China’s wealthiest gaining on U.S. counterparts

chuanfu buffett

Wang Chuanfu. Net Worth: $5.8 billion. Company: BYD. Industry: Battery, Automobile. City: Shenzhen. Billionaire investor Warren Buffett (R) receives a BYD car model as a gift from BYD’s Chief Executive Officer Wang Chuanfu in this file photo. Buffett’s Berkshire Hathaway Inc has realized a $1.02 billion paper profit on a 10-month-old investment in BYD Co after shares in the mainland car and battery maker quintupled. China Daily.

His BYD, which makes electric cars and batteries, got a jolt from recent Warren Buffett investment; stock up 6 times this year.

China’s 400 Richest

The nation’s wealthiest are gaining against their U.S. counterparts.

Forbes | Nov 4, 2009

by Russell Flannery

SHANGHAI — A quick comparison of our new Forbes China Rich List with that of the Forbes 400 list of richest Americans, published in September, appears to tell a familiar story. China’s 400 Richest are worth a record $314 billion, but that is just one-fourth the total net worth of their American counterparts. China’s richest person, BYD’s Wang Chuanfu, has a net worth of $5.8 billion, far below the $50 billion fortune belonging to America’s richest citizen, Microsoft’s Bill Gates. In the U.S., Wang would only rank no. 40, tied with petroleum magnate Harold Hamm.

But the more interesting story is the fact that Chinese tycoons are making huge gains, at a time when many of the world’s richest haven’t been as lucky, thanks to strong economic growth and rebounding stock markets. Shanghai’s main index is up 69% and Hong Kong’s 56% in the past 12 months. As a result, we pinned down a record 79 billionaires, up from 24 a year earlier, more than Germany, Russia or India had in March when we published our worldwide billionaire rankings. The U.S. has 391 billionaires, but that’s down from 489 a year ago. The total net worth of the China 400 jumped 81%, or $141 billion, at a time when American’s wealthiest lost $300 billion, or 20% of their cumulative total, dropping to $1.27 trillion.

Chinese tycoons are also giving some of their American rivals a run for their money. Baidu’s ( BIDU – news – people ) Robin Li is worth $12.4 billion less than his rivals at Google ( GOOG – news – people ), Sergey Brin and Larry Page, but he has bragging rights for keeping Google at bay in China; his Internet search engine’s market share in his native country is about double that of its American nemesis. Chinese billionaire Chen Yihong’s China Dongxiang is seen as one of the country’s most competitive sports apparel brands, going up against internationals like Philip Knight’s Nike ( NKE – news – people ).

Rather than just a rivalry, there is also a growing collaboration of resources–capital, technology and people–between the U.S. and China that will likely help lead to continuing good fortunes for the Asian nation’s increasingly global entrepreneurs. Warren Buffett’s investment through a subsidiary of Berkshire Hathaway ( BRK – news – people ) in China’s car and battery maker BYD highlights the trend this year (read the story on Wang here). That Buffett support helped push up its co-founder Wang Chuanfu’s net worth by $4.7 billion, the biggest dollar gain of anyone on the list, and propelled him to the top spot in the rankings. Two other BYD executives, Lu Xiangyang and Xia Zuoquan, are billionaires as well. In September, Duke Energy ( DUK – news – people ) signed an agreement with Rich List-member Wang Yusuo’s ENN Group to jointly develop commercial solar power projects in the U.S.

U.S. investment banks and capital markets are also courting Chinese businesses like never before. China Rich List members who took companies public in the U.S. this year include Zhou Xin (China Real Estate) Charles Zhang (Changyou) and Chen Tianqiao (Shanda Games).

But for now, China’s wealth boom, after last year’s bust, is still very much tied to its own robust growth. China quickly overcame the financial crisis with a dose of government spending and loose monetary policy. The economy is likely to grow by 8% this year. Yet it’s not just short-term stimulus that’s buoyed its wealthy. A long-term trade surplus, urbanization and favorable demographics are benefiting the economy. Heavy infrastructure spending–from the integration of Hong Kong and Guangzhou to the Beijing subway is laying the groundwork for longer-term gains for Chinese entrepreneurs like Shen Guojun and China Zhongwang’s Liu Zhongtian, assuming he can overcome accusations about his company’s prospectus.

China’s cash-rich consumers, who are prone to saving–in contrast to overextended Americans–have fueled the fortunes of many on our list this year, including Zhou Chengjian of retailer Metersbonwe and Li Shufu of Geely Automobiles. Real estate tycoons have also done quite well, catering to the upwardly mobile and burgeoning middle classes as well as multi-nationals coming to China for business; in fact, real estate is the main source of wealth for more than a third of the 400 Chinese and at least a quarter of the country’s billionaires.

The Chinese expression, shi lai yun zhuan, which means “a new moment has arrived, and luck has changed,” captures well the improved fortunes of the country’s richest. But the best may still be yet to come. More than ever, there are new opportunities for Chinese entrepreneurs willing to seize them, and along with those opportunities, still more fortunes to be made.

To compile these rankings, a dozen reporters interviewed rich listers, employees, rivals, investors, fund managers, real estate agents and securities analysts. We also sifted through documents and databases to determine value and ownership of assets. For people with publicly traded fortunes, net worths were calculated using Oct. 16 stock prices. Privately held fortunes were valued at book value or by coupling estimates of revenues, profits or book value to prevailing ratios for similarly publicly traded companies. Unlike the Forbes billionaires list, the ranking has been broadened to include some family fortunes. We also include a few entrepreneurs born in mainland China who have citizenship from elsewhere but whose main source of wealth and/or residence is still on the mainland.

Reporting and research by Maggie Chen, Danni Cao and Jiang Yan. Additional research by Forbes China.

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