According to this recent infographic from Visual Capitalist, listing the world’s top 10 ‘Billionaire Cities’, “More than half of the top 10 cities are located in Asia, providing evidence of the shift eastwards when it comes to seats of wealth. Five of the six Asian cities listed are all in China”. How did this happen?
To understand the answer to this question you have to go back to the 1980s when China started opening up and Deng Xiaoping famously said, with some hope and optimism: “to get rich is glorious”. At that time, China was a very poor country under firm State control, and the best and brightest minds worked for State Owned Enterprises (“SOEs”) where they were offered secure employment for life in return for their total loyalty and dedication to the national cause.
|They were paid relatively low salaries but offered substantial employee benefits, including food, accommodation for their families and education for their one child. This form of secure and all encompassing employment was known as having an “iron bowl” i.e. your employment would provide you with a job, food and income security for your whole life, including for your family, even in retirement.|
As China “opened up” in the 1980s, there was an urgent and critical need to start developing and stimulating the private sector which involved encouraging entrepreneurially-minded individuals to give up their “iron bowl” and venture out on their own to establish private businesses to grow the economy, attract foreign investment, stimulate private sector employment, create competition and, most importantly, encourage a new generation of workers to seek careers outside the secure but slow-moving public sector. This required a total cultural shift in the mindset of new university graduates and some of the younger middle managers in large SOEs.
In those days I was living in Hong Kong which was an amazing example of Chinese entrepreneurialism supported by a British style colonial administration. The Hong Kong Chinese (many of whom had fled mainland China in the 1940 and 50s) displayed a spirit of adventure, flexibility, courage and risk-taking that propelled Hong Kong to the highest rankings of free, open and western economies, and this was supported by a “light touch” Government which allowed capitalism to flourish. In contrast, mainland China looked poor, slow and boring, a fact pointed out to me many times by my Hong Kong friends who couldn’t understand why I was so interested in what was starting to happen across the border.
To get things going, the State identified under-performing assets, industry sectors and new start up opportunities and started offering incentives (eg loans, subsidies, gifts) to the more courageous and ambitious employees of SOEs to start or take over new or under-performing assets and businesses. It’s easy to look back now with modern western eyes and talk about ‘corruption’ and/or ‘inequity’ but, at the time, China was a planned and mainly agricultural economy, chugging along at very low growth rates, and there was an urgent need to encourage capitalism, entrepreneurialism and individual risk-taking, to get things moving.
It turns out they were right. 40 years later, China now has a total of 878 billionaires in US dollar terms, with 257 new billionaires added to the Hurun Rich List (which has been tracking the wealth of the ultra-rich for 22 years) so far this year. With over 2,398 millionaires in China today, a number which is also growing rapidly, you can only imagine how the map of the top 10 Billionaire cities will look in another decade or two.
|Source: Visual Capitalist: The top 10 billionaire cities|