#134 Tell-All Book Reveals How Business Is REALLY Done in China
on this episode of china unscripted a tell-all book into how business is really done in china the chinese communist party does not want you to read it welcome to china unscripted i'm chris chappell i'm shelley chung and i'm matt guenesta and joining us today is desmond shum author of the new book red roulette an inside story of wealth power corruption and vengeance in today's china desmond and his ex-wife whitney duan did business with the highest levels of the communist party elite until one day in 2017 the party disappeared whitney with no explanation desmond's book talks about their rise and fall and exposes china's hidden corruption uh desmond thank you very much for joining us today thank you for having me so desmond your new book uh your new memoir red roulette just came out um why do you think the chinese communist party is so afraid of the book i think it's uh the first time i mean really it's the first time somebody have that intimate con interaction with them actually come out to tell a story so you know same as your program unscripted story by the ccp right yeah well you you were you had like first-hand knowledge and you you were there as you know the west kind of uh the whole economic buildup of china you saw that all happening right yeah i i you know i think one of the things interesting is uh you know as i have said you know my rise uh mirrored the rise of china well and on that topic i know uh the chinese communist party put a lot of pressure on you to make sure or to try and convince you not to publish this book why don't you tell us a little bit about that uh the friday before uh wall street journal and financial time both public story on my uh on her situation and of my upcoming book on your your ex-wife yes yeah yeah whitney's situation and uh and my upcoming book and then she called me i got you know i got a call she called my cousin and then she called my mom because it was middle of night on um sunday morning so the two of them text me and said well whitney called him and asked me to call her back so that was which was unusual because the communist party had detained your ex-wife how many years ago was that four years i actually i picked a publishing day of my book uh you know to be on the anniversary of offer four four years disappearance yeah why did they detain her again nobody knows they never even never acknowledged they have taken her so her parents i mean i kept in touch with her parents i mean her parents you know never never heard a word over them from the government i keep telling them you know you should maybe try to go to the police just say well we have a missing person to see what's the reaction but they were they were too afraid they were too afraid they didn't even go to the police and her mom like rang her phone every day and and obviously the phone line was dead so she just disappears no explanation and you two have a a young son who was eight years old at the time i believe right you haven't heard anything from her nobody has nobody yeah until now right before your book gets released that's right what did she say to you what [ __ ] shoot first i mean first you should actually we i you know asked her to talk to my son it was uh six o'clock in the morning i wake up very early like 5 30. i call her six so i first asked her to speak to my you know speech to our son because i wake him up so he hasn't he hasn't heard from her for four years so that was that was a bit you know that was a touching moment actually she was asking him how tall are you what's your weight now um are you doing school and then and then afterwards she asked speak to me separately and um and then she was um she asked me to cancel the book launch uh um she you know so on tuesday and but that was sunday uh and then she was uh she asked me to you know cancel the book launch did she say why she wanted you to cancel it no no she didn't say why i know um she did just say you know i should cancel i wonder how she heard about that book in the four years she was disappeared for yeah i'm you know i'm sure you know i'm actually surprised the beautiful i mean that's two things kind of one is stupid and one is surprise uh stupid pie is like you know some bureaucrats just in beijing they might they must imagine that you know you can disappear the book like china right and a snap of a finger books are coming off the bookshelf across china i mean you know on by you you call me on sunday the book supposed to come out on tuesday then the books are already in the bookstore or on the way to bookstore even i want to do anything that's beyond my hand so it's uh it's kind of ridiculous to even make that request and then surprise is i'm i mean you know looking back and it's really surprising they are you know for once they're acting so so quick you know so efficiently you know the articles come on tuesday uh on friday and then shoot at priya within a day yeah i mean if you could have pulled the book would you have no no i wouldn't i mean it i didn't start the book for for publishing i mean i i started a book a year after her disappearance as a gift for my son and i wasn't thinking of publishing him because you know was i know how personally costly it will be you know if i publish something like that so i was just writing a book because my son was you know getting nine years old he'd go online he searched you know research about his mom because she want to know who she is what she have done why she has been disappeared so that was that you know so so i said well instead of you getting all the rumors on off you know on off the internet let me give you um give you a gift that's my account of who we are and what we have done and then in my view it's uh you know you can stand up tall and nothing to be ashamed of that was my starting point of writing the the book well what was the story you wanted to tell your son in in the book i was uh i would just you know i think i would just want to say you know say things i see it say things what i experience and what you know i just laid it all out as you probably i know as you have read the book and you you know i'm i'm not really making a accurate you know accusation on you know this and that you know i'm just saying this is what happened this is what i done this is what i saw this is what i experienced this is what i feel at the time and clearly that really threatens the chinese communist party yeah apparently so yeah now you had said earlier that your rise mirrored the communist party's financial rise uh could you explain a bit about uh what you mean by that and and some of the specific experiences that you've had over the last couple decades in china i think you know i went to i i went to um china start traveling to china in the early 90s and i was the first batch of private equity professionals going to china i was working for a u.s firm and at the time i remember you know i was we were mostly investing in foreign companies going to china and then we were trying to invest into private enterprises in china but at the time it's tiny all the companies are tiny i mean in the early 90s you know if they do like couple millions in revenue a private company that's that's considered sizable uh you know sizable companies and today obviously you know you know you look at you know uh evergreen right you're talking about two what 2 trillion rmb so what 300 million of uh debt right right 300 billion yeah it says really 300 billion of debt it's just a very different scale now isn't it yeah so what's interesting is that i know as you were doing business in china you were actually pretty well politically connected yeah well you asked i mean i felt when i first started wasn't i was just you know i was just this foreign educated kids from hong kong coming back to the homeland and then trying to do something and i i moved to beijing in 97 the company the u.s company actually moved me to beijing to run their office in beijing and shanghai and and i i left the company in 2000 i sort of try my hand in the entrepreneurial rank and um it's after meeting uh whitney um that's that's when you know i sort of seeing seeing what's behind the curtain behind the doors you know by the time i met her i had been running around in china for 10 years right i mean i've been you know doing business in china for 10 years i mean we did not small deals right i mean we we invest i you know we i was involved in a first internet it's still listed it's the first chinese tech company list on nasdaq and i was invested you know i was a i was a uh involved in that so i mean i had plenty of experience doing business in china by that time but until i met her i you know i mean as i lay out in a book i mean i don't really know how to speak to this group of people i mean they have a lot of code languages uh i don't really know how to behave you know i was you know i was behaving just like you know a regular person would behave in a in a free world but actually you go into a room with this group of people everything change you you you speak a different kind of language you sit differently you you you you know you behave differently you know you knock your wine glasses differently with them it's it's an entire different experience and then until somebody sort of introduced yours to you to to that world and guide you along the process you wouldn't able to do it where do you think that different behavior comes from it comes from i think that well i believe is that the communist party is a very hierarchical society and then structure everything by go by political power and then every rank has a different level of political power and then it's paying respect to their power what's an example of that like a simple thing it's like in the chinese society in general you will say well the elderly are the respected person right like a family gathering you will have the elderly sitting at the top of the table right i mean that's just chinese culture but you go into that room let's say you have 10 people 10 people 10 percent dinner the seating is basically go according to the ranking and it's very very specific everybody know where exactly they should sit and then you have like you know couple people sort of being uh modest the lower ranking officials being modest and then trying to fight for the last seat say the the most humble see so to speak around the round table and then you have that but everybody know who she sits on which seat so it's kind of like a subversion of traditional chinese culture it's then now based on communist party hierarchy and ranking yeah yeah i know people talk a lot about uh how important guanxi is in business dealings in china uh relationships what's what was your experience with that it is uh it is i mean it is shocking and then in a way in shocking it is is how what actually does that mean how that guangxi is actually built because you got a lot of people you know you know foreigners coming to china claiming they have ko and ko guanxi with this and that and then you have this you know hong kong people coming to china and then they have guanxi with this and that you know and then to average person it's you know it's just like oh okay yeah he has a photo shot with that person oh yeah he actually went to the dinner with that person and they assumed that some kind of guanxi it's actually absolutely not you know if you see in the book i mean it is very very different type of relationship you know in a way to build guanxi with power you need to submerge your humanity you need to put yourself down to to to serve the that person at the top and and then you're trying to anticipate their wishes and and then do better than the next guy who is also trying to uh curry favor from the from that person so it is a very humbling experience to say the least it sounds very dehumanizing there's no such thing as like human to human wow so like how how do people have to sacrifice their humanity for this you put other person's interests ahead of yourself in all situations you're trying to anticipate what would it possibly like and you get there and prepare for them before they ever arrive and then you know and then it is it's not just that person is everybody you know that person may be like his son-in-law okay or his son you know he's like okay that his son want to get to uh you know um just came back let's say give example something just uh or the daughter just uh went to western education went to harvard just came back ah and then you're trying to that's a 20 something year old right and and and then you're trying to build relationship with that person because you know if you do that and help that that boy or the girl the the the his father gonna his scholar father gonna like it so you're gonna like have coffee that person who have their kid and it's like oh what do you want oh you want to get into a pe firm let me find your job in the pe film oh maybe you want you know two years from now you want to build a pe firm by yourself maybe let us help you you know it's like all of those things it's a you know it's this kind of this kind of things is they call it that's the real one it's like a completely different type of relationship is it you're trying to someone so like merge into their family right yeah well it's it's funny because i could see that actually ending up making the business environment in china much worse like if you're constantly hiring people who aren't actually knowledgeable or skilled just hiring them because of their connections that would result in people being in positions of power that shouldn't be there well you know those that's like a a course of doing business you build in you know redundancy and then you have another you have another person do the real job yeah remember that whole uh was it jp morgan a few years ago that had that scandal with like just hiring a bunch of principals the sons and daughters program yeah yeah i mean maybe that was a little too blatant yeah but then they got them in trouble but from what you're saying this is basically how it how it works right that's that's that's how it works i mean you know jp morgan let's say they want to get a get into ipo uh sponsorship with a major stay on enterprise that son and daughter can call on his parents or his uncles and say well get me you know get me a meeting with the ceo of their stale enterprise my boss wants to meet that guy and that's a meeting that's a meeting that you know other bankers wouldn't be able to do and that's what you're paying the kids for you mentioned in the book uh that whitney your ex-wife really learned how to build these kinds of relationships and how to kind of handle and deal with chinese officials pretty early on how did she get that experience and and what did she do that kind of led to her like really rapid rise uh in chinese business i think you know as many things in life a lot of coincidence and it happens together and then you it mixes mix up it comes together and it becomes something else at the end of it she came from a very very humble background i mean i came from a humble background my parents are both secondary teachers i mean her situation even worse i mean she come from basically a countryside in san dong and she her parents didn't believe she can get into university they sent her to a vacation school to be a car repairing uh repairing mechanic and then she should believe she can do it she'll study on her own and then took the exam twice the the school entrance uh university entrance exam twice and get into the university and what happened afterwards is really prepare her you know for for what happened you know for what happened 20 years later is she you know she was a star student in a university she graduated top of the class and then the university asked her to stay and become a secretary to the president of the university and that's a military's uh it's a it's a university related to the military so she very own gets you know accompanying the the president university see meeting with the you know seeing how meetings are done at the senior official level and then and then from there she was she got seconded to um to be a junior bureaucrat in a county so she'll spend i think two three years there and at that level and that situation should get to see how sort of most um you know how how the how the system work at the bottom right i mean the county level how the officials relate to each other how things actually get done on the ground and in her situation the head of the county actually was arrested for corruption and a lot of backstabbing according to the story she told me and then she just got really disappointed and disillusioned by the by how how the system actually works and how corrupt it is and then and then she decided she wanted to try out her luck and her commercial work and then she should start her career with again a real estate development company uh belongs to the military in the 90s um military engaging you know all sort of uh commercial activities because the the state was bankrupt the military was making money just to support themselves so from that level she also you know she also get to you know what you should get to learn about real estate development the other thing is how the stay on enterprises work so all those experience come together so enable her to hone her skill in you know networking at a most senior level in beijing a decade later well it's interesting how you kind of talk about how she had to learn how guanxi works within the context of the chinese communist party because that kind of flies in the face of the idea that like oh this is something from traditional chinese culture it's it's obviously not it's something that you have to learn even if you are a person from mainland china it's something really just awful and foreign that's kind of forced upon you yeah it is uh it is it exists in the context of chinese culture but it's very it has a it's a it's a completely different thing it's peculiar in in its own on its own sense um you know so it has a background and context of the chinese culture but they have been trusted to fit the system and so it must be very challenging for any kind of foreign businessman coming into this environment even coming from hong kong oh yeah coming into this environment trying to figure out how this game is played yes yes absolutely i mean that's that's why i know i've i i believe the book will be very interesting for somebody even you know it just just you know somebody want to do business in china and today you know you know now i'll show you how the game is actually played well that's that's that's the key so the the big thing is like you were saying that back in the day you know a lot of uh the pla controlled a lot of the businesses uh and so basically from like you know the 90s 2000s there was a sudden uh swell of so-called private chinese companies um but really what is how private can any company be in china yeah i think i think it's very um you know we a lot of times the west and and use the same term on a chinese company and the chinese use the same term as the west on on their own situation actually they are referring to very very different things i think the west is a somehow some sort of naivety because the calling then the name the the calling sounds the same and it must be the same thing and uh and the chinese actually i think that is uh there is a part on the chinese of i would say intentionally misrepresenting so you know as you just saying that a private enterprise what was so private about a chinese company no no i mean that that where in the in the eye of the party you all belong to the state and a conscious and subconscious level all entrepreneur is aware of their risk and when you started running your own private equity in the early 2000s right or 90s so like well that is with the u.s
company and then go on after 2000. yeah so like when you started going on your own what was your awareness like did you feel like you were starting a totally private company and then realized that it couldn't be private or was there some other uh like change in your understanding uh you i was getting my introduction of uh the real practice of of china you know at the time when i first started beginning of it i was doing a telecom software company and then you're starting uh to deal with the the officials in this uh stay on telecom companies and um you're starting to get the education of okay this is how things are done but you were like you were coming into china essentially as a as an outsider right yes but the communist party in their view your telecom company still belonged to the state at some level right in their view in their view is you are private as long as long i allow you and and and if i need to let's say conscript you for this course of the state that's just a snap of finger and a decision on my part so you have to do it otherwise you get what shut down no they just replace you with somebody else or you can be disappeared clearly that's an option obviously i mean when you when you started getting into real estate development yeah this is something that's interesting to me because so much of the wealth in china now is like built on real estate development and i think a lot of people don't really understand how that works could you explain to us a little bit about how how like that kind of real estate transaction works so what's the role of these chinese communist party officials and their families in this well first of all i think real estate you know it's a it's a peculiar asset class in the situation china which is very different from the rest of the world i mean the rest of world you have all sort of financial assets to put your savings and area incomes into but in china essentially because the stock the stock market has been so volatile is uh you know and then it's not really you know it doesn't it's not related to fundamental analysis it's so volatile it's completely policy driven and there's so many crashes happen in the past the the general public just don't want that money to put into the stock market and then china doesn't really have a have a debt market to say and so so what happened was that almost all uh individuals you know put their money into real estate you know because that's only asset cost is widely available and then so so so real estate becomes you know almost like a a mechanism for people to save their deposits to save their money and you know almost like a deposit so so so in that sense a real estate is a very very different asset class it's from from the west rest of the world uh in terms of uh as a developer i mean it is a industry that has um that is very heavily regulated you know in a book i gave example i did not project i need 157 uh serial approval just to complete that project and each ceo approval it comes from one bureaucrat and and every one of them i need to work on so it's a it's a very very um heavily regulated project and then this uh it's completely added sort of form of the government uh in many cases but like to get those 1757 you know official seals what do you have to do you have to you know as i said you know you have to submit yourself to to the power in front of you you know i give example you know i i need to drink a bottle multi every every meal for like you know four years a bottle yeah that's uh like half a liter how did you survive uh half a liter 53 percent of liquor and then i have you know i have a team of uh um employees they do nothing but to entertain uh serve those are bureaucrats that's just the way it is for us that's that's incredible well i know uh you mentioned i think in your book that uh 2008 was a was a year that you felt things changed what happened 2008 i think really has is a watershed moment for for for china i think what happened was um i think before eight before the the financial crisis there was a lot of uh the debate in the society at large and very often at the top at the top of the leadership level it's not about whether we want to be like the west or you know we're going to grow the router rest where the model you know copy the web model of the west or not it's more about what pace are we gonna you know uh uh go along on their route and and the financial crisis really really changed that i think from that moment society a larger energy also the leadership definitely is looking at it and say well look at the entire world they are crashed and burning and look at that we are doing well and then if not for us holding the exchange rate the rmb exchange rate steady asia would have gone down so you know we are sort of the savior of the world in in a sense and also they then they they re-value their situation they say well maybe more west model is not that great at all and then maybe our model is not that bad so so that really changed the perception uh the belief of how they look at the west and how they look at their own uh development and economic model and another part of it is a view of the state of enterprise in the past it always has been um let's retrench the inefficient state-owned enterprise and let the private enterprise and the foreign company advance in the economy so that's a general sense of that but but the financial crisis really because at that moment they said well okay you know i want to you know inject another 400 billion into the economy and i would do it and then that more obviously the most the quickest way to do it is through the state of enterprise because they want the price basically you know they say well okay i'm gonna the bank's gonna give you a hundred million tomorrow and then in a week you're gonna start spending that 100 million right they can give direct orders like that and and then and this private enterprise you cannot right you have to you have to sort of you know put out policies run about encouragement you know encourage companies to invest and all that it's a very different way of management right so so they say well okay well maybe you know it's very important it is very important for us to keep uh that state of enter stay on enterprise have having a central in the economy because we can actually direct them at the step of the finger so so so all this come together and then always you know underneath all that the bureaucracies always have a tendency have an urge to exert their influence except their power right i mean if a bureaucrat i'm not sitting in a minis ministry all i do is look you know directing you know helping sort of the private enterprise to events what's my power where's my power the moment is well but tomorrow onward you have you know you have to to stay on a price under your direction and then you can direct them how to spend 500 million hey man he's all for it he's all for it so that's the the system always baking has this urge to assert yourself uh in the economy so so all that you know so all that come together you know so you know after the financial crisis things really start changing so basically it went from a sort of shadowy control of the chinese communist party over private enterprises to just more direct party control yeah i think it went from reluctantly letting you guys grow to say to the to to a state of like okay i'm gonna reassert myself you guys gonna come on you know you guys need to retreat you know get put in a retreat you guys just you should step back a bit you had an interesting anecdote about um having a party secretary in your company right could you can you tell us about that yeah after the financial crisis they uh never before i mean they they start you know i have a joint venture with the stale enterprise so although i'm the majority shareholder and then i was the ceo they requested that i put in a party apparatus requested well i mean how can you say no right i mean what happened like and and then they're putting up your ipad and then they appointed a party secretary to my company and then and all of a sudden i need to you know i need his consent on many many corporate matters and a change dynamic of uh management yeah what are some specific uh business decisions that you had to make differently than you would have otherwise because of pressure from the party secretary everything i mean everything i mean he you know i need to cons consult with him on everything because you know you although he doesn't have a official title to to be the manager of the company you just like you know you have you know he he you upset him and he's gonna run back to his uh his uh his uh you know he's uh superior and then he's gonna create great trouble for me you know you know you know and then so so trying to sort of make it almost like a not a co-ceo per se but at least a junior co-ceo and so like you had to develop this relationship with him as well to just make friends with him right and make sure that he yeah he was agreed with you um geez let's just can't imagine having that like like in our small company i'm just imagining like the us government or like one political party says like oh you have to now have this person deciding like what episodes you're going to produce or what topics you're going to cover like that's insane to me but it sounds like that's just the norm of what happens in china yes well that in bottles of mother yeah oh man you know how does um how does the party apparatus kind of how does how do the families of party officials come into this like we talked a little bit about you know the private equity having to hire like the sons and daughters of chinese officials um like how much of the wealth is is in family members of the communist party what happened is basically you know some of the family actually designed in such a way i mean i call it you know i call it red aristocrats uh my in my book and then it's called by bloodline and like a medieval you know aristocrats and they they some of the family actually design in such a way so one um like the daughter going to the private business are going to run the business and the sun go into political system so the the family has a one leg on each side of the game and and then a lot of times i mean so superior question i think every government official or every yeah every bureaucrat has their finger in some port you know um i remember like 30 years ago when i started doing business in china we used to have this joke you line up you know china has a quote and called very stringent punishment for corrupt officials right so like 30 years ago we have this drug like you line up all the communist party member against the wall you shoot them one after another you're shooting too few of them you're missing a whole bunch of corrupt officials and but you shoot every one of them you're probably shooting a few too many because uh some of them actually may not be corrupt but you know by that you buy by the police then the you know today's world you shoot all the 95 million members i don't think anybody would be mistaken well sounds like a very very functional system either way this is why you know xi jinping's so-called anti-corruption campaign and i think the western media often frame it as going after corruption but basically if every party member is corrupt then clearly this says his campaign has nothing to do with corruption and merely he's using corruption as like a legal tool to go after the specific people he wants to go after i feel i think i have a few things to say if one is his starting point when he start this is definitely a political uh cleansing program to assert his power and grab power uh from from different fashions on from possible political rivals that's definitely stopping point some of those did try to do a coup against him so yeah and then but he also i do believe he does want to have a cleanse of the system to us at the sort of the junior level so to speak right but if you look at the history of 70 years of communist party this kind of campaign has been going i mean having recycled itself and re every every few you know every few years every few you know every decade or two it has always you know has this but never it never has a lasting effect because the structure of this is baked into the system i just give you example you know the centennial party celebration right um celebrating the the communist party the ccp's 100 years anniversary in the london reports that about this seven busload of uh red aerospray went on to tiananmen square stem same besides xi jinping and watched parade right there's seven busloads they are the cream of the cup of the red error square they have if you look at them they have no official title they are just supposedly quote unquote average citizen they have no specific contribution you can name to the city to the society or to the country the only reason they can go on top of the tiananmen square and stand next to the party chairman and the president of china as he almost equals is the by block line the only reason they got that they have this kind of position is gun bloodline so they are the you know the true you know i actually would call them the true owner of china you know a lot of people you know have just say oh communist party this and parliament community party debt colonies party is made by people these are the people who actually own the communist party it's it's interesting like you really frame it as like just systemic corruption within china within the chinese communist party i think i know why they didn't want you to publish your book go ahead well for all of that well i mean i think there is something really you know like you said nobody's kind of shown the nitty-gritty of how how to do business in china and how it works especially from you know the real estate side and talking about having to uh you know develop these relationships with all these officials and what you have to do to get your 157 chops your seals right like it's really interesting because i think there's still this naivety from you know american businesses um entire industries who go into china and they're like oh well we're just gonna like you know first it was you know this industry then it was you know like manufacturing then you know uh private equity now hollywood now like you know it's just like wave after wave of these companies being like oh we can we can do it it's it's just gonna be easy uh and then kind of coming but like nobody talks about what it's actually like because they don't want to harm their chances of doing business in china yeah that's true that's true although you know maybe i can look at your book as like a how-to guide because now i know how to do business in china all i have to do is sacrifice my humanity uh develop relationships with you know hundreds and hundreds of party officials and make friends with their children drink enormous amounts of mother liquor uh until i'm almost dead and and and i feel then i'll make it that's a very good uh go-to guy you know too and it actually works but the point but i feel like the point of your book is it doesn't matter even if you do all of that if you do all the right things it's still going to come back to bite you because maybe the people you are developing guanxi with they're in power now but maybe someday in the future a rival faction is in power and then suddenly you're on the outs because you're connected to the wrong people so you're saying i should have read his book to the end that's that's why i mean we you know we sort of we we every entrepreneur in china know the game they're playing is extremely risky and the risk is not you know nothing to do with it's not business risk it's completely political and you know just just my employees you know a middle class employee just the moment they start having some cash they open account in hong kong and stash some some of that away and then the bigger your business is the more you stack your way because you say well there's a lot of risk in harry there's a lot of political risk inherent this system i don't know when they're gonna you know take away my my private property let's stash them away off of you know successful way far away from the hand of the ccp so how much of this wealth is ending up outside of china and like invested in the us and real estate or other businesses i wouldn't know the number but it's a tremendous amount how about you yourself when you started to make a lot of money in china yeah yeah i know i showed in the book you know one of the conflict point between me and my ex-wife was how much we should you know diversify away from china she believed china has a brighter future we should concentrate our bets and i have a i have a different view so that is one of the fiction point of our marriage i think that's one of the sad things about the story of your of your ex-wife is that you know she obviously was a very motivated person she obviously cared a lot about china tried to rise up through the political ranks thought that was corrupt it like she seemed like she really like you would think a normal government would like somebody like that instead she ends up disappeared i think yeah i think that's one of the saddest part of uh you know our experience is we really you know if i may use the word patriotic we really want to build something uh with china and for china you know we you know as i you know talked about in the book very early on early 2000s when we first started making some serious money we start going to charity i mean in china charity there's no test credit for it i mean it's a direct deduction of your net worth and and we have been over the years you know sponsor academics we give the library to chiang you know to my knowledge today i'm still an honorary trustee of ching hwa university and then we really want to you know help china build china and this is what we end up with and this is just you know it's a it's a it's a lesson for a lot of people i think when was the moment that you became disillusioned i think it's two three years under uh into xi jinping's first term so it's 2014. well i mean you know it starts earlier than that it starts you know when you know i talk about the party apparatus the party you know eventually that you know i sold that company and one of the main reasons i sell that company is just this is unmanageable you can you can run a business like in that kind of situation and then i may as well get some money out and then let's do something else so i'm starting to have a second thoughts about this path we are on and then you look at xi jinping's situation you know i remember uh vividly i think the first year uh uh in his administration i i'm a member i was a member of you know ccpcc or something like that another politics consultation party i went to a um they called uh uh a meeting uh with many of us and then essentially they they said well okay political consultative you know supposedly there's a very prestigious uh uh political setup i mean jackie chan is in it uh we used to hope we're advised and sits on you know advise the government or whatever but basically he's saying that you know basically democracy is not on the agenda by any means essentially that's what he's saying and then you listen to that you're like whoa whoa i thought we are going that way obviously that door is shut and permanently shot yeah yeah now uh it's interesting that you were on the cppcc the chinese people's political consultative conference council conference conference a lot of acronyms so but but but you're the only person we've ever had on our show that was in the cppcc so what is that like we are voting machines like you're going there and everything passed by you know let's say you're six about like it is 600 something members everything you know you have maybe two or three absentee votes and the rest is all agree right you just like emotion comes up you raise your hand emotion comes up you raise your hand it's just a voting machine how do you all get so unified well because they structured a meeting and conference voting in such a way so every time you know a promotion comes up they say okay if you agree raise your hand right it's a public vote if you disagree you raise your hand it's like hey man they're looking at you who's going to disagree right and then there are a few things in a year that's a supposedly secret ballot but they make sure everybody has line is a line it's a fixed lineup you know it's like one lineup you know you you cannot say well i'm gonna vote first that's no such a thing you're gonna line up to the next guy and the guy before you know and then you must vote after he has vote then you know they can retrace it back to you whatever you're gonna vote right so so eventually your your vote is open to the party to look at an exam and then if you say no well you know what's gonna come down ex yeah so besides the uh you know being told what to vote i mean are there other like um privileges or uh you know i guess what were the sides of of being in the cpcc where the party's like yeah the parties a lot of multi i believe it's more like uh it's more like a social prestige you know so you're like a recognized person of the society by the party it's more like that and that's a lot of i mean i belong to the hong kong group and a lot of hong kong people in general actually don't understand the game very well and a lot of them they thought you know get into that that will actually enable them to make one she it's like yeah well you don't know what gamer you're playing did you meet jackie chan or yao ming you know i met jack ma when uh you know 1998 the first time he came out to uh raise money what was that like he was a very cocky guy you know you know i i remember i have a coffee with him and then he was uh you know the the coffee shops window actually seized the building goldman sachs office was and he was telling me you know oh you know goldman just uh agreed to give me five million and and i didn't even give them a business plan i want free from you and then obviously you're not going to get a business plan right how was i what the heck is this guy you know what he's talking about i'm gonna go back to my office brings my boss we're gonna invest three minutes into this company and then nobody gonna give a business and then we're not gonna get a business what the heck so did you invest with him no we did well you you missed your opportunity and then you were probably glad later right uh yes and no i mean what happened actually in between you know the five years in the five years after that i have coffee with this company almost bankrupt twice and then you know i remember that uh you know i was talking to the goldman people so we invested eventually privately you know unity this all famous uh a ping on situation right we invest in ping on insurance and goldman was invested in uh alibaba and investor in uh in pengan they actually want to sell alibaba but there's no ticket in the market so they end up selling the the ping on so you know it's who knows you know my situation things happen so so you know it's history play out very differently from anybody can foresee well i know um you had some connections to the former premier of china that's who he was right yeah yeah yeah i'm kind of i'm kind of curious about that because that ties into a lot of the factional stuff that's happening in china um which part of it you you like to talk about uh well just how you got into that how that connection was created and you know what that got you or what that cost you in the end what happened what happened was um whitney had a dinner with uh we call her auntie jiang right the wife of uh wife for one job and um so they struck up about the relationship from there and and then when job out i mean auntie jiang you know they aren't they're not read at a frequency they're not red error squad they are like you know they are common rights through the rank so what people in that kind of situation they don't really have a client so to speak so the red error square because they basically grew up in beijing you know they go to specific schools so they have a network from their their childhood their their relatives already in the system so they have a web of relationship in the system and when java you know his family writes for the rank you know i don't you know they don't have a clan to speak of uh so at that early stage so you you so we become part of that client and then we you know we we do business together or become business partners so so that you know you know if actually they you are like a red error spread they already have a built-in clan life you know from history it's actually even it's it's very difficult you know to be involved in those kinds it's a different situation but yeah yeah in java's case you know yeah what happened was uh we would build a relationship with the wife and then eventually become a business partner with them yeah and so what what did wenji bao do as your business partner like what role did he play in helping you you know get deals or or do developments or um as i as i you know talk about in the book i mean i actually don't believe uh he was involved you know in this and then he's very aware of what his family is actually doing he's so damn busy you know going to uh going to the office and um you know doing what he's supposed to do uh what happened was uh what happened was basically when we get into that kind of situation then i i know i have in a book guide that's a private slider air force you know so their family you know the anti-giant become the air force you know so you have a fighter jet you know flying above you on in the sky everybody sort of look at that whoa that's a powerful jet and then we are the infantrymen right we are an infantryman actually doing the execution on the ground taking real grounds right and that's what happened i think that's a very lively uh vivid you know sort of description i see and so in exchange for having that that protection uh or that that powerful jet flying overhead uh they got part of your business yeah where they got some money from it yeah they take 30 profit in china wow that's substantial that's uh i think that's that that uh may i say it's the market going rate for for a situation like that they're actually like you know just the the that's what the red rhinos took i do i like it it's the communist party's market rate yeah it's so interesting to me that just you know there's this antidote you talk about in the book where just having you know whitney just having auntie jiang sitting like if if you're meeting at a restaurant she's just like sitting there and she doesn't say anything just knowing that she's there means that she supports the project which means you know the the wen family supports it yeah it's it's really fascinating yeah i mean that's that's part of the game you know i talked about you know we talked about earlier it is every move it's it's it's being read into and then you need to how to know how to read into the game right i mean she doesn't what she won't be sitting any dinner with anybody why is she there right i mean so people who are in the game just seeing her there's like okay okay and then you look at listen to what she has to say about the next person you're like okay i'm getting hints here well considering that that is how things are done what what is the significance of when uh chinese businessmen or chinese officials try to make those kind of connections to us officials like hunter biden for instance or man there's a million of those examples right i mean you know if you just you know look at the communist party's uh operation manual if there's a sort of speak right and the end of the design and started by mao right that says he said that the mouth you know mao you know won the war and then you know take over china he said the three weapon the key three weapons of uh uh in his eye to to take over china number one is united front number two is party apparatus number three is military power number one is united front what does that mean that means capture opinion leaders capture elites of the society sway the opinion of the society so like hunter biden situation is part of the program that you lead capturing and then it's it's it's a it's the same it's it's the same still the same operating menu it hasn't changed it's no accident you know like a lot of elites in the west you know come out to speak on behalf of china it's it's part of the program yeah like people like larry fink uh ceo of blackrock right i mean he's very just like china's a great country everything's gonna be great tripled you know triple your investments but he's been elite captured when they arrive in china they are being presented very very different china so that's that's one one side of the game the other side of the game is they infiltrate all of all the people around you and then try use those people to sway your opinion and don't ever you know like people a person like larry think you know he get into china he thinks he's building real relationship with some individuals in china in those people in the know and then they're feeding him like insider information about china so he has a real insight and knowledge of china crap those people i guarantee you i guarantee you every one of them after meeting him go back and write a report oh that's so dehumanizing that's the theme well i mean it's it's also just like there's this superiority about it right that like you know larry fink thinks he's going in and getting something and then like i don't have industry and the other side they're like this guy you know he's such an idiot we're taking advantage of his greed he has no idea it's it's a it's a complete amount you know you he's being compute you know when he is in china he's being completely manipulated you know this is this entire environment around him is man-made for him at that particular point in time and unfortunately he then has a significant influence over the uni united states wall street us government yeah no great are you are you concerned at all about you know what you said in the book like now the books out they obviously pressured you to not publish are you concerned about you know any retaliation from it you know i uh i mean a journalist uh the other day you know looked at me and then said you know you and tell me that you know you'll be a madman for the ccp for the rest of your life right i mean i mean i i'm prepared for it when i decide to publish it but to have it say it in your face it's just you know it still sends a chill down my spine um well and then the other thing i have to say is you know a police stating and lock up a women for four years in a dark sale is capable of all heroes well it was a very brave thing you did to to publish the book the book is red roulette i'll put a link in the description below be sure to check it out it's fascinating desmond thank you so much for joining us today and hope to have you on again sometime soon yeah yeah let me know let me know well i really learned a lot from that interview and especially his book for instance i always thought it was pronounced roulet really yeah okay yeah well that's why you never want any money at the roulette wheel yeah you go to vegas and ask for the relay table and people would yeah and apparently it's it's not pronounced ballot it's ballet yeah but it was uh i mean that's a really fascinating insight into business because the like 99 of people who are doing business in china maybe 100 of them and 99 of people who've left still won't tell you what it's really like because there's so much incentive to like just keep that stuff secret well yeah i mean i think on one hand it's you know you've probably had to do some things you're not especially proud of oh yeah you know or you know you're worried that whatever you did or say could come back they could they could still definitely go after you even if you're outside china right i mean clearly they have a tendency to make people disappear who are close to you yeah well i think that's interesting that like obviously they're a little touchy about this if her uh his ex-wife suddenly reappeared and just was like please don't publish the book yeah well i admire his courage for just publishing it anyway knowing that there could be a risk to to her to himself but of course he's right because like if you give in to what the party wants you're probably not going to win in the end yeah i mean publishing it definitely is better for his wife yes than not publishing it right i mean always always shine a light in the darkness uh even if you know the bad guys don't want you to do it yeah i mean i think it you know it's it's super interesting and you know i like how he was like you know i'm not really ashamed of anything i've done i'm willing to put it out there and kind of like tell the real story yeah yeah no that's it's it's great that there is now a book like this that's been published it's out in the public record so we definitely recommend that you should check it out if you have the chance uh we are putting a link in the description below um yeah it's it's it's finally the insider's story that we've been wanting to hear about how business is actually done in china so once again thanks for watching i'm chris chappell i'm shelley chung and i'm matt ganesha we'll see you next time so you
2021-09-22 13:41
