PDF Summary:Red Roulette, by Desmond Shum

Red Roulette is Desmond Shum's autobiography chronicling his rise through China's business circles and increasing disillusionment with the nation's authoritarian government. Shum vividly recounts navigating labyrinthine connections, bureaucratic hurdles, and the compromises required to thrive amidst a system where wealth and influence often emerge from personal ties and political favor rather than merit.

As Shum ascends from humble beginnings, he gains firsthand exposure to elite "princelings" exploiting familial privilege. His optimism fades as President Xi Jinping tightens control, imprisoning rivals under the guise of anti-corruption and stifling any whiff of dissent. Shum ultimately abandons his pro-China aspirations due to rising personal risks from the unaccountable regime.

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Throughout Hu Jintao and Wen Jiabao's leadership period, private enterprises encountered considerable challenges.

Under the governance of Hu Jintao and Wen Jiabao, China experienced a notable phase of economic growth, but concurrently, there was a tightening of political freedoms. Following the 2008 worldwide economic downturn, the Chinese Communist Party heightened its emphasis on governmental oversight. Enterprises operated by the government were often given preferential treatment, securing advantageous deals and loans at reduced interest rates, while privately-owned companies faced stricter regulatory scrutiny and a plethora of bureaucratic hurdles.

The ruling authority was visibly uneasy witnessing the rise of autonomous entrepreneurs such as Shum, who were vocal advocates for individual freedoms, the creation of an independent press, and the implementation of democratic reforms within the political system. Throughout Hu and Wen's tenure, there was a subtle yet decisive tightening of power, signaling to the business community the true locus of command in China.

In the wake of the 2008 financial upheaval, the Chinese Communist Party strengthened its control over the country's economic levers.

The economic and governmental trajectory of China was fundamentally shifted by the financial crisis of 2008. In a period of financial instability and downturn, the strength of China's economy was in part ascribed to a vigorous stimulus approach, primarily executed via state-owned enterprises. The successes reinforced the belief among members of the Chinese Communist Party that the blend of state control with capitalist mechanisms was superior, and it cemented the view that the tenets of Western democracy and unrestrained capitalism possessed inherent flaws.

The Party's burgeoning assurance was evident in the policy pivot that now emphasized strengthening state-run businesses, often at the expense of the interests of the private sector. Desmond Shum acquired direct knowledge by participating in significant infrastructure projects, such as the creation of a logistics center near the airport. Initially open to partnerships with private sector investors, party officials began to scrutinize agreements more closely and insisted on increased supervision, all the while emphasizing the unchallenged authority of the Communist Party. The gradual change indicated the forthcoming conclusion of the period marked by unbridled entrepreneurial activity.

The introduction of new regulations that favored government-run businesses frequently resulted in negative consequences for privately-owned companies.

The policy change that led to favoring state-run enterprises was evident in various aspects. Private sector businesses faced stricter scrutiny from organizations like the National Development and Reform Commission, known for its complex approval processes and bureaucratic hurdles. Government-controlled financial institutions provided preferential lending to publicly owned corporations, while privately held firms struggled to secure similar financial backing. Government contracts, once awarded competitively, were increasingly directed towards SOEs, limiting opportunities for private sector participation in infrastructure and other large-scale projects.

Shum, who had sharpened his skills in establishing joint ventures with organizations associated with the government, watched the airport project's development with growing concern. He observed how the authorities consciously reasserted control over the economy, supervising fiscal strategies and state purchasing systems, thereby hindering the progress of independent companies while enhancing the influence and strength of government-run corporations. The metamorphosis, coupled with a growing crackdown on dissent, signaled a return to a stricter and more autocratic system, suggesting that business figures like Shum would need to adapt in order to prosper in this altered environment.

Xi Jinping's resolute consolidation of power and strict actions against dissent.

Xi Jinping's ascent to power in 2012 marked a clear shift towards a more authoritarian approach to governance. He utilized an anti-corruption campaign to strengthen his position in the party, effectively marginalizing opponents, among them Bo Xilai and other acquaintances of Shum, including a high-ranking individual connected to Hu Jintao. The initiative was designed to eliminate corruption and ensure the loyalty of the remaining officials, while simultaneously countering any opposition to Xi's authority.

In response to directives from Xi Jinping, forceful actions were implemented to quell opposition and independent entities, targeting groups within civil society, burgeoning independent media outlets, and scholarly institutions. Desmond Shum's growing commitment to fostering social accountability, backing charitable endeavors, and championing initiatives like the Kaifeng Foundation, heightened the stakes associated with his push for reforms in governance. He personally witnessed the Party's absolute intolerance for any autonomous behavior, even if it was well-intentioned. The uncompromising measures against dissenters clearly showed the determination of China's rulers to shape a country governed solely by the Communist Party, significantly curtailing the liberty of people like Shum to pursue their dreams.

Xi Jinping leveraged his anti-corruption drive to confront political rivals and reduce the sway of private entrepreneurs.

Xi Jinping's anti-corruption crusade was depicted as a valiant endeavor to cleanse the political party and restore public trust. However, Shum astutely noted that the initiative was strategically employed to target specific groups and individuals seen as potential challenges to Xi's power. Individuals once seen as contenders for the top tiers of power, including Bo Xilai, experienced swift falls from grace, facing convictions on dubious charges of corruption and abuse of power. Ling Jihua, previously connected to former Party leader Hu Jintao, was ousted from his role and faced accusations that implicated his deceased son, thereby damaging the reputation of the entire Youth League faction.

The initiative reached further than merely the sphere of political activities. Entrepreneurs who previously thrived by forging ties with Party officials suddenly found themselves facing increased jeopardy. Xi stressed that the advantages and influence obtained through political connections can be withdrawn if one strays from the guidelines established by the Party. This environment fostered widespread fear and skepticism among business owners, prompting many to move their assets overseas or to adopt a posture of complete conformity to avoid being singled out in Xi's campaign.

The increasing control exerted by the Chinese Communist Party on free expression, the press, and organizations dedicated to civil liberties starkly contrasted with the author's philanthropic activities and his push for political change.

Xi's amassing of authority extended beyond merely the realms of politics and economics. He devised a thorough plan to suppress opposing opinions and regulate information dissemination. The government curtailed the autonomy of the press by positioning sympathizers in key editorial roles and suppressing contrary viewpoints, thereby guaranteeing conformity with the narrative dictated by the Party. Organizations within civil society, many initiated with financial support from individuals such as Shum, encountered intensified examination and administrative obstacles, leading to the closure of numerous such entities.

Desmond Shum's philanthropic efforts, especially those associated with the Kaifeng Foundation, became increasingly perilous. His efforts to promote social responsibility and subtly advocate for alterations in governance were deemed intolerable and hazardous by the ruling authorities. The unwavering resolve of China's leadership to maintain complete control over every aspect of societal life is highlighted by this act of suppression, which also showcases Xi's intolerance for autonomous thinking or behavior.

Other Perspectives

• Deng's reforms, while economically transformative, may have laid the groundwork for the current authoritarian control, as they did not include political liberalization.
• The narrative that Deng's reforms were universally beneficial can be contested, as they also led to increased inequality and environmental degradation.
• The idea that Hu Jintao and Wen Jiabao's leadership solely posed challenges for private enterprises overlooks the global context and internal policy debates that also shaped their governance.
• The assertion that the 2008 financial crisis led to a straightforward increase in state control over the economy may oversimplify the nuanced and sector-specific responses that occurred.
• Xi Jinping's anti-corruption campaign, while criticized for targeting political rivals, could also be seen as a necessary measure to address systemic corruption within the party and government institutions.
• The tightening of control over free expression and civil liberties under Xi Jinping might be defended as a means to maintain social stability and national unity, though this perspective is contentious and not universally accepted.

The complex and often morally grey interactions that occur within the Chinese Communist Party's governance, which intertwine business and political affairs.

This section delves into the complex interplay between business activities and governmental governance in China, shedding light on elements that are often misunderstood. The book sheds light on how personal connections, elite standing, and special advantages shaped the landscape of opportunities, forcing figures like Shum to navigate a complex labyrinth of allegiances and compromises, within a setting where the stakes were high and outcomes were unpredictable.

The author delves into the complex realm of households belonging to China's politically influential and upper-class circles.

Desmond Shum acquired profound understanding of the inner workings of the Chinese Communist Party through his close relationship with Zhang Beili, who was wed to Wen Jiabao, the rising vice-premier of China, revealing a world controlled by the privileged descendants of the Party's foremost figures. He witnessed firsthand how these individuals leveraged their family connections to secure advantageous agreements and access resources with a degree of impunity that set them apart from ordinary citizens of China.

As he ascended to the upper echelons of power, his initial successes were overshadowed by growing skepticism regarding the fairness and integrity of the system. He observed that these prominent individuals often amassed wealth not through genuine talent or business acumen but by exploiting their relationships with powerful people, thus continuing the widespread corruption ingrained in China's governance and economic frameworks. As Shum became more cognizant of the darker elements of China's political system, his disillusionment grew, realizing that achieving success often meant making compromises on moral grounds in a setting saturated with preferential treatment and privileged access.

Forming connections with powerful families like the Wen dynasty was crucial for business success, but it required compromises in both morality and legality.

Shum underscores the importance of forging connections with powerful clans when engaging in commercial activities within China's market. He offers an in-depth description of the strong alliance his spouse established with Zhang Beili. Whitney found her independence and commercial savvy appealing, and she intentionally fostered a strong relationship with Auntie Zhang, recognizing her as an essential connection to the influence of the Wen family. The relationship, strengthened by regular social gatherings, the exchange of gifts, and support in private affairs, paved the way for lucrative opportunities that were usually out of reach for businesspeople lacking these ties.

However, as their business ventures flourished and yielded greater profits, Desmond Shum's unease intensified due to the moral compromises necessitated by their connection to the Wen family. Zhang's engagement in unofficial business dealings, common among high-ranking Party members, often blurred the lines between legitimate commerce and outright corruption. Shum wrestled with the ongoing difficulty of adhering to the entrenched norms within the system during his pursuit of achievement, slowly coming to realize that these norms benefitted a select few, often at the expense of fairness and transparency.

The writer observed that the children of powerful political figures exploited their advantageous status for their own benefit.

Shum offers a harsh critique of how children of high-ranking officials exploited their familial privileges for their own benefit. He details the methods by which certain people, like Li Botan (David Li), who is wed to a descendant of a prominent Politburo member, seemingly accumulated their fortunes by capitalizing on family connections to secure lucrative deals, dodge tax obligations, and exploit government assets for private ventures, all the while projecting a sense of untouchability and privilege.

Shum narrates disconcerting stories of the lavish lifestyles led by these princelings, who splurge on luxury goods, private jets, and expensive hobbies like polo, showcasing their wealth and status in a way that sharply contradicts the professed dedication of the Communist Party to serve the people. The widening gap between the opulent living standards of China's upper echelons and the struggles of the general populace slowly eroded Shum's faith in the system, showing that privilege and connections often outweighed hard work and dedication. He started to view the system as inherently tilted towards the affluent, thus exacerbating economic inequalities and breeding dissatisfaction among those excluded from the powerful elite.

The significance of personal networks and favoritism in obtaining agreements and official sanctions.

Desmond Shum's journey in founding businesses, particularly his role in creating a significant logistics center near the airport, highlighted the necessity of building personal connections to secure deals and obtain governmental support. He recounts that although his business proposal was robust and had global support, the progression of his initiative hinged on adeptly maneuvering through a labyrinth of administrative obstacles, which necessitated relentless advocacy, the exchange of mutual favors, and the tactical presentation of gifts and compliments to persuade the authorities responsible for issuing the necessary permits and licenses, as well as securing financial support.

Shum contends that reliance on guanxi exposed an inherent bias in China's systemic fabric, undermining the principles of fair competition by favoring relationships rather than genuine merit. While some connections, such as those with Shunyi District representatives Li Ping and Li Yousheng, were incredibly beneficial in accelerating procedures and fostering confidence, others posed challenges, particularly the obstinate official who demanded significant concessions and expensive payoffs, highlighting the unpredictable and corruption-prone aspects of the system. To thrive in such a setting, Shum understood that one must comprehend individual aspirations and be willing to conform to the unspoken standards, often at the expense of ethical principles.

In China, successfully carrying out a project often necessitated participating in the trade of bribes, returning favors, and utilizing one's network of personal relationships.

Shum offers a vivid portrayal of the complex environment in China's commercial sector, where success often hinges on strategically leveraging personal networks and the exchange of favors and bribes. He narrates the intricate process of securing approval for the airport expansion initiative, a route that often involved navigating through a labyrinth of bureaucratic obstacles, which included countless dinners with extravagant portions of expensive Moutai liquor, strategically offered presents like luxury watches and golf gear, and continuous efforts to appeal to the egos and personal ambitions of the authorities.

Shum illustrates how a cadre of bureau chiefs, wielding significant power, could indefinitely stall projects until their demands were met. He recounts a particularly frustrating encounter where a customs authority insisted on increasing the project's expenses by an additional $50 million before granting approval. The story highlights the deep-seated corruption within the administrative framework of China, emphasizing the importance of personal connections and mutual commitments rather than compliance with legal processes and fair competition.

The bureaucratic hurdles and solicitations for illicit payments consistently thwarted the writer's attempts to establish a hub for airport logistics management.

The story told by Shum regarding the evolution of the Airport City Logistics Park illuminates the challenges faced by entrepreneurs with strong ties to China. Despite receiving backing from relatives of Wen and working alongside a powerful government-run corporation, the project was persistently hindered by complex administrative procedures, shifting rules, and the shifting landscape of political priorities. Shum details the challenging process of obtaining over 150 distinct official stamps, with each one requiring a separate negotiation often hinted at or explicitly accompanied by demands for gifts, favors, or outright bribes.

He describes the process of preparing land for building as a harrowing experience because landowners, frequently in collusion with local authorities, would intentionally delay proceedings to extort substantial payments. In Shum's account, he emphasizes how unspoken rules and the prioritization of personal connections frequently eclipse formal processes and established contracts, leading to an environment filled with uncertainty and significantly shaped by the whims of powerful individuals.

The author's growing disillusionment with the widespread unethical behavior and authoritarian measures implemented by the leadership of China.

Shum begins his story with a hopeful view of China's potential, but as he explores the intricate governance structures of the CCP and witnesses the increasingly autocratic tactics, his early optimism gradually fades due to the self-serving and deceitful behavior of the Party's top echelons. The sudden detention and capital punishment of airport executive Li Peiying on allegations of corruption, notwithstanding his allegiance to the party and his role in advancing China's economy, underscored the system's disregard for justice and procedural integrity.

Desmond Shum's growing disenchantment was fueled by witnessing how the Chinese Communist Party deliberately stifled private enterprises, muzzled dissent, and obstructed any minor attempts to promote social accountability and push for governmental reforms. Shum started to reconsider his life in China and felt his personal safety was at risk after learning about the Wen family's wealth through a report in The New York Times. He understood that his accomplishments would be swiftly nullified unless he maintained absolute loyalty and obedience within a system that prioritized the interests of the political party above all else.

The writer's trust diminished when he realized that what was presented as anti-corruption measures were actually strategies to remove political rivals.

Initially, Shum was aligned with the prevailing sentiment among business executives that Xi Jinping's rigorous campaign against corruption might signal the beginning of genuine structural changes by tackling the widespread graft that eroded trust and impeded economic progress. The approach's emphasis on targeting specific people, particularly those perceived as potential threats to Xi's leadership, rather than confirmed corrupt officials, intensified Shum's skepticism about the prospects for genuine reform.

He recognized that the primary objective of the campaign was to consolidate political control by enabling Xi Jinping to eliminate rivals, solidify his authority, and intimidate any challengers. This revelation exposed the insincerity at the heart of the political party's core assertions, shattering the illusory belief in a system that claimed to recognize and reward individual skill and achievements. The story highlighted the primary goal of the Party as securing its continuity, skillfully leveraging corrupt practices to neutralize threats to its prevailing hierarchy.

The writer's choice to depart from China was shaped by his personal clashes with the aggressive tactics of the Communist Party, which led to the baffling disappearance of his spouse.

The Chinese Communist Party's authoritarian tactics, once confined to its political ranks, began to encroach upon the private lives of regular people, affecting individuals such as Shum who had once enjoyed significant ties to the upper echelons of the Party. Despite Whitney's efforts to shield the family by taking the blame, the disclosure of the Wen family's riches in a notable magazine caused ripples in their social circle, showing that the vigilant gaze and potential consequences of the Communist Party could reach even those with strong connections. This awareness intensified the existing strains in their marriage, culminating in their split and a particularly bitter divorce.

The Party's merciless nature became starkly apparent with Whitney's unexplained vanishing in 2017. This alarming occurrence, emblematic of a series of unauthorized detentions and coerced admissions aimed at those considered troublesome, underscored the intrinsic savagery of the regime. The incident highlighted the utter disregard for due process, legal rights, and basic human dignity, illustrating the true cost incurred in a situation where power is unchecked and accountability is lacking. Desmond Shum made the decision to leave China, a country he once dedicated himself to improving, despite his significant wealth and influence, because he felt that prioritizing his personal safety and freedom was crucial.

Practical Tips

• You can enhance your awareness of global business practices by comparing the dynamics of your local business community with those described. Start by observing how local businesses network and secure deals, then note any similarities or differences with the practices mentioned. For example, if you notice that a local business often partners with the same suppliers, consider whether this is due to efficiency, personal connections, or other factors.
• Develop a personal code of ethics for professional interactions to navigate your own business dealings with integrity. Write down your principles regarding networking, favors, and transparency, and commit to following them in your professional life. When faced with decisions, use this code as a guide to ensure your actions align with your values, such as declining an opportunity that requires compromising your standards.
• Use storytelling to foster ethical awareness in your community by creating narratives that illustrate the consequences of unethical behavior. Write short stories or create simple comic strips that depict scenarios where favoritism or corruption leads to negative outcomes, and share these with friends or on social media to spark conversations about ethics and personal responsibility in business and politics.