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A Chinese entrepreneur's leap of little faith

[财经资讯]      来源:英语学习

Just six days after final approval of change of use on a plot of land owned by his company, Wang Jianzhong jumped from the 15th floor of a government building and died.

In a suicide note, the company chairman criticized the bureaucratic practices of some government officials, blaming their inefficiency for dragging his company into the mire.

His company in central China's Hunan Province, the Hengdun Group, produces bamboo chopping blocks and juice products. It also runs a five-star rural villa for tourists. The company began with a small workshop in 1998 and now has 1,600 workers.

Expansion had brought the group financial difficulties in recent years. The company's balance sheet in October showed assets of 432 million yuan (about 70.5 million U.S. dollars). and debts of 548 million yuan. Among the loans, 231 million yuan was from private lenders. Interest on private loans is usually several times higher than those of banks.

The investigation following his death last week showed Wang's 18 credit cards overdrawn to the extent of 1.24 million yuan. He owed workers their salaries and cash totaling five million yuan.

The suicide of a successful and hard working businessman at the age of 61 starkly illustrates the difficult situation of many private firms who complain about an unfair market environment, with barriers to access and finance.

BLAME THE GOVERNMENT?

Since April, Wang had been trying to change 7.3 hectares from industrial to commercial use. Its value would then rise sharply given the state of the housing market. Wang planned to use the revenue to pay off some loans.

Complicated procedures meant Wang's application was not approved by Xiangtan municipal government until Nov. 6, six months after submission.

One week after approval, Wang jumped from a toilet on the 15th floor of a Xiangtan government office, having told others he was discussing business with the government.

"Our boss spent most of his time in the past six months on the application. We seldom saw him," said a Hengdun Group worker.

"The government handled the application according to procedure, but it was not as fast as Wang expected," said Liu Wei, deputy Communist Party chief of the company.

Management were well aware of the difficulties facing the company Wang was struggling to save, but as to why he killed himself and chose the government building where his application was approved, no one knows.

Change of land use is a complicated procedure and involves many government departments. "According to the rules, we have to first deal with the whole industrial park, then Wang's application for his personal plot," said an official of Xiangtan urban planning bureau, who refused to be identified.

"To meet Wang's demand, we reviewed the two plans at almost the same time and approved them in one meeting," said the official.

According to analysts who are familiar with the company, even with approval, the profit on the plot would not have solved the company's problems.

Depressed, Wang had repeatedly threatened to jump from buildings, according to text messages on his mobile phone and a letter in the hands of the police. It is not clear what exactly prompted Wang to commit suicide, but bureaucracy is a major complaint of many private companies.

To improve efficiency, the government has simplified some review and approval procedures in recent years. The key document approved by the Communist Party of China Central Committee on Nov.12 highlights streamlining government administration.

For example, investment projects, except those concerning national security, eco-safety, strategic resource exploitation or vital public interest, no longer need government approval.

POOR MANAGEMENT

The Hengdun Group borrowed more than 200 million yuan from banks and had problems borrowing more, so Wang turned to private lenders and borrowed a further 231 million yuan.

"Private loans were handled by Wang himself. I do not know why he borrowed such a huge sum or how he spent it," said Liu.

In China, many small and medium enterprises resort to underground financing because state banks fail to meet their needs. Interest rates are, of course, much higher than those of banks and some companies, unable to pay back loans, go bankrupt.

Wang invested more than six million yuan in product development, but his beverage brand did not sell well and the plant has been suffering losses. In 2008, Hengdun invested more than 100 million yuan in building a 40-hectare rural villa complex for tourists, but the project brought little profit.

Due to poor education, farmers-turned-entrepreneurs lack full control of the development strategies, investment tactics and finance risks of their companies, according to Ni Hongtao, a legal professor at Xiangtan University.

"Any imprudence at all is likely to put their companies on the verge of bankruptcy," he said.

A Chinese entrepreneur's leap of little faith文章来源头牌英语[财经资讯]
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