I Stand Corrected Read online

  It is not much of an exaggeration to say that I am impossibly obstinate when my unyielding determination refuses to listen to reason. But it also must be said that, unattractive as it is in an unvarnished state, tenacity is the thing entrepreneurism is made of. It was my unattractively willful self that enabled me to consider launching a magazine in L.A., never having lived there and with absolutely no experience in magazine publishing.

  PART FIVE

  The Cost of Doing Business

  He who has never been cheated cannot be a good businessman.

  —Chinese proverb

  CHAPTER THIRTEEN

  Robert deferred his legal bills, which made forming Buzz Inc. possible, and I left New York with barely enough seed money to launch the magazine in L.A.

  A year of nonstop work produced impressive results: newsstand sales, subscriptions, and advertising revenue performed better than the figures driving our business model. But in business—as in life—timing can hold success hostage. The day we entered a second stage of financing, the stock market plummeted five hundred points and our funding disappeared. More time was bought by collateralizing ad revenue already committed from the magazine’s multi-issue contracts in order to borrow enough money to publish two more issues. Sales continued to climb; still, no funding came.

  After months of trying to finance the magazine, I was prepared to give up when we realized we couldn’t pay for the rented office furniture anymore. Then the one remaining phone rang. It was an unknown Englishman calling from Bangkok.

  “I’ve been on holiday in Hawaii, where I came across a copy of your magazine,” explained the Englishman, who introduced himself by name only.

  How on earth did a copy of the magazine end up in Hawaii? I wondered.

  “Is the company that owns the magazine private?” asked the Englishman.

  “Yes …?” I said, more question than confirmation.

  “I represent the proprietor of a major media company based in Bangkok who’s looking for investments in the United States, preferably in L.A.,” was what the Englishman told me.

  THE PRACTICE OF eighteenth-century Thai monarchs to take daughters of wealthy Chinese as concubines created two distinct advantages for the Thais: it established political connections in China, and it encouraged Chinese merchants to infiltrate trading houses in Thailand, which kept the Europeans in line.

  Sondhi Limthongkul is a Chinese Thai, which makes him an entrepreneur by nature and design—one who had multiplied a single business publication into thirty more and a personal fortune.

  I flew to Bangkok to meet him.

  Travel without your family is a different kind of travel. Enrichment comes by what is experienced from what you—and sometimes only you—know of yourself. In fact, some of the best moments in travel lose their moments when, afterward, you are forced to describe them anecdotally to someone else.

  No matter how dearly I loved W., he would not have understood my delight the moment I spotted Peter Ustinov walking through the lobby of the Mandarin Oriental in Bangkok. In fact, if W. had been with me, the moment would not have been the same.

  It wasn’t simply a pleasure of the moment, but rather the personal history of its parts. It had to do with being told by Jonathan that, before leaving Bangkok, I should have lunch at the Mandarin Oriental, where I should make a point of ordering a club sandwich and enjoying the view. He hadn’t disclosed what the view would be, allowing me the pleasure of anticipation. It was that the view turned out to be of the magnificent sweep and the constant activity of the Chao Phraya River … that the club sandwich rewarded me with a recognizable taste of home … that the delicious sandwich, made with perfect toast, was on an elegantly simple white plate, placed on a table draped in crisp white linen. The table was on a terrace outdoors, so I could feel a warm breeze, and it was far enough from the next table that I could imagine I might have been the only one looking out at the world. It had to do with the fact that I was sitting by myself, with myself, but that I also loved my husband and son a world away … and that I was part of a family to which I would be returning soon.

  The moment also had to do with my mother, a complicated and emotionally unavailable woman, who, for reasons unexplained, had simply stopped talking to me one day the year prior. But before she did—in a fleeting comment—she made herself available enough to tell me she admired the wit of Peter Ustinov, the intellectual acuity of Peter Ustinov, his gift of mimicry and his keen interest in art history. It was that—after the sandwich, the river view, the sublime happiness at my own good fortune—the object of my mother’s admiration was walking toward me in the lobby, headed to the pool in a white terry cloth robe and flip-flops.

  All the moments became a single, aggregated moment. It suggested itself in his eyes before making its way down to the corners of his mouth. Without either of us breaking stride, just at the point we passed each other, Peter Ustinov and I exchanged a smile.

  It was a good omen.

  The next day, Sondhi, based in Bangkok, agreed to become the magazine’s largest shareholder. And like a contrived twist in the middle of a problematic plot, my salvation came from a stranger in a distant land.

  During the nine years we worked together, Sondhi proved Western in his professional behavior—by that I mean he was goal oriented in ways I recognized. But his attitude toward money remained decidedly Asian.

  My upbringing had placed the subject of money off-limits, making it difficult for me to discuss it other than in the context of business. Even more uncomfortable for me was the appearance of large amounts of money outside of a bank. And so whenever Sondhi pulled out thick reams of bills from a leather bag handed to him by his assistant, I was not only embarrassed but couldn’t help feeling something nefarious was afoot.

  Experience is a great leveler, and the longer I conducted business in Asia, the less furtive I felt with the public display of money. By the time I became a consultant in China, I had no problem accepting remuneration in tightly rolled tubes of renminbi and transferring them into Ziploc bags. Like everyone in China, I paid for things in cash. Since the largest bill the Chinese government prints is still the hundred-renminbi note, worth about sixteen dollars, doing and buying things in China takes a great many of them.

  Determined to avoid any questions from the IRS, I was scrupulous in reporting my income from China. But—with so much cash changing hands there—I saw how Chinese businesses hid profits in plain sight. It’s not just Chinese businesses that manage to retain cash; memories of deprived childhoods have led members of the older generation to hold on to most of what they’ve earned. When they’re not hoarding cash, they’re using it to purchase everything from cars and houses to yachts and foreign luxury goods. Paper money was invented by seventh-century Chinese merchants. The Chinese government—the first to print paper money—consequently has no choice but to print more of it. China now accounts for about 40 percent of all global currency paper output. Printing bills in larger denominations is the logical answer, but the government, concerned that doing so would fuel inflation and facilitate easier payments to corrupt officials, refuses this straightforward solution.

  CHAPTER FOURTEEN

  China has become an economic world leader in a remarkably short period of time, but the reliability of its national accounts remains a matter of debate.

  Institutional culpability is an issue with which the Chinese will be forced to contend in order to rebalance their economy from one driven by investment to one based on domestic demand. Petitioning the powerful—a practice in China for centuries—continues to substitute for legal process, and the Chinese judicial system almost always bends toward the interests of the state. Without laws of the land, business contracts between Chinese and Westerners are not binding, nor are there legal remedies to correct that frustrating injustice.

  Released from accountability, or what Westerners believe to be the moral obligations of playing fair, the Chinese are not always of the mind that they need to pay Westerners
what is owed, particularly when it comes to services. It’s been my unfortunate—but by no means unusual—experience in China that when an inequity is revealed, it produces silence but not shame. Sometimes, though—when and where you least expect it—a business agreement falls effortlessly into place alongside its fair and forthcoming compensation.

  That was the case with me and a Cantonese businessman.

  Walking through the lobby of the St. Regis Beijing after a breakfast meeting, I passed the Chinese wife of a Western business associate. She introduced me to the man with whom she was chatting. He was extremely small and painfully shy and spoke no English. I offered two or three polite words and wished them a pleasant day. A few hours later, the woman phoned to explain that the man was a friend of the family and wished to extend an invitation to us both to come to Guangzhou, where he was based when not in Beijing.

  “Well, that’s very generous of him,” I told her. “But I’m scheduled for a working session with my book publisher here in Beijing at the end of the week.”

  “No, I mean this afternoon. He’s inviting us to go this afternoon,” she said.

  “What kind of business is he in?” I asked.

  “I told him about your background,” she answered, deflecting my question.

  “Where would we stay?” I asked.

  “At his resort,” she told me. “He owns a resort.”

  Two months before, I might have thought the proposition disturbingly odd. But living among the Chinese for that same period of time had enabled me to acknowledge that, yes, it was odd but, no, it was not necessarily disturbing. I flew to Guangzhou that afternoon.

  When we landed, the other passengers were kept in their seats while we were ushered to the front of the plane. The hatch opened, and there, directly in front of us, stood several members of what I assumed was the local police. They escorted us to a car parked on the tarmac to take us someplace. Where I could not say.

  It was at this point I decided to press for more information.

  “What would you like to know?” asked the woman who, just a few hours before, had convinced me to come.

  “What is the name of our host?” was where I thought I should start.

  She told me to refer to our host simply as Chairman. There was no “the” in front of Chairman, just Chairman. That a preceding article wasn’t called on gave Chairman its celebrity-like ring.

  Chinese capitalism consists of three interwoven categories: state-owned capitalism, international capitalism, and private capitalism. The last of these blurs the boundary between reason and something else entirely. Chairman made his fortune in real estate, not an unfamiliar path to riches in China.

  Because the Communist Party apparatus includes provincial-level governments, the provincial leaders have regionalized authority over large municipalities. And because those leaders’ advancement in the party is based on their region’s growth, it is not difficult to puzzle out why top local government officials are making the kind of decisions that will facilitate urban expansion.

  Nor is it any wonder that many Chinese living in the country wish to move to the city. Urban residents receive state-allocated jobs and access to an array of social services currently denied to those living in the country. Given the inflated housing prices, it’s a financial stretch for most Chinese to own their own homes. Complicating matters further is the contentious issue of the hukou, which has blocked those in rural areas from receiving the same social services as do city dwellers.

  At the 2013 Third Plenum—a gathering of party leaders to set economic policy—there was an agreement in principle to strengthen land rights and shore up China’s social safety net. But at the time I met Chairman, people seeking to move from the province in which they were registered—where they were born—needed governmental approval.

  Chairman managed to put all of these challenges to work on his behalf. The scale of his real estate holdings—and his corresponding level of wealth—was extreme, even for China.

  Guangzhou is a trading port and the capital of the province of Guangdong (historically known as Canton). Located on the Pearl River not far from Hong Kong, it is a key national transportation hub and the third-largest city in China, right behind Beijing and Shanghai.

  Chairman owns a great deal of Guangzhou. How this impressive feat was accomplished touches on all aspects of the Chinese system, one in which politics and business work in a partnership driven by mutual self-interest.

  Honoré de Balzac suggested that behind every great fortune in France was a crime. In China, it’s not so much a crime but guanxi. Like the Chinese Thai, the Cantonese in southern China are known for their shrewd business sense. Chairman was somehow able to grant relocation permits to those agreeing to move into his apartment complexes in Guangzhou. The ever-increasing numbers of Guangzhou’s new residents gave rise to his ownership of more and more residential buildings there, which in turn provided him the financial wherewithal to buy and build more and more of the city. It was a brilliant business model.

  After amassing his billions, Chairman made arrangements for a huge temple gong to be loaded on a flatbed truck. The truck was driven to Conghua, where legend tells of fenghuang, the majestic Chinese Phoenix, which—so struck by the beauty of the mountains—stopped midway, in its journey across China’s southern sky to rest there. Chairman instructed his security force to fan out and surround the Phoenix Mountains. The gong was struck, and as far as it could be heard, Chairman took possession of the land. On it he built an enormous resort complex designed to evoke an imperial hunting palace. He called it Imperial Springs.

  My arrival at Imperial Springs unspooled with cinematic fluidity. Security guards saluted as our car drove through the arched entrance. That formality was repeated each time the car passed the numerous checkpoints, where yet more security guards wearing headphones announced me in advance to those waiting at my final destination. Lined up in a precise row in front of the enormous villa where I would stay were all five of my personal butlers, two of whom handed me a bouquet of flowers so large it had to be held by two more assistant butlers. My overnight bag was unpacked, the few clothes I’d brought were sprayed with rose water before being placed in a walk-in closet the size of most New York City apartments, and I was given a printed agenda of a tour that would stretch over the next two hours on acres of Crayola-green lawns and gardens that appeared computer enhanced.

  What I saw would cheat anything in fiction.

  Imperial Springs has a center equipped for corporate conferences that includes a thousand-seat state-of-the-art auditorium with eight simultaneous translation booths and a ballroom that can accommodate five hundred.

  There is also a golf club with the confusing name of International Summit. The twenty-seven-hole course features remote-controlled electric golf carts that drive themselves. The golf club resembles a larger version of the Gate of the Heavenly Peace in Tiananmen Square; its interior is borrowed from Ralph Lauren.

  Overlooking the resort is the presidential villa. With perfect feng shui, it backs onto the Phoenix Mountains and faces the Liuxi River. The villa has a helicopter landing area, twenty-eight bedrooms, twenty-four-hour butler service, a private chef versed in international cuisine, and outdoor and indoor swimming pools. All of these amenities are scrupulously maintained by a dedicated staff and await the president of a country, any country. Alas, there have been no takers. But for those non-presidential guests staying at Imperial Springs, there are, situated along the mountains, thirty-seven individual villas in the traditional Chinese style.

  The resort also boasts China’s only all-suite hotel, a bar that also functions as a giant humidor, and a spa with six treatment rooms, each with its own radon-infused hot spring. There is a private museum to house Chairman’s art collection and a separate living compound for the thousand people who work at the resort.

  Although Imperial Springs had been built two years before my visit, Chairman could count the number of guests on one hand. That face-losing fa
ct was the troubling issue he wished to discuss with me. But in China it is considered inexcusably impolite to discuss business over the first meal, and so no business was mentioned during the elaborately staged dinner that night. The meal began with a total of five rare Tibetan caterpillars being gently placed in my soup broth. Each cost a hundred dollars, and the time-consuming presentation meant I could not ignore the math. I was grateful that it took the time it did to complete the ritual, for it ensured that—on the off-chance they were still alive—the caterpillars would likely drown before I was expected to show due appreciation by eating them one after the other.

  It is a genetic understanding in China that you don’t trust anyone but your family. And so it was Chairman’s family I met the next day before an overture was made for me to become a consultant to his holding company, which controlled interests in a private bank, restaurants, hotels, and schools, in addition to Imperial Springs.

  It wasn’t until I flew back to Beijing with the woman who brought me that I heard the story behind International Summit, the golf club whose name makes no reference to golf. The Chinese are enthusiastic players of golf. It combines business with the obvious display of wealth: building golf courses in China requires a subsidized move of farmers off the land. For that reason, it is against the law to build a golf course on the mainland. Chairman built one nonetheless—three, as a matter of fact, and not one of them was referred to by what it was.

  The caprices of the very rich in China are no different than those I’ve seen in any number of other countries, including my own. The morning I left Beijing for Guangzhou, China Daily ran an article on a certain tea that is grown by using panda droppings as fertilizer and costs $31,000 for five hundred grams. Chairman’s wealth was made obvious not so much by his resort but by the fact he had three children. He had paid dearly for that privilege with something known as a “social compensation fee,” a fine for the very rich that buys them dispensation from the one-child policy.