Australians planning to dip their toes back in the waters of the Chinese economy in the wake of the Covid pandemic should ‘think twice,’ a Chinese entrepreneur whose billionaire ex-wife was snatched by Beijing‘s secret police told Daily Mail Australia.
Desmond Shum has penned a chilling insider’s account of what it’s like to navigate high-level business deals under Xi Jinping‘s ruthless ‘one-man dictatorship’.
The book, Red Roulette, gives a brutally honest perspective of what companies and entrepreneurs can expect to face in China once its borders reopen – as a crackdown on non state-owned entities intensifies.
The developing nation was riding a tidal wave of economic success after more than a decade of double digit growth during the 2000s, with one of the greatest accumulations of wealth in human history creating a stampede of freshly-made billionaires.
Mr Shum and his politically connected wife Whitney Duan embodied that dramatic rise, making about US$3billion by charming their way into lucrative Chinese stock IPOs and developing a vast real estate network including one of Beijing’s most lavish hotels and the largest air cargo logistics facility in China.
Chinese Billionaire Whitney Duan (pictured in Tiananmen Square during the 1990s) who was snatched off the street by Beijing’s secret police in September 2017 and held without charge for four years, cut off from any contact with her friends, family and young son
Desmond Shum (pictured on a private jet with his son) just penned a chilling insider’s account of what it’s like to navigate high-level business deals under Xi Jinping’s ruthless ‘one-man dictatorship’
There was so much money floating around at that time, that when the couple flew to Paris on a jaunt with three other Communist Party elites and their wives in 2011, they took not one but three private jets.
On the runway the group decided it might be fun to play cards on the trip, so they all piled into the one jet and the two other private planes flew to Europe empty.
But having that much wealth in China can be extremely dangerous, particularly if you fall out of favour with the Communist Party, Mr Shum said.
Mr Shum suspects this is what happened to his former wife Whitney Duan who was snatched off the street by Beijing’s secret police in September 2017 and held without charge for four years, cut off from any contact with her friends, family and young son.
‘There is a lot of tension between Communist Party factions and we became political roadkill,’ he said.
‘I left China in 2015 with my son but we would speak a couple of times a week but suddenly my calls were not answered. They never explained why she was detained and she has never been prosecuted.’
Mr Shum and his politically connected wife Whitney Duan (pictured together in Switzerland, 2004) embodied the rise of China, minting themselves about US$3billion by charming their way into lucrative Chinese stock IPOs and developing a vast real estate network including one of Beijing’s most lavish hotels and the largest air cargo logistics facility in China
Mr Shum accused his government of targeting and silencing rich business people in his new memoir, ‘Red Roulette: An Insider’s Story of Wealth, Power, Corruption and Vengeance in Today’s China’
WEALTHY CHINESE WHO’VE DISAPPEARED
Peng Shuai, 2021: The professional tennis player’s whereabouts is unknown after she spoke out about sexual assault at the hands of former vice-premier Zhang Gaoli.
Zhao Wei, 2021: The actress and social media influencer disappeared following Xi Jinping’s ‘virtue before artistry’ crackdown on young creators.
Jack Ma, 2020: The billionaire E-commerce tycoon has rarely been heard from after publicly criticising Chinese draconian banking system.
Cheng Lei, 2020: The Chinese-Australian CNBC business news anchor in Beijing has not been seen for over a year.
Ren Zhiqiang, 2020: Immediately after speaking out against the CCP’s handling of the Covid pandemic, former chairman of Huayuan Real Estate Group was snatched and sentenced to 18 months in prison on dubious financial charges.
Fan Bingbing, 2018: The actress who starred in the Hollywood film franchise like X-men vanished for years before making a public apology about ‘owing taxes’ to the Chinese government.
Wang Quanzhang, 2015: The human rights lawyer disappeared before being sentenced to several years in jail for ‘subverting state power’.
Ai Weiwei, 2011: The high-profile artist vanished for several months after criticising the government.
Because the business world in China is dictated by political power, anybody who wants to be successful ‘needs to be associated with the Communist Party’.
Ms Duan did this with unparalleled skill, parlaying an alliance with the family of political titan Chinese premier Wen Jiabao and his wife, Zhang Peili, with ‘unimaginable success’.
Mr Shum writes that he and Whitney didn’t feel any discomfort shelling out thousands of dollars on lunch at the Michelin starred Lei Garden restaurant on the glitzy Jinbao Street in Beijing, schmoozing with political elites.
‘To me, it was just the cost of doing business in China in the 2000s,’ he said.
‘Sea bass at $500 a pop was a favourite dish of ours, as was a $1000 fish soup.
‘A big element of it was the Chinese concept of “face”.
‘Everybody knew we were paying ridiculous prices for the soup and even the veggies, but it was precisely that which gave our guest face.’
But eventually the high-stakes game derailed when China, under President-for-life Xi Jinping, began to crack down on the wealthy, fearing entrepreneurs had become too powerful and could threaten the dominance of the communist regime.
Mr Shum warns the same thing could also happen to international business travellers once China’s borders reopen in 2023.
‘I think as a tourist it would not be a clear safety problem but when it comes to business that is a very different issue,’ he said.
‘Many companies who try to pull their money out and diversify into other parts of Asia for example, they immediately run into trouble from the Chinese not letting them take their money out.
‘So on your books it might say you have $10million of assets in China but the moment you try to pull that money out, that money may no longer belong to you.
‘And given the continuing deterioration of relations between Beijing and the West, and Australia in particular, I think Australian businesses going over there really need to think twice.’
The business world in China is dictated by political power, anybody who wants to be successful ‘needs to be associated with the Communist Party’. Pictured: Desmond Shum (left) after graduating from the University of Wisconsin in the US and returning to Hong Kong to become a stockbroker
Being wealthy in in China can be extremely dangerous, particularly if you fall out of favour with the Communist Party or align yourself with the wrong faction. Pictured: Mr Shum in high school is given an award for swimming
HOW RICH WERE WHITNEY AND DESMOND?
*The couple racked up a fortune of about US$3billion and scoured the globe collecting gemstones, rare wines and art.
*Whitney spent US$15million on a single pink diamond and US$5 million on a painting.
*On a daily basis they would spend a measly $1000 on fish soup for lunch, dining at the Michelin starred Lei Garden restaurant on the glitzy Jinbao Street in Beijing.
*Desmond once paid US$500,000 for a rare Swiss watch so detailed in took two years to build. He received the seventh F.P. Journe timepiece and it’s rumoured Vladimir Putin snatched up second.
*Whitney paid a huge import tax to ship over a Rolls Royce, while Desmond owned a Ferrari and a Lamborghini.
*The pair once flew to Europe on a private jet with three politically-connected couples as two other private planes followed empty.
*They once enjoyed a night of wine tasting at the Pavillon Ledoyen in Paris, where the cost for one person is a staggering US$100,000.
Entrepreneurs and free market capitalism had been the engines of China’s economic growth during the early 2000s, but according to Mr Shun businesses leaders were ‘never trusted’.
‘Ever since it had seized power in 1949, the Communist Party has used elements of society when it needed them and discarded them when it was done,’ he said.
‘The Party has an almost animal instinct toward repression and control and any time the Party can afford to swing toward repression, it will.’
Doing business in China can be extremely difficult because when the one-party state passes a law it makes it retroactive.
This means unregulated events which may have occurred years ago can be considered crimes at any point in the future.
During Xi’s dramatic rise to power in 2013, the party arrested 2.7 million officials under an unprecedented ‘corruption’ crackdown before he abolished presidential term limits in 2018.
‘When he started it I thought well the system is so corrupt some kind of cleansing is necessary but as he was purging all of these bureaucrats, he replaced them with loyalists to carry out his bidding, Mr Shum said.
‘I believe Xi is taking this country on a dangerous path. I think the country is going to spiral downward.
‘Xi has turned China into a one-man dictatorship. It used to be a one-party dictatorship which concentrated power in a few men, now it’s a one-man dictatorship.
‘He has taken out all possible legitimate successors.’
Since Mr Shum’s Red Roulette: An Insider’s Story of Wealth, Power, Corruption, and Vengeance in Today’s China, came out in September, it has been met with high praise from literary critics and China-focused academics.
Pictured: Desmond Shum rallies alongside Hong Kong anti-China protesters in 2019 – the place where he spent his teenage years after moving from Beijing
Desmond Shum and Whitney Duan are pictured with their son in Mongolia during 2013
Not surprisingly, the memoir has been slammed by the Communist Party and banned it in China.
But despite the pushback, the international pressure has achieved something very few thought possible – Whitney’s release.
‘When I wrote the book this was definitely one of the wishes that I had,’ Mr Shum said.
‘I had hoped the spotlight would help her situation and so when she actually came out because of the book I thought that was amazing.’