If anyone feels the need for a good read in these dark days, let me give a strong recommendation for the autobiographical “Red Roulette”. If one has an interest in business, politics, the modern world, or ripping yarns, this well-written fast-paced thought-provoking true tale is a must-read!
“Red Roulette: An Insider’s Story of Wealth, Power, Corruption, and Vengeance in Today’s China”, by Desmond Shum, ISBN 978-1-9821-5615-2, 310 pages (2021).
China around the end of the 20th Century seems to have been rather like the US around the end of the 19th Century – a place where a person from a humble background could make a real difference if he had the right combination of talent, ambition, hard work … and luck. Desmond Shum was such a person.
Born Shum Dong in Shanghai in 1968 during Mao’s Cultural Revolution, he had the misfortune of belonging to a family which had been persecuted by the Communists. 10 people from 3 families were crammed into a small house, sharing a bathroom and kitchen. Life got worse in 1978 when his mother took him to Hong Kong, then ruled by Perfidious Albion, where the Cantonese dialect was like a foreign language to him. They slept in the living room of a relative’s tiny apartment where privacy was unknown.
Despite the hardships, Shum grew up tall and athletic, a voracious reader and a good student. In 1989, while mainland China was being rocked by Tiananmen Square, his parents – with their Chinese emphasis on education – scratched together the funds for him to go to the University of Wisconsin.
Upon graduation in 1993, he returned to Hong Kong where his US education enabled him to join a financial brokerage firm. About a year later, he moved to a private equity firm. Mainland China was then ruled by Deng Xiaoping, who focused on lifting China’s population out of poverty by releasing Chinese entrepreneurial spirits under the slogan “To get rich is glorious”.
Shum mentions many fascinating stories about life in Hong Kong & China during those Go-Go years. His teacher father initially could find work in Hong Kong only as a laborer in a cold storage facility. He eventually worked up to running Tyson Foods’ business in China, which he quickly built up to a $100 Million turnover selling the parts of chickens that Americans won’t touch (such as chicken feet) to Chinese who coveted them. Then there was the tale of the Hong Kong bar girl who parlayed her assets into the chairmanship of a substantial Hong Kong corporation. And the Chinese naval officer who proposed using his warship to smuggle beer from Hong Kong to China to avoid China’s hefty import duties.
Shum transferred to the private equity firm’s Beijing office in 1997 – exciting times, such as Chinese musicians rediscovering jazz which had been banned by the Communists back in 1949. Wanting to get closer to the business action, he took an offer in 1999 to become CEO of a company offering secretarial & banking services. The business collapsed in 2001, and he fell back on his parents for support.
A failure at the age of 33, Shum began to reconsider the direction of his life. Then fate intervened. While doing some consulting work in Beijing, he met Whitney Duan – an unusual 30-something hard-driving female entrepreneur, a force of nature – although it turned out her background had been as humble and hard-scrabble as his own. Within a year, they had moved in together, in a relationship that appears to have been as much business partnership as romance. They married in 2004.
Whitney’s outsized personality, flair, and beautiful voice had enabled her to turn a chance encounter with the wife of one of China’s vice-premiers into a strong relationship. This gave Whitney guanxi – often translated as “connections”.
(This reminds me of the only time I tried to call my elected US Senator to seek his help with an issue. The DC Swamp Creature in his office who fobbed me off undoubtedly had never heard of guanxi – but she knew I did not have it. There may be less difference between Beijing and the DC Swamp than many of us would like to believe).
Whitney’s ties to “Auntie Zhang” opened doors for her & Shum. In 2003, they launched a project to build a huge logistics park at Beijing’s airport to handle the rapidly growing volume of trade. But China’s bureaucracies are as bad as ours. Even though Whitney used her guanxi to get key Ministers to approve the project, there were dozens of subordinates who could delay or kill it. Shum “sacrificed his liver” in endless glad-handling of such lesser officials. They also had to deal with issues that would be quite familiar in the West – such as speculators who bought properties in the path of development and demanded ridiculous prices to sell to the logistics park.
While this project was painfully proceeding, Whitney’s biological clock was ticking. Unable to conceive the old-fashioned way, she spent several years visiting In Vitro Fertilization clinics in Beijing, Hong Kong, and finally New York. Success! Their son was delivered by Caesarian section in a New York hospital in 2009 – with the timing of his birth planned by Whitney for astrological perfection.
Becoming a father had a deep impact on Shum, causing him again to reassess his life’s direction, just as his earlier failure as a CEO had done: “I sensed that many noveau riche Chinese … confronted a yawning moral vacuum in a society that had destroyed traditional Chinese values, tossed aside Communist communitarian norms, and was focused solely on the pursuit of lucre”.
During the near-decade it took to build the logistics park, the tenor of China had begun to change. As China became more technologically advanced and wealthier, the Communist Party started to tighten down on the entrepreneurial spirit that had created the success. As he moved in the upper reaches of Beijing society, Shum became concerned about the lifestyles of the dissolute “Red Princelings” – offspring of the original Communist revolutionaries.
The Shums sold their share in the park in 2011 for a profit of about $200 Million. Then their partnership began to fracture. Concerned about the changing political environment in China, Shum wanted to go international and win projects in open competition, based on their proven track record with the logistics park; in contrast, Whitney wanted to remain focused on China and continue to use her guanxi, which was growing as Auntie Zhang’s husband was promoted to China’s premier. Whitney’s view prevailed. She also became more careless about flaunting her growing wealth. The couple became increasingly estranged as they worked on their next big project – a high-end hotel/office/apartment/museum complex on a riverbank in Beijing. In 2013, they separated.
The changes already under way in China’s political structure accelerated in 2012 when Xi Jinping became the Communist Party boss. He immediately launched a massive anti-corruption campaign which by 2020 had led to the investigation of more than 2.7 million officials for corruption with the punishment of more than 1.5 million, including 7 national-level leaders and two dozen generals. While there clearly was the need to cut the massive corruption within China, Xi also used the campaign to eliminate his rivals and promote his allies. Shum summarized the business situation in China: “We all went along with a system that we knew was wrong because to do otherwise would have cost us – and everyone around us, including loved ones – their livelihood, freedom, and, who knows, even their lives”.
Shum became increasingly disenchanted with China’s politics and Xi’s rule. After some nasty in-fighting with Whitney, Shum moved to England with their son in 2015. By the end of the year, they divorced. Whitney continued to live & work in Beijing where, in September 2017, she disappeared from her well-guarded office – apparently detained by Communist authorities. She has not been heard of since. All Shum’s efforts to discover the whereabouts of his ex-wife have drawn a blank.
My apologies for this long outline of Shum’s book, but it really is one of the most fascinating tales I have read in a long time. As the saying goes – read the whole thing; time well spent.