtook Germany as the second-largest consumer of beer, guzzling nearly ten million tons every year. With the economy booming and wages rising, young Chinese flocked to the bars, pockets full of cash, in search of a good time and beer consumption went through the roof.

  The big multinationals that came to China had one significant disadvantage. Famous brand names such as Budweiser, Carlsberg and Heineken meant nothing in China. They might as well have tried to launch Chinese brand names such as King Benefit, Cloudy Lake, Clock Tower or Dragon-and-Elephant in the States. The real prize for a brewer serious about the Chinese market was to capture a famous local brand.

  Despite the huge number of breweries there were really only a handful of nationally recognized brands in China: Tsingtao in Shandong, Snowflake up in the north-east of the country and the two Beijing breweries, Beijing Beer and Five Star. After Liberation, Premier Zhou Enlai had encouraged Tsingtao to be China’s national export brand so it became well known outside China. He chose Five Star as the premium domestic brand and from then on it always appeared on the banquet tables in the Great Hall of the People.

  Five Star grew into the largest beer brand in China by licensing its trademarks to local breweries all over the country. In return for a royalty based on the amount of beer produced, Five Star agreed that these breweries could sell beer under the Five Star name and use its labels and the famous blue logo with the five white stars. For the consumer it was all Five Star beer and often they didn’t know that it had not been produced in Beijing. By 1993, Five Star had forty-eight licensee breweries all over the country churning out more than a million tons of beer a year. It was the ultimate prize for a foreign investor in this exploding market but something that appeared hopelessly out of reach. However, we had set our sights high and in early 1994 we got a lucky break.

  In January of that year, Jenny Jiang walked into my office and demanded a job. There was a lot to do and I couldn’t think of any reasonable objection off the top of my head so she started there and then. She had just graduated from Fu Dan University in Shanghai and had an unusually dominant character. Tall and sinuous, she had an athletic appearance and a brisk manner that told you she would brook no nonsense. She became my assistant dealing with the breweries and we worked together for five years.

  During the Spring Festival in 1994, Jenny was invited to a dinner where she met a mid-level official in the Beijing Government. He had been intrigued to hear about Pat’s investment strategy and asked her whether someone might like to visit the Government. I grabbed the chance to go.

  The Municipal Government of Beijing presides over its citizens from behind high, nondescript walls along a leafy lane called Justice Street just east of Tiananmen Square. Inside the compound are groups of buildings that look like colonial houses, with shutters over the windows. There are walkways and roundabouts and neatly planted fir trees and the first impression is one of businesslike efficiency. But after a while I sensed an air of soporific exhaustion, more like something you might expect in a career bureaucrat’s retirement home.

  As we sat inside on a huge dusty sofa waiting for our hosts, I took in the surroundings. The room reminded me of that first trip to the Land Bureau in Shanghai all those years ago with the boys in pinstripes from New York. It looked as though it had last been decorated in the 1930s. It was lifeless and exuded a strange heaviness. There was a smell of dust and old furniture polish. The dark-painted wood, thick maroon carpet and the clock slowly ticking in the corner made me want to tear open the suffocating brown curtains and grimy windows and let in the light and air.

  When the officials finally arrived, I saw from the name cards that they were unusually senior for an appearance at a first meeting. I went through my normal introductions and the assistants scribbled in their little brown notebooks. The meeting was uneventful but the next day Jenny received another call. A tinny voice at the end of the line said that. ‘It all went so well that we want you to come back. Today, if possible.’ I was puzzled but made no comment. The next meeting was the same as the first except that the officials attending had real power. Layers of secretaries and assistants normally protected the directors of the Investment Bureau and the Planning Commission and they rarely appeared in person. They listened politely, without commenting, and asked me to come back the next day.

  Pat arrived back from one of his trips to the States that evening and attended the next meeting. We were shown into a huge meeting-room where Lu Yuchang, Deputy Mayor of Beijing was waiting with a dozen bureau chiefs. Each bureau was responsible for an industry sector and we soon found out that the one responsible for the breweries in Beijing was the First Light Industry Bureau. In a matter of minutes, Deputy Mayor Lu instructed the Bureau Chief to arrange a visit to Five Star. It was a bizarre stroke of luck; an introduction from the Government would surely get attention at the brewery.

  Two days later another call came, inviting us to a fourth meeting. We arrived at the gates of the compound and were shown into the same fusty room. As we walked in there was an audible hum and a huge array of lights was switched on. The Mayor himself walked from the shadows and shook Pat by the han
d. A battery of cameramen and sound recordists stood at the back of the room as Pat sat next to the Mayor and exchanged platitudes. Moments later, the lights went off. Blinking and confused, we were whisked over the road in a line of black limousines to the Beijing Hotel for dinner with the Deputy Mayor.

  This weird sequence of events, culminating in the televised meeting with the Mayor, a member of China’s Politburo, had taken about ten days. It would normally take months of patient lobbying to see a deputy director and a meeting with the Mayor would be unobtainable for an outsider. The real motive behind these events was only clear in retrospect. It came out a few weeks later that the State Council had been worried by the slow progress of trade talks with the United States. The Mayor just wanted to be seen on television with an American investor. As always in China, it was a matter of politics and the officials withdrew afterwards as suddenly and silently as they had appeared. But we had our prize: the introduction to Five Star.

  As we drove back late from the dinner, I was thinking about the officials that we had met. I didn’t like them. Their remarks were so predictable that it betrayed an inner reserve that was spooky. I couldn’t decode their hollow flattery and elaborate words but I felt a heaviness and exhaustion about them. It was as if a vast weight had crushed out all the joy in their lives. It made me uneasy. I said that I thought I could hear the echoes of the gunfire in Tiananmen Square resonating in those fusty corridors with their high ceilings and antimacassars but Pat was scornfully dismissive.