Those in the Chinese city of Shenzhen who know Wu Kin Hung usually say the same things about the man: that he is a giant of the real estate industry, an accomplished poet, and very good at what he does.
Last summer, Mr. Wu led Toledo Mayor Mike Bell to the top of Shenzhen’s “Empire Building,” the pale green glass skyscraper for which he is best known in the coastal city that is home to many of the factories making goods bound for the United States.
At the top of the 69-story tower, also known as “Shun Hing Square,” Mr. Bell held out his arms as if to embrace the skyline before him, with a smiling and laughing Mr. Wu joining him perilously close to the edge of the building.
With the mayor and his business partner, Yuan Xiaohong, standing at his side posing for photos, Mr. Wu boasted about the building’s construction, which he oversaw.
In fact, Mr. Wu pointed out, he was “the general manager for this whole thing,” and “the speed on construction of this building was building every story in three days.”
The result was a record, he said, in the 1990s “in terms of speed in the height a building rises.”
Although he also mentioned that the entire city was built in just three decades, he didn’t point out that he was a key government bureaucrat overseeing Shenzhen’s growth.
In Toledo, Mr. Wu is less well known. He is one of two Chinese investors who spent millions of dollars to buy from the city The Docks restaurant complex and more than half of the vacant Marina District, both along Toledo’s riverfront in East Toledo across from downtown.
An investigation commissioned by The Blade in China into the backgrounds of Mr. Wu and Ms. Yuan — the pair behind Dashing Pacific Group Ltd., the new owner of The Docks and the Marina District — shows that the two investors made their millions working under China’s common system of patronage, which is heavily reliant on family relations, personal connections, and favors.
Both, it appears, owe much to their connections with officials in the ruling Chinese Communist Party.
According to the Chinese investigators — whom The Blade hired but has decided not to identify because of concerns about possible Chinese government retaliation — Mr. Wu appears to have amassed a personal fortune after spending years as a Shenzhen government bureaucrat dealing with land-use management.
His years in government were followed by the establishment of several of his own companies, which included building apartment complexes and managing a water reservoir in Shenzhen.
Ms. Yuan, a sometime resident of Shenzhen born far to the north in Inner Mongolia, made her fortune not in real estate development but by running an information technology business with ties to the government.
Ms. Yuan and Mr. Wu agreed to be interviewed by The Blade through a translator via telephone from China, but on the morning of the interview, Mr. Wu declined to participate, saying through a spokesman that he was traveling on business.
He also declined to respond to written questions from The Blade.
Instead, the Wu family issued a statement:
“We are very grateful to the many Toledo residents who have welcomed us into their lives and homes,” the statement reads. “We have found the city of Toledo to be a friendly, peaceful, and beautiful place, and we want to do something positive in this community … We have complied with all laws and business standards in China and have worked diligently for many years to earn the respect of our business partners there. … We respect the mission of the media to provide information to the American public, and Dashing Pacific is committed to providing information regarding the development of the Marina District as it becomes available. However, based on our review of your questions, we have decided not to participate in this interview.”
For Mr. Wu, 55, it seems success came as a local government planning official at the center of the transition of the city of Shenzhen, near Hong Kong, from a small fishing town of 20,000 into a metropolitan area with 17 million people. That transformation occurred in a matter of years thanks to government oversight of the Shenzhen economy that allowed and encouraged capitalism to flourish within the totalitarian state.
Ezra F. Vogel, a retired Harvard University professor and author of Deng Xiaoping and the Transformation of China, said business in China exploded in the 1980s as a special economic zone was set up in Shenzhen.
Mr. Deng, an important Chinese political figure and de facto leader of the country, is credited with reshaping China and lifting hundreds of millions of peasants out of poverty. Shenzhen was the focal point in that transformation.
“Probably no city in the world grew up like Shenzhen, from 20,000 to a place larger than New York or Los Angeles,” Mr. Vogel said from his home in Massachusetts.
Mr. Deng’s vision was to truly transform China.
“Given that China is still backward, what road can we take to develop the productive forces and raise the people’s standard of living?” Mr. Deng wrote in 1984.
“Capitalism can only enrich less than 10 percent of the Chinese population; it can never enrich the remaining more than 90 percent. But if we adhere to socialism and apply the principle of distribution to each according to his work, there will not be excessive disparities in wealth. Consequently, no polarization will occur as our productive forces become developed over the next 20 to 30 years.”
Mr. Vogel, who was questioned by The Blade about how business works in China, said Shenzhen’s development was “sort of like the Wild West in the United States.”
“There were a lot of gray areas and the rules had not been really established. It was all so new [and] the officials tried to keep controls, but a lot of personal arrangements developed to make things happen,” Mr. Vogel said. “They tried to establish laws later on. Some people continued their personal relations and found ways to put stuff in their own pockets, and there is no question that there is a lot of that all along the coast near Hong Kong in the Guangdong Province.”
The review of Mr. Wu’s career by Blade investigators in China found that he was deeply involved in the development of Shenzhen as it became the incubator for capitalism in China.
“No one can know exactly how much money Wu made from these spoils of office, although he was not the only one,” the investigators wrote in their report.
During Mr. Bell’s second trip to Shenzhen last year, Ms. Yuan and Mr. Wu took the mayor on a bus tour that included a visit to a statue of Mr. Deng overlooking the city. As the vehicle pulled up, Ms. Yuan turned back to Mayor Bell and said, “You have to learn from that man, Deng Xiaoping.”
Mr. Wu was born in June, 1956, as the second of four children “to a family of well-connected Chinese Communist Party” members about 170 miles north of Shenzhen in Longchuan County, Guangdong Province, according to investigators. He was admitted to South China University of Technology in 1977, a year after Mao Zedong died. There, he studied architecture, graduated three years later, and was assigned to work by the Chinese Communist Party at the Shenzhen Construction Commission.
“At the time, young graduates in China had little choice over their career and were assigned by the government to ‘work units’ thought to make the best use of their respective academic qualifications,” the report by investigators stated.
“However, it was possible for a lucky few in those days to pull strings by using a combination of private connections and family influence to land a posting in a work unit with more favorable working conditions,” the report stated. “This seems to have been the case for Wu, who was inducted into the SCC [Shenzhen Construction Commission] by its deputy head Ding Xuebao, himself rumored to be a relative of Wu’s parents.”
The University of Toledo’s Mark Schroeder, who recruits students from China to come to Toledo, said that situation is plausible.
“From what I know, that still exists. It sounds more than plausible,” Mr. Schroeder wrote in an email.
“It was normal in those years for those things to happen,” said Mr. Chen, who was born in China.
The investigators hired by The Blade learned that Mr. Wu, after graduating from college, was assigned to the Shenzhen Property Development Corp. with central government approval at the behest of Luo Jinxing, deputy director of the Shenzhen Property Development Management Bureau.
Mr. Luo, born in nearby Huiyang in 1935, is known in China as the “godfather” of Shenzhen real estate development. Mr. Wu stayed with the Shenzhen Property Development Corp. until 1997 and presided over its 1993 privatization into Shenzhen’s largest real estate company.
“Wu worked directly under Luo and became the latter’s political protégé,” the report stated.
The Shenzhen Property Development Corp. — a sub-bureau of the powerful Shenzhen Construction Commission — had a monopoly as Shenzhen’s only authorized real estate development office at the time Mr. Wu started working for the organization.
Also during that time, Mr. Wu was in charge of property development and rose to the rank of deputy section chief. One key project he was in charge of was the Shenzhen International Trade Building, built between 1982 and 1985, which became one of Shenzhen’s most iconic skyscrapers.
The investigators found that under Mr. Luo’s tutelage, “Mr. Wu made massive profits from his job at the Shenzhen Construction Commission.”
The report further states this would have occurred in different ways in Mr. Wu’s particular post, including deals with state-owned land buyers and through land auctions when that became authorized from 1987 onward.
“The sheer scale of profits accessible would have been unprecedented in China at the time, since Shenzhen was the first place in China where trading in real estate became legal,” the report said.
The report also states, “Between 1987 and 1988 alone, the Shenzhen government leased land worth 122 million [renminbi, China’s currency], or $19.3 million at today’s values. Wu would have made certainly millions, if not tens of millions, of dollars throughout his tenure at the Shenzhen Property Development Corporation in the 1980s. Our sources consider it very feasible that he can raise $200 million [to develop Toledo’s Marina District], especially since his political connections also ensure that he has access to easy credit from banks: In China where banks are not independent, the word of a powerful official is enough to unlock funds at will.”
David Yen, a professor at Miami University’s Farmer school of business in Oxford, Ohio, and director of the school’s China Business Program, said party connections in China can pave the way for deals.
“In order to set up a business in China you need to pass a number of levels to get approval, so the process is quite tedious. So with connections, the approval process will be much quicker.”
The Blade’s Chinese investigators discovered that Mr. Wu developed many powerful political connections while at the Shenzhen Construction Commission.
“These were achieved both through his patron, Luo Jinxing, and because Shenzhen’s nascent real estate industry was a pilot project in the economic reforms of Chinese paramount leader Deng Xiao- ping,” the investigator’s report stated. “As a result, powerful central government leaders became intimately involved with Shenzhen, including several of Deng Xiaoping’s own relatives, who profited handsomely from the city’s development.”
“As just one example, one of Wu’s notable princeling contacts includes Deng Xiao- ping’s niece, Ding Peng, who now leads Shenzhen Fountain Corporation, a lucrative property management company and one of China’s earliest and most profitable IPOs,” the report said. “Wu’s political contacts include many top-level associates of Deng Xiaoping and their family members, including former governors of Guangdong Province where Shenzhen is located, and at least two of China’s most well-known military figures, Wang Zhen and Ye Jianying. Wu’s list of political contacts, according to our sources, also extends to relatives of Wen Jiabao, China’s current prime minister, and of Xi Jinping, who is slated to take over the presidency of China from Hu Jintao.”
Mr. Xi met last week at the White House with President Obama.
The city of Toledo released a limited biography of Mr. Wu, stating that he was involved in the design and construction of the Shenzhen airport. That fact was confirmed by Blade investigators in China.
“In October, 1990, Wu became the general manager of Shenzhen Airport Construction Office-affiliate Shenzhen Airport Terminal Co. Ltd., when [that company] itself was founded, and remained at this position until February, 1992,” the report said.
“Wu does appear to have grown very wealthy,” the investigative report states. “Our sources claim that while at Shenzhen Airport Construction Office, Wu became the envy of other government bureaucrats because of the size of his fortune.”
He left his government job in 1993 to join Kumagai Gumi, a large construction company. According to both the Toledo-provided biography of Mr. Wu and the investigator’s reports, after he was hired by Kumagai Gumi he was put in charge of construction of the Shenzhen Empire Building, estimated to cost $142 million. That 69-story structure is the project that Mr. Wu to this day is most prominently associated with.
Mayor Bell and the Toledo delegation were taken to the roof of the skyscraper during their trip to China in May — Mr. Bell’s second of three trade missions to the country since taking office as mayor in January, 2010.
Wu the poet
Mr. Wu also is very active on the cultural front in China.
He is known to be a poet and once wrote and publicly recited a poem dedicated to Mr. Bell at a banquet in Shenzen after it was announced that Dashing Pacific would be buying The Docks.
Mr. Wu has published several books of poetry and is the majority shareholder in a company named Dawang Culture, which seeks to promote the arts in a scenic suburb of Shenzhen along the shore of the city’s large reservoir.
One of Mr. Wu’s books of poetry is named Longchuan Ji Sheng, which references Longchuan, a rural county where he was born. Long- chuan is known for its scenic beauty.
Mr. Wu also set up a theater company, Shenzhen Dawang Theatre Co. Ltd., in 2011, in which he holds 48 percent equity.
Mr. Wu also is chairman of the “Shenzhen Dawang Cultural Development Corporation,” according to his biography.
Several firms are associated with Mr. Wu, including a Hong Kong firm named Royal Asia that sells medical insurance to Hong Kong natives and a company named Eagle Nation. Information on both firms can be found in public domain documents in China.
According to public records in China, Mr. Wu serves as the chairman of a company named Shenzhen Yipeng Industry Co. Ltd., which does not appear in his biography released by Toledo. It is unclear what the company does. Originally, the business’ scope included sales of aluminium alloys and construction materials, which were eventually dropped in 1996.
Mr. Wu joined the company in November, 1999, taking over a 34 percent stake.
According to documents obtained by Blade investigators, Weipeng Industry appears to have been in the red for two consecutive years. It showed a loss of 510,000 Chinese yuan renminbi ($80,980) in 2009 and a loss of 1,240,000 Chinese yuan renminbi ($196,892) in 2010.
Weipeng Industry is a registered developer. One of its residential developments, called Weipeng Gardens, is a large 32-story property in the trendy Futian district of Shenzhen. Weipeng Gardens has 1,626 units, and 114 units were sold in 2010.
Weipeng Industry has the highest public profile of any of the companies connected to Mr. Wu. According to the Hong Kong Companies Registry, Mr. Wu also serves as a director of Golden Golf Ltd., established in 1993. The most recent incorporation documents, from June 23, 2011, show that Mr. Wu owns 40 percent of the firm. Golden Golf has the same registered Hong Kong address as Dashing Pacific.
A matter of trust
Mayor Bell says the backgrounds of Mr. Wu and Ms. Yuan, or the history of their Chinese business deals, are irrelevant to their investments in Toledo.
Still, the mayor says he knows Mr. Wu and Ms. Yuan as well as he knows Regional Growth Partnership Chief Executive Dean Monske, his former deputy mayor, or Jen Sorgenfrei, his public information officer and one of his closest aides.
“Is there something hidden? I can’t think of anything,” he said. “From what I understand, Mr. Wu is a very bright developer and … he was just very good at what he did. People liked his ability to put things together.”
Patrick M. Norton, a partner in the Washington law firm of Steptoe & Johnson LLP, who has experience in international commercial arbitration and mediation and international anti-corruption investigations, in general agreed with Mr. Bell when told of his efforts to attract investment.
“They have no right to turn down investors just because they are Chinese investors,” said Mr. Norton, who declined to comment at length because he didn’t have details about Dashing Pacific or The Blade’s commissioned investigation. “They shouldn’t be scrutinized any more than anyone else … or than someone from Chicago.”
Mr. Monske, whose association and friendship with former Perrysburg developer Scott Prephan ultimately led to the mayor meeting Mr. Wu and Ms. Yuan, said he trusts the Dashing Pacific businessmen because neither has ever shown cause to mistrust them.
“I know them as well as anyone else we would do business with in the manner we are doing business with them,” Mr. Monske said. “Quite honestly, we know [Mr. Wu and Ms. Yuan] better than most people who would be willing to have a business relationship with us and bring a company and business opportunity to Toledo.”
Contact Ignazio Messina at: firstname.lastname@example.org or 419-724-6171.