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Land Purchase in Iceland

Identity Crisis

A Chinese businessman’s bid for a large tract of land in Iceland is being treated with suspicion by the Western media. Despite having been welcomed by the Icelandic government, the controversy surrounding Huang Nubo’s political background highlights the unexpected difficulties faced by China’s officials-turned-entrepreneurs

December 2011 Issue | by Li Jia

Who is Huang Nubo? Businessman, mountaineer and all-round ec­centric, he ranks 126th on Forbes’ 2011 list of the world’s richest Chinese peo­ple, and 46th on their “Asia’s Heroes of Phi­lanthropy” list, alongside celebrities like Yao Ming and Jackie Chan. He is also one of the few people to have stood at the peaks of all seven continents, including Mount Everest, as well as the North and South Poles. Often preferring to go by the name “the poet Luo Ying,” Huang is certainly not your average Chinese businessman.

Despite his wealth and fame, however, he was barely known outside of China until the recent controversy over his plans to buy 0.3 percent of Iceland for US$200 million. West­ern media have been keen to raise security is­sues, suggesting that the deal may be aimed at helping China gain a foothold on the North Sea Route, a valuable asset should the Arctic ice shelf continue to melt as a result of global warming. The speculation is based mainly on Huang’s political background; he worked for the Publicity Department of the Communist Party of China (CPC) and the Ministry of Construction for more than 10 years before founding his own company in 1996.

Angry Wave

There have been three routes to getting rich in China over the past 30 years, according to China Comment, a magazine sponsored by the Publicity Department, Huang’s former employer. The first is to start from scratch, the second is to manage a State-owned enterprise, and the third and easiest way is to be born into a family with a strong political background.

Huang is a combination of the three. The youngest son of a senior military official, he could have enjoyed a significant headstart in life, but his father was arrested and committed suicide when Huang was only three years old. His mother died 10 years later. As with many Chinese families of the time, the poverty and humiliation of his early years are still clear in his memory.

Like nearly every young Chinese person in the 1960s and 1970s, he was sent to the countryside to work as a peasant in 1973. He changed his given name to Nubo, meaning “angry waves,” dreaming of fighting for a bet­ter existence. Change came in 1976 when he was admitted to Peking University in the very first intake of college students after the Cultural Revolution (1966-1976).

Since then, life has been good to Huang. But after 10 years assessing aspiring civil servants in the Publicity Department’s personnel office, he knew he didn’t want to “mimic their lives by retiring as a government official,” he told News­China.

In 1990, he joined the China Mayor’s Associ­ation, affiliated with the Ministry of Construc­tion, but was disappointed to find a turgid envi­ronment similar to his previous job. But he was designated to launch a consultancy company, giving him his first taste of running a business, albeit an unsuccessful one.

In 1996, he renounced all official entitle­ment and refashioned his company into a pri­vate business called Zhong Kun. “I had no idea of what the business world was all about”, he admitted. His warehouse was often full of tea, dolls, and other things that no one seemed to want. But Huang was saved by the market-oriented housing reform of the late 1990s; he gambled on the property market boom, won, and has ridden this major success ever since. Now, his company has huge projects in Beijing and tourism facilities in other cities. “I have deep gratitude for China’s policies of Reform and Opening-up,” he said. “These days you don’t have as much chance of climbing the lad­der as we did,” he added.

His story is not unique among his generation of entrepreneurs. Between the 1980s and 2000, many officials made the jump to private enter­prise. But diligence and intelligence notwith­standing, private enterprises have always had to build connections with political power, often by questionable methods such as bribery. Huang has admitted that his company was not with­out transgressions of this kind during its early days. In his book Brutal Growth, Feng Lun, another property mogul, described how private enterprises were forced to turn to such means in the absence of a well-developed legal frame­work. “Now, we should stop sinning, and seek redemption for what we have done,” Huang told NewsChina.

Iceberg

“That is not a bad word,” laughed Huang, when he was told that a newspaper had described him as an “ambitious man.” Over the past few years, he has made a great effort to expand his business into overseas markets.

So far, his only successful overseas expansion has been in the US, where some of his develop­ment projects are already underway. Elsewhere though, he has met with less enthusiasm. Ac­cording to Huang, local trade unions in Hok­kaido, Japan declared that Chinese were not welcome to invest. The opposition party in Kyrgyzstan and even the Russian Ministry of Defence have also raised their respective con­cerns over potential strategic interests at stake in business deals with China.

But Huang never expected that problem in Iceland; he said he was actually invited to invest there. He became mildly famous in Iceland af­ter sponsoring a China-Iceland poetry founda­tion last year. An Icelandic architect told Ragnar Baldursson, Icelandic ministerial counsellor in Beijing and an old Peking University classmate of Huang’s, that a tract of land had been avail­able for some time, and that he hoped Huang would consider it.

The deal was struck in August this year. “[The land] is beautiful and cheap,” he said. He claimed he had always been fascinated with wilderness, out of personal taste as much as commercial interest. “Places like this are per­fect tourist attractions.” With four commercial flights loaded with tourists going from the US to Iceland every day, he hopes the project will be the first step towards business outreach into northern Europe.

He was warmly received by the sellers, the mayor, ministers of economics and foreign af­fairs and the president, and he doesn’t remem­ber being asked any pointed questions about his background. A poll showed that 59 percent of Icelanders were supportive of the deal, while 23 percent said they had no opinion, and only 18 percent opposing it.

Everything was running smoothly, until the Financial Times raised the question of China’s strategic interest. Huang does not think he him­self is the target. “It’s all because it is a Chinese investment,” he said. In fact, Iceland has repeat­edly expressed its willingness to co-operate with China on developing the North Sea Route. While Huang’s Icelandic partners have stressed the advantage of the potential port 60 to 100 ki­lometers from his planned resort, he denies that he took this into consideration when deciding to buy the tract of land.

Huawei, the world’s second largest supplier of telecoms equipment, failed in all its attempts at buying out American companies because its founder, Ren Zhengfei, had served in the Chi­nese army in the 1970s. Some US congressmen took this as evidence of the close ties between Ren’s company and the Chinese military.

“Ren is in the telecoms industry, which is somewhat sensitive. I can’t understand how a tourism project can be linked to strategic in­terests”, Huang said. Currently, Huang is still awaiting the approval of the Chinese and Ice­landic governments.

“My case is a good thing for Chinese private enterprises. Firstly, they have learned that there are many opportunities overseas. Secondly, it has given me the chance to tell the rest of the world who we are and what we think”, he said. He is absolutely confident that private com­panies would be much more successful than SOEs in overseas ventures.

At a time of economic downturn overseas, it may be a good time for Chinese private busi­nesspeople to make favorable deals in foreign countries. But with political history standing in the way, the question is whether or not the rest of the world is willing to break the ice with China’s entrepreneurs.

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