Corporate Finance in NW China:

The big lesson in life in NW China is – business does not come first in this part of China. First you relax together – “become friends”.
In November 2004, I had the chance to fly nearly five hours north of Shanghai to visit Urumqi a small city of 2.3 million people in Xinjiang province the most north western part of China – the largest province in China.
We flew up on a Thursday morning and were greeted inside the security area of the airport by the GM of the five star hotel owned by the local corporation seeking investment finance (the reason for the trip).
Day one – An interesting drive in from the airport to the centre of Urumqi. We had been provided two classic 1950’s American limos (one for me and my colleague, one apparently for the luggage). The drive took us past seething fruit, silk and carpet markets, mosques and a cityscape, definitely more Central Asian than Han Chinese. Different clothing, body shape and facial structures than in Eastern China. Interesting – it wasnt China, but of course , it was.
All main road signs were in Arabic and in Chinese. In the streets an occasional glimpse of an armed soldier accompanying each policeman on foot patrol. We were taken to lunch in our hotel in a private dining room twice the size of my apartment in Shanghai.
In the afternoon we were chauffeured around the various local markets, up to Red Hill with its red brick towers with wonderful views of the snow capped Tianshan mountains behind Urumqi and to Qinghai Mosque. I was beginning to understand, business does not come first in this part of China. First relaxation – “become friends”.
That evening the first of many banquets was organised and hosted in a local restaurant featuring Cantonese food owned by one of the GMs of a local construction company (also looking to do business in the future).
Endless rounds of toasting “gambei” and plates of food, arriving, queuing at the door without mercy.
The meal was hosted by Mr Mi (Chairman of the Hualing Group).
Across two separate rooms- Mr Mi moved from room to room during the evening; a multi-tasker, toasting the significant individuals in each group, those that represented potential “co-operation” in the near future.
One room is filled with the baijiu-fueled revelry from a Beijing Construction company. We were across and down the hall.
In our room sat the management team from a Guangdong (Southern China) Construction company. Each time Mr Mi appeared back in our room, one woman dominated the toasting with Mr Mi. She was apparently the daughter-in-law of the Premier of the Xinjiang Province. She ran a local investment company. Her male companion insisted on random karaoke outbursts as the baijiu took over. A couple of other local Govt officials made up the numbers, all deference and smiles.
There was much toasting, with the highly regarded rice wine, “Maotai” or baijiu which smells like nail polish remover and is about 70% proof – paint stripper!
The local dry red wine favoured here is branded, “Loulan”. It is high in tannin; set your “teeth-on-edge,” high. They have been growing wine here for 2,000 years but I assume have never thought it necessary to improve the taste.
We were chauffeured back to the hotel around 11:00pm – the other business guests from our party stayed up most of the night playing mahjong in one of the business lounges.
Day one in a suit.
The next three days always began in the same manner.
We would be told to be in the foyer at 8:30am and we would be collected by a representative of our host. We were of course never given an agenda, so we just assumed business would be discussed at some point. But until the middle of the third day no business discussions were initiated, and business was only brought up after we had visited the beautiful home of the Chairman of the Hualing Group.
Mr Mi insisted we stroll through his gardens, inspect his large outdoor meagerie of exotic tigers, peacocks; stroll through and taste fruit from his orchards; he had us grind maise in an old millstone – all in his garden; in a suit of course.
One day we ended up travelling 500 km along the Silk Road. It was 45 degrees C on an Autumn day as we arrived in Turpan, home to the indigenous Uyghurs.
I suppose staggering under a scorching sun in a suit along a potholed dusty track beside the mud brick ruins of Gaochang (a 2000 year old settlement) looking for water, was no less incongruous than that experienced the following day, riding a Khazaki horse in the mountains. That suit rode well.
The sturdy little Kazakhi horses took us high onto a ridge over-looking a beautiful valley to the south of Urumqi. Inside a large domed Kazakhi tent, the Chairman of the Hualing Group had organised cards, money, cushions, low rise tables laden with salads. The interior of the tent was strikingly bold with carpets in rainbow colours. Outside, locals cooked on a spit the most mouth watering lamb Id ever tasted. The gambling took three hours and eventually the money was redistributed – we returned for more dining, more toasting that evening-and the next.
Mr Mi, a significant high net worth individual also supported/funded a local school for 600 orphans, located next door to his home. Children are brought to him by the local Government from all over Xinjiang Province, following any of the many earthquakes in the southern region near Kashgar (Kash as the locals call it). The day we visited, twenty kids are playing soccer on “the only grassed soccer pitch in Urumqi”. The kids are happy and well dressed and run over to Mr Mi surrounding him and chattering to him as if he was their father.
Mr Mi also ran (in a large warehouse attached to the orphanage/school) a training workshop for the local unemployed. Mr Mi is quite the man. He is muslim and a Han Chinese. He started with one restaurant 15 years previously and was by the time of our meeting, worth over USD 400 m. Mr Mi is very low key but very business driven – an ironic statement, given the style of the visit, yet there was no other way to describe him. His need? Just, USD 200m finance to expand his abattoir and logistics business.

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