South China Morning Post
August 7, 2006
Mark O’Neill looks at a rogue’s gallery of the business world as China takes the fast lane to progress.
Tang Wanxin The collapse of the D’Long group in 2004 was one of the most spectacular examples of uncontrolled expansion by private business so far this decade. Founded in 1986 by four brothers named Tang in the far west region of Xinjiang, D’Long was originally a colour film development business. It grew into a sprawling conglomerate that owned major stakes in five listed companies with 177 subsidiaries and a large portfolio of publicly traded shares. By the time of its collapse, its debts exceeded its assets by about 2.8 billion yuan to 1.8 billion yuan. From 2000, the group went on an acquisition spree, borrowing money from the grey market and private sources at up to 20 per cent interest a year and from banks at about 5 per cent. It used the funds to buy investment trusts, commercial banks and securities houses. It tried to pass itself off as a Chinese version of General Electric of the United States. Few people aside from the four brothers knew the real state of its finances and they exploited the fact that Beijing gives privileged treatment to firms in Xinjiang, which has one of the weakest economies in China and a restive Uygur minority. Tang Wanxin went on trial in January this year, charged with illegal banking and stock price manipulation. The other brothers are expected to face similar charges.