Children of the Yuan Percent: Everyone Hates China’s Rich Kids
[ Christopher Beam | September 30, 2015 | via Bloomberg ]
The fuerdai, China’s second-generation rich kids, are the most loathed group in the country. They’re also its future.
Emerging from a nightclub near Workers’ Stadium in Beijing at 1:30 a.m. on a Saturday in June, Mikael Hveem ordered an Uber. He selected the cheapest car option and was surprised when the vehicle that rolled up was a dark blue Maserati. The driver, a young, baby-faced Chinese man, introduced himself as Jason. Hveem asked him why he was driving an Uber—he obviously didn’t need the cash. Jason said he did it to meet people, especially girls. Driving around late at night in Beijing’s nightclub district, he figured he’d find the kind of woman who would be charmed by a clean-cut 22-year-old in a sports car.
Dog wearing two gold Apple Watches
When I heard this story from a friend who had also been in the car, I asked for the driver’s contact info. I introduced myself to Jason over WeChat, China’s popular mobile app, and asked for an interview. He replied immediately with a screen shot that included photos of women in various states of undress. “Best hookers in bj :),” he added. I explained there had been a misunderstanding, and we arranged to have coffee.
When we met at a cafe in Beijing’s business district, it was clear that Jason, whose surname is Zhang, was different from other young Chinese. He had a job, at a media company that produced reality TV shows, but didn’t seem especially busy. He’d studied in the U.S., but at a golf academy in Florida, and he’d dropped out after two years. His father was the head of a major HR company, and his mother was a government official. He wore a $5,500 IWC watch because, he said, he’d lost his expensive one. I asked him how much money he had. “I don’t know,” he said. “More than I can spend.” So this was it: I had found, in the wild, one of the elusive breed known in China as the fuerdai, or “second-generation rich.”
As portrayed in the local press, fuerdai are to China what Paris Hilton was to the U.S. a decade ago, only less tasteful. Every few months there’s a fuerdai scandal, whether it’s a photo of a woman about to set fire to a pile of 100-yuan ($16) notes; members of the much derided Sports Car Club posing beside their Lamborghinis; or someone pulling a gun during a street race. In 2013 reports of a fuerdai sex party at the beach resort of Sanya provoked a nationwide finger-wag. Two prominent rich kids got into a public arms race over who had the bigger stash: The widely despised socialite Guo Meimei posted photos online of herself with 5 million yuan worth of casino chips; her rival responded with a screen shot of his bank statement, which appeared to contain 3.7 billion yuan. (Guo was sentenced to five years in prison for running a gambling den.) Recently, the son of Wang Jianlin, a real estate mogul and the richest man in China, trolled the nation by posting a photo of his dog wearing two gold Apple Watches, one on each forepaw. Fuerdai outrages occasionally feature government intrigue, such as a 2012 Ferrari crash in Beijing involving two young women and the son of a high-level official, all of whom were at least partially naked when they were thrown from the car. The man’s father, a top aide to then-president Hu Jintao, was later arrested and charged with corruption.
The fuerdai (pronounced foo-arr-dye) aren’t just an embarrassment. The Communist Party seems to consider them an economic or even political threat. President Xi Jinping himself spoke out this year, advising the second generation to “think about the source of their wealth and how to behave after becoming affluent.” An article published by the United Front Work Department, the bureau that manages relations between the party and nonparty elite, warned: “They know only how to show off their wealth but don’t know how to create wealth.” Some local governments have taken steps to reeducate their wealthy elite. In June, according to Beijing Youth Daily, 70 heirs to major Chinese companies attended lectures on filial piety and the role of traditional values in business.
While Xi’s anticorruption campaign has curbed some of the most outrageous wealth-flaunting, the gap between rich and poor is still evident to anyone on a Beijing street weaving between fruit vendor carts and black Audis. Now, as the economy slows and the party looks for scapegoats, the fuerdai are in the precarious position of having to justify their existence and show that China’s future leaders aren’t just money-igniting, Ferrari-wrecking layabouts. Not all of them, anyway.
After a few weeks of nosing around, I persuaded a crew of fuerdai to invite me to one of their occasional dinners. When I arrived, I wondered if I’d come to the wrong place. It was an outdoor barbecue spot in northern Beijing, with locals sitting on stools so low they were almost squatting, swilling Yanjing beer and chewing on lamb skewers. Identifying the centimillionaire scions among the riffraff was difficult. The fuerdai trickled in, dressed the same as everyone else in the restaurant—in tank tops, button-downs, jeans, flip-flops. The only giveaway was the liquor they brought: French Champagne and a bottle of Maotai, the choicest brand of baijiu. Martin Hang, the gregarious organizer of the dinner and editor of a magazine called Fortune Generation (no relation to the U.S. publication), introduced everyone. The dozen guests included Wang Daqi, 30, son of a famous business consultant, who had recently written a book about rich kids in China; Albert Tang, 20, a philosophy student at Bard whose father runs a major Beijing publishing house; and Sophia Cheng, 27, the only woman in the group. It still wasn’t clear to me what threshold of wealth one needed to exceed to be fuerdai, but Cheng assured me she qualified. (Hang disagreed.) Her parents had given her a vast amount—more than 100 million yuan, she said—which she invested in film, mobile-gaming, and meat-processing companies.
Drinking began in earnest before the food arrived. We toasted as a group, then in pairs, then in subgroups, then in pairs again, until everyone was so shattered that it felt like we’d known each other forever. Conversation volleyed between business and gossip. One member of the group was dubbed the Champagne Prince for his ordering habits at clubs. Another attendee, Lin Xin, 30, talked up his company’s technology for authenticating antiques. Someone joked about how wannabe rich kids would go to clubs and rent bottles of expensive liquor to display on their table to make it look like they had money. (“But what if a girl wants to drink it?” another person wondered.) Cheng mentioned that she had a few spare chickens in her car; did anyone want to try some? Tang, the philosophy student, pulled me aside and asked what I knew about the Freemasons.
At the center of it all was Hang, who, as editor of Fortune Generation and a prominent member of the Relay China Elite Association, a nonprofit that serves as a social club for the second-generation rich, functions as a connector among China’s children of privilege. Hang, 31, explained how Relay works. “We’re trying to help the second generation do better together,” he said, speaking carefully and with precision, even after many drinks. Founded in 2008, Relay was created to help fuerdai meet other fuerdai, who might be facing similar challenges of wealth. There’s an initiation fee of 200,000 yuan, and members must prove that their family businesses pay at least 50 million yuan in annual taxes. At forums held several times a year, the heirs listen to lectures on topics such as how to minimize taxes or maximize profit (“All legal stuff,” one member assured me) and visit each other’s companies. “Most of the time the forum is very boring,” Hang said. He rolled out the magazine in 2011, hoping to promote a more positive image of fuerdai than the decadent wastrels usually portrayed in the media. It was a rebranding: Relay’s members dropped the fu (“wealthy”) from fuerdai and started to refer to themselves using a new term, chuangerdai, which means “second-generation entrepreneurs,” or just erdai, “second generation.” Each month the magazine cover features a different child of privilege, usually male, wearing a suit and striking a casually authoritative pose—for the July issue, while leaning on an Audi. (The two-page ad immediately following the cover is also for Audi.)
The purpose of the organization, Hang said, is to encourage second-generation kids to take over the family business or at least play a role in its management. Such companies are crucial to the Chinese economy, he said: Not only do they make up 85 percent of non-state-owned enterprises, they also put long-term success ahead of quarterly results.
The downside is that family-run companies are, well, run by families, and most kids in China don’t relish the idea of working alongside their parents. Hang took issue with the statistic, released by Shanghai Jiaotong University in 2012, that 82 percent of second-generation heirs aren’t willing to take over their family business. He didn’t dispute the data so much as the semantics: “They aren’t willing to do it, but they still have to.”
It’s a distinction that Hang knows well. His father’s advertising agency, started in 1993, is one of the largest of its kind in Jiangxi province. After graduating from college, Hang avoided the agency. He studied financial management in the Netherlands and bought the rights to Norron, a Norse god-themed online game. He was cocky about his business acumen. “I thought I was awesome,” he said. “I was a fuerdai—I wasn’t interested in talking to other people.” When the game failed to take off, Hang decided to join his father’s company. “I had a choice,” he said. “I could do something else, but it would make my parents work very hard. They never said I had to, but I thought it was necessary.”
All fuerdai face a version of the same problem: They have everything but the ability to surpass their own parents. Whatever they achieve will be credited to their family, not to themselves. Hang described always being introduced as “the son of Mr. Hang.” When Wang, the author, found a publisher for his book, he didn’t know if they wanted to publish it because it was good, or because of his famous father. “People will always say your only competence is that you were reincarnated into a good family,” he said. He told me about the difficulty of explaining the burdens of inheritance to the nonwealthy. “They never understand—‘Why are you in pain?’ ” said Wang. “I say it’s not relevant. The amount of wealth doesn’t determine how happy you are. You can only know by experiencing it.”
It’s no surprise that most fuerdai, after summering in Bali and wintering in the Alps, reading philosophy at Oxford and getting MBAs from Stanford, are reluctant to take over the family toothpaste cap factory. Ping Fan, 36, who serves as executive deputy director of Relay, moved to Shanghai to start his own investment firm rather than work at his father’s real estate company in Liaoning province. He picked Shanghai, he said, “because it was far from my family.” After graduating from Columbia University, Even Jiang, 28, briefly considered joining her mother’s diamond import business, but they disagreed about the direction of the company. Instead, she went to work at Merrill Lynch, then returned to Shanghai to start a concierge service, inspired by the American Express service she used when living in Manhattan. Liu Jiawen, 32, whose parents own a successful clothing company in Hunan province, tried to start her own clothing line after graduating. “I wanted to show I could do it on my own,” she said. The company failed.
Along with riches, fuerdai often inherit a surplus of emotional trauma. The first generation of Chinese entrepreneurs came of age during a time that rewarded callousness. “They were the generation of the Cultural Revolution,” said Wang. “During that time, there was no humanity.” His grandfather, the principal of a middle school in Guizhou province, was humiliated by Red Guards. “They were raised cruelly—there was no mercy. It was survival of the fittest.” Many fuerdai have their parents’ same coldness, Wang said: “They’re really hard to be friends with.”
Zhang, the Uber driver, was sent to boarding school starting in kindergarten, even though his parents lived only a short distance from the school. Perhaps to compensate for their inattention, they gave him everything he wanted, including hundreds of toy cars. Last Christmas he bought himself the Maserati. “It’s like their childhood has not ended,” Wang said of his fellow rich kids. “Their childhood was not fully satisfied, so they always want to prolong the process of being children.” Thanks to China’s one-child policy, most fuerdai grew up without siblings. That’s why so many travel in packs on Saturday nights, Wang said. “They want to be taken care of. They want to be loved.”
For Zhang, partying is a way of staving off boredom. He used to go out clubbing five nights a week. “If I didn’t go, I couldn’t sleep,” he said. He doesn’t lack for companionship, he added. Two or three times a week, he’ll hire a high-end sex worker—a “booty call,” in his words—for $1,000 or more. Zhang prefers paying for sex to flirting with a girl under the pretense that he might date her. “This way is more direct,” he said. “I think this is a way of respecting women.” But some nights, sitting at home alone, he scrolls through the contacts on his phone only to reach the bottom without finding anyone he wants to call. When we first spoke, he said he had a girlfriend of three years who treated him well, but that he didn’t love her. “You’re the first person I’ve told that to,” he said.
Most fuerdai don’t talk about their problems so openly. “They have trust issues,” said Wayne Chen, 32, a second-generation investor from Shanghai. “They need a place to talk. They need a group.” Relay offers a setting in which they can speak honestly, without having to pretend. “It’s similar to a rehab center,” he said.
In July, Jiang noticed that business at a barbecue restaurant she owns in Shanghai was slower than usual. “It was only half of the crowd,” she said. The stock market had been falling since June and was down 38 percent from its peak by the end of the summer. Over dinner at the restaurant, I asked Jiang and Chen, who are a couple, as well as Hang, if fuerdai had felt the pain of the market crash. “Of course,” Jiang said. “A lot of their family companies are listed.” She herself had bought stocks, she said, but pulled out when the market got too bumpy. Chen said his family money was invested in a “risk-averse way,” much of it in fixed-income assets and funds of funds.
Still, the volatility—and more important, the government’s clumsy response to it—signaled a deeper discord within China’s slowing economy, which affects the fuerdai as much as anyone. Raising money is tougher than before, said Jiang. Hang said the slowdown has hurt ad sales at the magazine, particularly from real estate companies.
Many fuerdai have moved money overseas—Boston Consulting Group put the amount of Chinese money invested abroad at $450 billion in 2013—often with the goal of gaining foreign citizenship. A survey conducted in 2013 found that 64 percent of Chinese high-net-worth individuals had emigrated or wanted to emigrate overseas. I asked Hang, Chen, and Jiang if fuerdai worry about their money. “Some do,” Hang said. “His dad sent him to the U.S.” He laughed and pointed at Chen, who is now an American citizen. Hang, who is married and has a 4-year-old son, said he hasn’t ruled out emigrating.
It’s not just China’s stock market drop that makes fuerdai jittery. “It’s society, too,” said Chen. “Like the Occupy Wall Street protests.” There’s always been a tendency in Chinese society to “hate the rich,” Hang said. It’s the same sentiment that fueled the Cultural Revolution, and was once practically the Communist Party’s mission statement. (Emphasis on “was.”)
Exacerbating the problem, most fuerdai don’t mix much with the working classes. “When we were children, we went to the best schools, so we didn’t encounter a lot of poor people,” Hang said. “This is very dangerous for society.” Relay is therefore planning to start a program fostering ties between fuerdai and children from the countryside. It also organizes charity drives. After a chemical factory exploded in Tianjin in August, killing more than 100 people, its members donated 1.5 million yuan through the local government. To hear Hang explain it, philanthropy is about more than just social responsibility—it’s about social stability.
That said, when I asked Jiang if she thought inequality was a problem in China, she was ambivalent. “I don’t know,” she said. “There are two groups of poor people. One is, you don’t work hard. You deserve to be poor because you don’t work hard. Second is, you work hard but can’t succeed. I think we should help the second group of people. … There’s a saying, jiu ji bu jiu pin—‘We’ll help you if you have an emergency, but we cannot help you if you’re poor.’ ”
One day this summer, at the urging of a friend, Wang decided to call his father and tell him he loved him. Wang senior picked up the phone. “I love you, Dad,” Daqi said. There was a pause. “Are you drunk?” his father asked. Wang told this story at a gathering at his father’s complex on a Friday night in August. The guests were friends he had met through Lifespring, a self-help company that, with introductory classes costing upward of $1,000, caters largely to fuerdai. (The original Lifespring was the subject of numerous lawsuits in the U.S. in the 1980s and ’90s, including charges of wrongful death, and went out of business in 1998.) Wang said the group has helped him reconcile his feelings about his father and has also provided the support and community he was unable to find at, say, the club.
With instant gratification never more than a credit card swipe away, the search for meaning is arguably harder for fuerdai than it is for most people. Some, like Jiang and Wang, feel most purposeful when deviating from their parents’ path. For others, returning to the family business is, to their surprise, a source of satisfaction. Liu said she’s glad she took over her family’s clothing company because it made her parents happy—a sentiment her former rebellious self would probably have scoffed at.
Not everyone has discovered a purpose. Zhang, the Uber driver, said his job at the TV production company is hardly his ideal career. But he’s not sure what is. “As a kid, I had a lot of dreams,” he said when we met up at the cafe near his office. “I wanted to be a golfer or a race car driver or a doctor, something like that. … But when you get older, you see more, and you see that some goals are just a dream.” He lit up a cigarette—now illegal indoors in Beijing—barely casting a glance to see if a waiter would stop him. Zhang never had any limitations, which was perhaps itself a limitation. “I don’t really have a plan,” he said. “Probably it’s a sad thing, but it’s the truth.” When I asked him if he’s happy, he said it’s all a question of attitude. “You can find a million reasons to be sad,” he said, “but you only have to find one reason to be happy. Every day I find one.” I asked him what today’s reason was. “Today, I meet you,” he said. “It’s a happy thing.”
Daqi, age 30
Photographer: Ka XiaoxiWang
Jason Zhang, age 22Photographer: Ka Xiaoxi The son of the richest man in China caused a stir by posting this photo of his dog wearing two gold Apple Watches.Photographer: Ka Xiaoxi Martin Hang, age 31Photographer: Ka Xiaoxi Models hired to attend Hang’s birthday party.Photographer: Ka Xiaoxi Even Jiang, age 28Photographer: Ka Xiaoxi