Rich pickings in list business

Updated: 2012-07-13 07:42

By Su Zhou (China Daily)

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 Rich pickings in list business

Rupert Hoogewerf, founder of Hurun Report, says he plans to compile more rankings inspired by talks with his wealthy contacts. Provided to China Daily

Former chartered accountant carves out niche in ranking China's wealthiest

As a qualified chartered accountant in Shanghai in 1999, Rupert Hoogewerf was in a prime position to chart the growing number and wealth of China's new entrepreneurs.

But what started out as a hobby in compiling a list of the country's richest people has turned into a small publishing empire and put the young Englishman in an enterprising class of his own.

Hoogewerf, now 42, says that at that time many observers outside China believed the richest Chinese made their fortunes due to their connections or from illegal activities such as smuggling.

"However, I noticed that there were a lot of amazing entrepreneurs in China; in Beijing, Shanghai, Shenzhen, Jiangsu province and everywhere," he says. "And the private sector was maybe smaller, but more efficient than the State-owned sector."

Having consulted all the public information, such as stock exchange data, Hoogewerf finished his list. Given the Chinese version of his name, it was the first Hurun report - and he sold it to Forbes magazine, the doyen of rich-list makers and now his main rival.

Today, the Hurun Report Inc, with its many and varied lists, publications and event services based in Shanghai, is recognized as an authority in keeping track of the rapid changes among China's high-net-worth individuals.

Hoogewerf, an old Etonian with a degree in Chinese, is its chairman and chief researcher.

He believes his work is becoming more important as Chinese entrepreneurs are increasingly active at different levels in China and around the world.

Some of the richest they are reluctant to be identified as "new money class" when put under the spotlight by Hoogewerf, preferring modesty and a low profile. But "nearly 70 percent of those on the lists are quite proud of their achievements".

"The next step of my job is to follow them abroad," he says. "When they are expanding their business and making acquisitions, I like to keep track of them and understand them.

"The presence of those entrepreneurs in overseas markets is more prominent than before, and they are making bigger acquisitions, such as the case of Alibaba Group and Yahoo! Inc (where the Chinese company bought back a 20 percent stake for $7.1 billion). Their social status is higher now.

"Besides, about 90 percent of the rich choose to send their children to study abroad, especially the US. Many of them are moving abroad, and more are considering doing so."

Eugene Lee, an economics professor at the University of Maryland University College in the US, says Hurun's lists help the rest of the world to understand the private sector of the Chinese economy, and Hoogewerf's experience in dealing with the non-transparent market makes them successful.

"As China has limited recourses to enable the public to get financial and business data, such lists provide a unique way of analyzing China's private sector," Lee says.

"However, Chinese businessmen's activities in the world market are a different story.

"In Western countries, these can be easily tracked down, where there are strong regulatory agencies to monitor foreign investments, and transparent taxing and reporting systems."

In that respect, Lee says, Hurun's competitors were better placed.

But it was Hoogewerf who was in the best position to cover the burgeoning new breed of Chinese business leaders, first with Forbes magazine, and then on his own.

Forbes published China's rich list for four consecutive years from 1999, compiled by Hoogewerf, who quit his job at Arthur Andersen accountants to work as an independent researcher for the magazine. Then Forbes decided to publish its own China list.

"Forbes wanted to make their own rich list for China because their orientation was to be the magazine focusing on rich individuals, as opposed to, for example, companies throughout the world," says John Ross, visiting professor of economics and management at Shanghai Jiao Tong University.

"They have the world's most powerful brand on this and believe they can push local competitors in China out of the way."

Hoogewerf, undeterred, founded his own company. But it had to involve more than producing one list. So, in discovering the hidden financial wealth of China, Hoogewerf also looked for new ways and opportunities to reveal the results and expand his business.

Now the Hurun Report publishes five main lists annually in English and Chinese, including the Contemporary Art list and the Best of the Best, with many sub-lists.

But compiling the lists is unprofitable in itself, Hoogewerf says. What makes money is the advertising carried in the high-end magazines that the Hurun Report publishes, aimed at the richest readership in China, and from running a variety of events.

According to its own research, 16 percent of the 106,000 who read the main monthly magazine have a personal income of more than 10 million yuan ($1.6 million, 1.3 million euros) and 64 percent are aged between 30 and 45.

This business model is Hoogewerf's competitive edge. Through his reports, the world gets to know that the smart entrepreneurs in China "no longer lack business trust because of ignorance", and those entrepreneurs can find ways to prove their value.

"There was a Chinese entrepreneur who told me he wanted to buy a factory abroad, but the other side did not know who this man was. Later they did an online research and found him on my list, thus believing that he had the competence," Hoogewerf says.

Xia Xueluan, a sociologist at Peking University, says Hoogewerf's list is recognition of such wealth. "People value and respect the wealth that is created through hard work," he says.

But, Xia adds there are many who question the fairness and sources of the lists.

In China, it is impossible to determine the real extent of people's assets by analyzing taxes or stock holdings, Yi Xianrong, a finance researcher with the Chinese Academy of Social Sciences, said on, a major portal website in China.

However, Hoogewerf insists all the information his company gathers is verifiable through public sources, and is not based on rumor.

He says it is impossible to investigate whether entrepreneurs gained their wealth in legal ways. "We cannot get access to their bank accounts. Even if we can get them, we cannot tell the bad debt."

Hoogewerf admits there have been some errors in the Hurun Report. Once, the income of several companies was miscalculated as an entrepreneur's own income. Later, Hoogewerf wrote and apologized and took him off the list.

For most on the rich list, Hoogewerf says, the real extent of their wealth "can only be more than the numbers on the list".

Hoogewerf plans to compile more rankings, based on different criteria and mainly inspired after talks with his wealthy contacts. For instance, he did not realize the influence and importance of Chinese artists until he noticed the interest from the rich group.

"They'd like to buy more, but they don't know much about Chinese art," he says. "So Hurun Report compiled and released the Contemporary Art list (ranking China's top selling artists) which will offer more information than the galleries."

This is how Hoogewerf connects with China's wealthy. He knows what kind of watch they prefer, who loves golf, and where they prefer to travel and spend their money. This is also the advantage he thinks the Hurun Report has over Forbes' rich list for the country. "They (Forbes) have many other things to do. We are more focused because China is all I have."

Lee at Maryland University College believes there is room for both.

"Having two versions of the rich list will give scholars better information," he says. "I believe that two publications tackling the subject will improve the measurement of wealth."

(China Daily 07/13/2012 page17)