The Man behind Xiamen PX project

Translated from Wang Boda (Yazhou Zhoukan, Issue 23, 2007)

Notes: In early June, thousands of people in Xiamen City took to the street to protest against the government's approval of the construction of a PX (it is alleged a toxic chemical) production complex. This article is about the secret Taiwanese tycoon behind it.

Taiwanese businessman Chen Youhao attempted to push the project of PX forward. The CEO of his Xianglu Group is Yu Xinchang a high-tech elite having studied in the United States. Years ago when he worked in HP (US), he was the supervisor of Jiang Zhemin's (former Chief Party Secretary) son Jiang Mianheng. He helps Chen make connection with the Beijing top officials. Chen has such a strong political and business network in China that officials in all ranks could not resist his temptation of money.

Xianglu Group triggered off the strong wave of environmental movement. In fact, Chen has prepared for this controversial project for long time and fully made use of his complex network of politics and business. But not many know that Yu Xinchang, CEO of Xianglu, was colleague of Jiang Mianheng, son of former Chief Party Secretary and President Jiang Zhemin, in HP (US). Yu was Jiang's supervisor and has close relationship.

Yu, of Zhejiang origin, was born in Taiwan. He got his PhD degree in Computer Science from the Illinois University in the US. During 1987-1992, he worked as CEO and General Manager of HP (China).

Jiang Mianheng is a top elite of China's “Crown Prince Party” (Taizhi Dang) and has close contact with the new generation of Taiwan's political and economic elite group. He had cooperated with Wang Wenyang, son of Taiwan's “God of Business” Wang Yongqing. He was committed to developing the China's information technology industry and caught media attention.

Chen, one of the important donors for the KMT, has donated hundreds of millions New Taiwan Dollars. It is speculated that Lian Zhan's trip to China helped Chen build up the political foundation of his economic project.

Yu Xinchang is highly regarded in Xiamen. In 2005, he was appointed as one of the ten outstanding entrepreneurs in Xiamen and Fujian Province.

Chen offered a huge amount of money to Yu for taking charge of Xianglu because he attempted to make connection with Jiang through Yu. Looking back upon this incident, we could see that China's top officials helped Chen a lot in expanding his enterprises. That is why he could develop his business at such a fast pace.

In the southern coastal area, Chen's core enterprise is Xianglu Group which includes a wide range of areas such as fibre production, petroleum chemical production, hotel and seven power plants. The capital amount of Xianglu Polyester Textile reaches as high as US$475 million. Xianglu Petroleum Chemical Industry has recently doubled its initial investment fund of US$260 million. Xianglu Petroleum Chemical Industry's investment in Haichang Xiamen through Tenglung Aromatics is crashed. Chen's dream of competing with Wang Yongqing to lead the petroleum chemical industry may be broken.

Chen Youhao wants to supersede Wang Yongqing

The total capital investment of PX project reaches US$1.4 billion. This is the most crucial part of the petrochemical industry. After construction, its annual production value is RMB 80 billion. Tenglung could produce 0.8 million tons of PX each year. This amount with Xianglu Petrochemical's annual production of 1.5 million tons would turn Chen into the world-class giant of this industry. He would accomplished the two crucial vertical integration of Polyester chemical. If so, Wang Yongqing's Formosa Plastics Group would not be able to compete with him.

Yet Chen's dream is broken by the rise of citizen right consciousness in Xiamen. After a series of protests and rallies, Tenglung's project is postponed and it is a big piece missing in Chen's territory.

Chen's corporate development in China is not always smooth. But he still expands the scale of his Taiwan business for ten times in China. In Taiwan, he had owned the Grand Formosa Hotel. In Xiamen, he built a so-called “biggest 5-star hotel in Asia”. Passing by the Xiamen Bridge, you will see Xianglu International Hotel. This grand hotel, occupying a site of 200,000 square meters and providing state of the art facilities, was opened on September 7 last year. As the relationship between Chen and Taiwan government is very sensitive, although the hotel was opened with the presence of political and business VIPs, Chen did not show up. The hotel denied having any relationship with Chen.

Chen's total investment in China reaches 3 billion

Chen's planning in China consists of two huge groups of Donglian and Xianglu with total investment of US$3 billion. He is one of the biggest Taiwanese investors in China. In order to maintain the integrity of his China investment, he widely made friends with people from the central to local governments. In 2000, Xianglu's board director Wu Hongxian, former Chief Secretary of Kaohsiong City Council and Chairperson of KMT's party branch, was replaced by Taiwanese businessman Yu Xinchang.

The personnel arrangement of Xianglu was related to the election in 2000. After it, Wu's political connection lost its value. Instead Chen needs Yu's good connections in Mainland China.

Chen, former CEO of Dongdishi Group, is one of the top ten overseas criminals wanted by Taiwan government. He is a big name in both Taiwan and Mainland. Chen has strong connections with politicians and businessmen in Taiwan. Many years ago, Li Denghui and his associates were his close friends. Likewise Chen has built up his empire of political-business network in Mainland China. His Donglian Group and Xianglu Group in Southeast China are his territory he has managed for years.

According to informants who had worked with Chen, Donglian Group is his first corporation in China. It is a joint venture of Lin Wenjing of Sanlin Group in Indonesia, Li Henglung, board director of Pacific Distribution Investment Co. involved in the corruption case of Taiwan SOGO, Hong Kong businessman Zhu Jiezheng, Zheng Zhoumin, Chinese businessman in the Philippines and Asia Trust and Deng Ahua, Uni-President Group and Taiwan's “Tainan gang”. All of them are big names and influential in political and economic circles. Years ago, Donglian Group was registered in Bermuda as United Oriental Bermuda Co. Donglian Group is a key player in Chen's plan of China including the Petrochemical in Tianjin and Liaoling, Cement Plant in Shanxi and Real-estate company in Beijing.

Beijing Donglian Building

In 1993, Chen built the Donglian Building, a site of 2,000 square meters, seven storey and located in Deshengmen Outer Avenue, Beijing. This is the core of his corporate empire including Donglian, Dongyao Estates, Donglian Agriculture and Xianglu Group. This is Chen's headquarter. Among them, the most eye-catching is the Taiwan Liaison Office. It is a proof of Chen's skill of maintaining political and business networks. He is able to build up them across the straits.

There is still a big project of Donglian in Beijing. Through Donglian Agriculture, it expropriated a big piece of land just next to the Great Wall in Miyun County. Donglian claimed that it is for the use of agriculture. But the property price around Beijing is going up recently. This piece of land is big enough for building a small city. It is believed that Chen will turn it into money.

People close to Chen Youhao said that Chen is completely calculative with his personal networks. Chen's cooperation with Sanlin Group of Indonesia or Taiwan's Uni-President Group turned out to be an unhappy ending. When he dealt with Wu Hongxian, Liu Taiying, KMT's former chairperson of investment management committee and Li Denghui's core aide Su Zhicheng, he only cared about his own interest. His donation to Chen Shuibien was only for his own interests.

It is alleged that although Chen has built a grand corporate empire in Mainland, he left a huge debt of 50-60 billion in Taiwan. He remains very low-profile in China.

Because of this huge debt, Chen is worried that his creditors in Taiwan might send people to assassinate or kidnap him. He does not dare to live in hotel. Instead he lives in his corporate headquarter and his Taiwanese friends could visit him only in Xianglu.

Looking back upon Chen's working style, one could expect that after his frustration in Tenglung's project in Haichang Xiamen, he definitely would use his political and business networks to make his dream come true. Chen is a big spender. Xiamen government and anti-PX civic groups will be faced with his “dollar offensive”. They might submit to his money. From what he did in Taiwan, one could know that both “blue” (KMT) and “green” (DPP) had accepted his huge amount of donation. It is estimated that KMT had received over NT$100 million. Chen Shuibian had received NT$20-30 million and DPP had also accepted quite a lot of money from Chen Youhao. Now his “dollar offensive” attacks three parties over the straits. It is an example of Taiwan's “money politics” taking effect in Mainland China.

Photo: The Dongdishi Group Building in Kaohsiung (Fishtail@Taipei)