Archive for the ‘Banking’ tag
China Entrepreneur magazine has published an English translation of its in-depth examination of the Wu Ying case. Wu Ying is a young woman who was once China’s 6th richest woman but is now on death row for “illegal fundraising”. The case has sparked a debate in China about the fairness of capital punishment.
The long China Entrepreneur article looks at not just her alleged crimes but also the underground financing ecosystem in Zhejiang Province. A highlight:
Wu Ying’s case has reflected the dilemma that small and medium enterprises in China are currently in, with the narrowing of the funding channels and a system still under development. When Wu Ying found no support from official financial institutions, she turned to private lending, a gray area that falls outside the supervision of the authorities. The final verdict in her case will directly impact private enterprises and private lending, and become a key precedent.
The most important question for businessmen is not whether Wu Ying is given the death sentence, but rather whether the debtor and creditor in a private lending arrangement have committed any crime as they practice outside the financing and credit system of the authorities.
“In terms of law, this case is rather clear. In terms of social influence, why is it so important to kill her, a young girl who has encountered problems in her business? What social effect would it bring if she were sentenced to death or sentenced heavily?” asks Tian Wenchang, director of King & Capital Law Firm, a confidant of Wu Ying from the law firm that is defending her.
What is more important: to make Wu Ying a sacrifice on the altar of control over private lending, or to lift the ban on private lending which is already a common practice? The best result would be for Wu Ying’s case to draw the attention of decision makers, and make them more aware of the current underground financing conditions and regulate the market.
Who wants Wu Ying dead?
Dongyang falls under the jurisdiction of Jinhua city. Like other cities and counties in Zhejiang province, private lending is so active here that even government officials get involved.
The two biggest industries in Dongyang are wood carving, and the Hengdian Film & TV studio. Dongyang is a forty minute drive from the much more prosperous Yiwu city.
Wu Ying’s father Wu Yongzheng, her husband Zhou Hongbo and many creditors share one belief about this case: Wu Ying is in trouble because she has picked the wrong place at the wrong time. They say her fall is not caused by private lending, but by her shaky foundation of powerful connections in Dongyang.
“You have no idea how common it (private lending) is in Dongyang. There are so many investment companies in Dongyang, and if this is a crime, then half of the people in this field should be put to jail,” a female creditor said. She believed that Wu Ying did nothing wrong by borrowing money from people. “She is just too young. Those who have expertise in this are still safe no matter how much money they have borrowed.”
“Dongyang has made a lot of efforts to attract investors, but few chose to stay, because the business environment is no good here,” Wu Ying’s husband Zhou Hongbo said during a phone interview. He said that he was strongly against Wu Ying’s idea of trying to grow her businesses in Dongyang, because he believed that she was too weak to compete against the local powers.
Wu Yongzheng says that his daughter told him that she was threatened for refusing to pay bribes to the Lou family, which he calls the local power that has dominated Dongyang for years. He remembers the threat as if it were a line from a gangster film: Somebody said, “‘who cares Wu Ying is making so much noise now? Sooner or later I’d have her kneeling down before me.’ ”
You can (and should) read the entire piece here.