Fate of China’s Top Billionaires: Shrinking Wealth, Bankruptcy or Arrest

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News Analysis

Amid China’s ongoing economic decline, multiple top Chinese billionaires saw their fortunes greatly diminished, companies went bankrupt, and some were arrested or fled the country.

Billionaire Goes Missing, Company Balance $51.25

On April 3, the court in Beijing announced the bankruptcy of Yinji Entertainment & Media, also known as DMG Media, reported the Chinese media, National Business Daily.

DMG Media, once a Chinese entertainment giant, has officially declared bankruptcy, while the chairman, also the top billionaire of Sichuan Province, Peter Xiao Wenge, has disappeared after cashing out more than $600 million.

According to the media’s report, the company was founded in 2008. In 2015, DMG Media completed a backdoor listing and officially debuted on the A-share market.

Around 2015, Mr. Xiao held shares valued at over $4 billion at its peak stock price of $6.16 and a market capitalization of nearly $6.91 billion.

However, the company suddenly encountered a meltdown starting in 2018, experiencing a sharp decline in performance.

In fact, Mr. Xiao has reduced his holdings in DMG Media twice, cashing out a total of about $330 million during its business collapse in 2018, according to Chinese state media, The Paper.

According to a report by Chinese media The Cover, Mr. Xiao has cumulatively cashed out a staggering approximate $610 million from the listed company.

Of the three founding members, Dan Mintz, an American filmmaker, has long gone missing; Mr. Xiao resigned as the chairman in 2015; and Wu Bing, in charge of management, has moved back to the United States as a U.S. citizen, as reported by National Business Daily.

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Stock Plummets Billions in 1 Day

On April 9, the stock of China Tianrui Group Cement mysteriously plunged 99 percent, cutting its market capitalization from HK$14 billion ($1.7 billion) to HK$141 million ($18 million).

According to their official website, the company is a leading manufacturer of clinker cement in Henan and Liaoning provinces, with an annual production capacity of about 35 million tons of clinker and 58 million tons of cement, and also one of the 12 large-scale cement enterprises nationwide supported by the regime.

Li Liufa, the controller of Tianrui Cement, was twice named the richest man in Henan Province on the New Fortune 500 Rich List by New Fortune magazine in 2011 and 2012.

According to a report in China Times, following the sudden plummet of Tianrui Cement’s stock price, there were reports indicating that Tianrui Cement lines at Zhengzhou had ceased production. In response, Tianrui Cement stated, “The suspension of individual plants is in response to the demand for off-peak production and is not due to operational issues.”

In recent years, peak-shifting production has become a tactic of the cement industry in China to deal with overcapacity issues.

Affected by the overall downturn in the Chinese cement industry, Tianrui Cement’s operating income in 2023 decreased by nearly 30 percent year-on-year, with a net loss of 634 million yuan ($87.58 million).

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Former Richest Man in China Under Investigation

Li Hejun, the founder of solar energy giant Hanergy, was detained by police on Dec. 17, 2022, in the northeastern Chinese province of Liaoning. Mr. Li Hejun once topped the Hurun Global Rich List in 2015, becoming the richest person in China.

Radio Free Asia reported that his detention could be linked to the troubled Bank of Jinzhou, which funded its 2015 initial public offering in Hong Kong with nearly 10 billion yuan ($1.5 billion).

The Slaughter List

In December 2015, the Hurun Report released a China Rich List special report showing that over the 17 years since the publication of the China Rich List, 35 of them were jailed, charged, or even executed mainly for running seriously afoul of the law for economic reasons.

Since its launch in 1999, the Hurun Report has been dubbed a “slaughter list” by local media, for many of the entrepreneurs on the list have run into trouble with the law.

According to the report, Huang Guangyu, the founder of GOME Electrical Appliances, was the wealthiest of the 18 imprisoned Chinese billionaires.

In 2015, Mr. Huang still ranked 87th with a net worth of 22 billion yuan ($3 billion). He was arrested in 2008, and in 2010, he was sentenced to 14 years in prison and fined 600 million yuan ($82.89 million) for “illegal business operations, insider trading, and bribery.” His assets worth around $27.63 million were confiscated.

In 2016, when Hurun Report released another Hurun Rich List, multiple Chinese media also reported 12 troubled Chinese billionaires. Apart from Mr. Huang, who was in prison, two individuals were awaiting sentencing, seven were under investigation, one was under residential surveillance, and one had disappeared or emigrated abroad.

According to the Hurun China Rich List 2017, Xu Jiayin, the founder of Evergrande Group, became China’s richest man with assets worth $43 billion. Evergrande was once the only Chinese real estate company to enter the Fortune Global 500 list within 20 years.

Evergrande defaulted on its debt in 2021, with its operating conditions continuously deteriorating. That year, Evergrande owed suppliers, creditors, and investors a total of 1.96 trillion yuan ($270 billion).

In September 2023, Mr. Xu was reported to have been taken away by the police.

Li Jing contributed to this report.

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