Red Roulette | Desmond Shum

Summary of: Red Roulette: An Insider’s Story of Wealth, Power, Corruption and Vengeance in Today’s China
By: Desmond Shum

Introduction

Embark on a riveting journey through the intricate world of power, wealth, and corruption in Desmond Shum’s ‘Red Roulette: An Insider’s Story of Wealth, Power, Corruption and Vengeance in Today’s China’. This gripping narrative presents the experiences of Shum and his wife Whitney Duan as they navigate China’s complex political and business landscape. The book unravels crucial themes such as the all-important guanxi, the gravity of political connections, the omnipresent CCP control over all aspects of life, and the perilous roulette of China’s wealth and politics. Get ready to explore the depths of China’s recent transformation and the accompanying consequences of the Chinese Communist Party’s resurgence of power.

From Foreigner to CEO

Desmond Shum, born in Shanghai and raised in Hong Kong, gained a mix of business knowledge and social skills while studying finance and accounting in the US. He worked as a stockbroker and for a private equity firm, before returning to mainland China as CEO of a company, but eventually left due to market changes. Shum’s experience as both a foreigner and a CEO shaped his understanding of Chinese human relations in business.

A Dynamic Duo in China’s Business World

Shum and Duan’s Partnership

Shum and Duan met in 2001, creating a successful partnership that combined Shum’s business acumen with Duan’s political acuity. Duan was a former government employee who turned to business after witnessing corruption in the government. She quickly gained a reputation as a skilled dealmaker, leveraging her contacts to sell IBM servers to state-run telecom companies. Duan’s success drew Shum’s attention, impressed with her political connections and knowledge of China’s growth engine.

Their professional relationship turned personal, allowing Duan to provide practical insights that complemented Shum’s approach. Together, they established a winning combination, with Shum learning Western business norms and spreadsheets, and Duan showcasing her talent in creating excellent political networks. In Duan’s own words, she was “committed to ensuring that ‘if you pulled my corpse out of my coffin and whipped it, you’d still find no dirt’,” indicating a deep commitment to ethical business dealings and a fear of the corrupt Chinese political system. This partnership highlights the synergy that can arise when complementary skills are harnessed towards a common goal.

Navigating political relationships in Chinese business

Doing business in China can be a complicated process. Political connections, known as “guanxi,” are crucial in navigating the permissions and obstacles that can arise, and lower-level officials may hold up deals for personal gain. To facilitate their business dealings, a couple in China purchased expensive gifts for important officials and enlisted the help of Auntie Zhang, the wife of one of China’s top politicians and a close friend of the couple. Although Auntie Zhang never got personally involved in business, her connection provided the couple with political clout and helped them navigate any obstructions that arose. Duan continued to court established and rising officials while creating future business allies and even dined with Xi Jinping before he became China’s leader. The key to successful business dealings in China is cultivating relationships and anticipating the needs of those in power, all while understanding that the rules are bendable as long as you have guanxi.

The Perks of Personal Connections

This passage follows Shum and Duan’s journey in creating a major airport project in Beijing, China, despite the territorial officials in charge. They learned to navigate the process by forming personal relationships and investing in business entertainment. With their persistence, they were able to acquire access to cheap credit and garnered the necessary approvals to complete the project. They also seized the opportunity to purchase stock in Ping An, which proved to be a lucrative investment. The couple utilized their newfound wealth to construct the prestigious Bulgari hotel and office complex through additional personal connections. To succeed in China, they learned to align themselves with someone’s political affiliations or personal networks and ultimately proved that in business, luck and having personal connections play a significant role.

The Cost of Doing Business in China

Shum, an entrepreneur in China set out to do well for himself and help build China. He believed economic development would lead to political openness and less CCP control. However, the party started to push back against Western ideologies, and entrepreneurs were only useful to them when necessary. To show loyalty, Shum became involved in state-supported marches in Hong Kong. This internal change cost Shum and Duan major relationships, and they sold their airport venture because the national mood turned against entrepreneurs. Shum had seen how state-owned enterprises could be detrimental.

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