• Sunday, October 04, 2015

'Princeling' Levin Zhu steps out of father's shadow

Staff Reporter 2012-04-03 08:43 (GMT+8)
Levin Zhu has been the CEO of China International Capital Corporation since 2002. (Photo/Xinhua)

Levin Zhu has been the CEO of China International Capital Corporation since 2002. (Photo/Xinhua)

The expected Communist Party leadership handover to Vice President Xi Jinping at the upcoming 18th National Congress has cast the spotlight on what role Xi's fellow "princelings" — a term used to describe the descendants of powerful party officials — will have in shaping the future of the country. One of the most prominent princelings in China's business circles expected to have a key impact on the economy during the next generation of leadership is Levin Zhu, CEO of China International Capital Corp and the son of former Chinese premier Zhu Rongji.

Born as Zhu Yunlai in 1957 in Changsha, the capital of Hunan province, Levin is the son of Zhu Rongji, China's premier from 1998 and 2003, and Lao An, the former vice chairman of the powerful China International Engineering and Consulting Corp. The Zhu family is apparently descended from Emperor Hongwu, who reigned from 1368 to 1398 during the Ming Dynasty.

The younger Zhu did not originally intend to enter the finance sector, having studied at the Nanjing Institute of Meteorology between 1977 and 1981, before spending the next two years at the China Meteorological Administration in Beijing.

Zhu later moved to the United States and graduated with a PhD in atmospheric science from the University of Wisconsin in 1994 before switching to business, completing a master's degree in accounting from Chicago's DePaul University in 1996. He then remained in the US to work for international financial institution Credit Suisse First Boston and earned an MBA from its International Bankers' School.

After returning to China, Zhu joined China International Capital Corporation in 1998, the first year his father became premier of the country. CICC was established in 1995 as China's first joint-venture investment bank, founded as a partnership between Chinese and international financial institutions including China National Investment and Guaranty Co, the Government of Singapore Investment Corp and the Minly Corp. Morgan Stanley was also one of the founding shareholders but divested its share for US$1 billion at the end of 2010 following reports of disputes over the management of the company.

Under Zhu's leadership, CICC achieved significant development and expansion through a number of landmark transactions, including the IPOs of Sinopec, China Telecom, China Life Insurance and the Agriculture Bank of China, as well as several major mergers and acquisitions. Between 1999 and 2009, the company's net income and net profit grew by 16- and 10-fold, respectively.

During this time, Zhu was also awarded honors such as Asia's 25 most powerful business leaders by Fortune magazine, the Asian Bank Achievement Award for Investment Banking by the Asian Banker, and the Greater China Financial Leadership Gold Prize by IIChina, the global online Chinese edition of Institutional Investor magazine.

Notwithstanding his success, Zhu did not want to be seen as profiting from his father's position and influence, which is why he ran the show from behind the scenes until October 2002, when he was finally named company CEO, according to a report from Bloomberg.

Zhu is said to be hands-on in his management approach, attending all key meetings between clients and global investors. He reportedly spent two years preparing to win the US$3.5 billion sale of China Life stock in 2003 and personally traveled with China Life's then-chairman Wang Xianzhang to the US to meet with fund managers.

Sources who have worked with Zhu in the past say he likes to make all key decisions himself, and demands extensive research documents and meetings before considering business opportunities.

"Levin Zhu is conservative because his father was behind the formation of CICC," says Victor Shih, a political economist at Northwestern University in Illinois.

Zhu's management style has been called "difficult" by some of the executives who left CICC over the years, saying that he refuses to delegate authority or accept outside ideas. He was also said to have blocked attempts by Morgan Stanley to reclaim a larger management role of the company in 2004 and 2005, paving the way for the companies to part ways in 2010.

"Like all good CEOs, Levin is very strong in his own mind and that may have created difficulty for Morgan Stanley," Mingly CEO Payson Cha told Bloomberg. "Levin really didn't think Morgan Stanley was able to contribute much and believed CICC should have its own character."

Some say CICC has lost some of its grip on the market since Zhu's father, who was been widely credited with shaping China's economic policies for two decades, stepped down as premier in March 2003. Critics say CICC's success had been driven by Zhu's unrivaled contacts and connections earned through his father, which enabled him to score big contracts from state-owned enterprises.

"The best connections are those that are contemporary," says Donald Straszheim, the chairman of Straszheim Global Advisors. Straszheim says China's economic policies in the last few years have focused more on being market-oriented, adding that it's only natural that the value of Zhu's past connections would gradually decline over time.

Despite its critics and amidst increased competition, CICC has remained China's No. 1 investment bank, and last year became the first Chinese member firm of the London stock exchange. The next natural step appears to be for CICC to go public, though Zhu has previously resisted the urge, citing the fact that managers would have to disclose compensation levels and be subjected to greater external scrutiny. However, early this month company chairman Li Jiange told the Wall Street Journal that an IPO is indeed part of CICC's medium to long-term plans.




Xi Jinping  習近平

Levin Zhu  朱雲來

Zhu Rongji  朱鎔基

Lao An  勞安

Emperor Hongwu  洪武帝

Wang Xianzhang  王憲章

Payson Cha  查懋聲

Li Jiange  李劍閣

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