What does it take to get a private company licensed in China? This week’s Oriental Outlook answers that question in an interesting fashion, by reproducing diary entries made over the course of eight months by two entrepreneurs in Hunan.
Between February and September, 2005, using a well-placed relative as an intermediary, Mao Shijian and Zhou Difan curried favor with local goverment officials as they sought permits for their start-up fireworks business. Each time they sent out gifts or treated officials to dinner, they made a note in their diary. The 105 entries tell a tale of banquets and late-night entertainment, hefty red envelopes, back-door job placements, dried tofu, and a veritable truckload of cigarettes and alcohol.
Here’s the Oriental Outlook article with a representative selection of diary entries.
The gift diary of a small, private company
by Huang Zhijie / OO
At the end of 2004, Mao Shijian and Zhou Difan, farmers from the town of Hetang in Lianyuan, Hunan Province, scoped out the regional fireworks market and decided to go into the fireworks business together as wholesalers.
Fireworks sales belongs to a special sector that requires permission from the Work Safety Bureau. Going over ways to clear all of the steps, they eventually decided to have Liang Wenkuan, one of Zhou Difan’s relatives and a staffer at a government agency in Lianyuan, facilitate their relationship with the government.
Looking back on things, that decision was the start of the “nightmare” for the two men. They spent upwards of 300,000 yuan on entertainment and gifts just to pave the way for getting their operating licence; practically every day they had to present a gift or take someone to dinner. In the journal recording these gifts that they provided to Oriental Outlook, March had just four days without a record of gifts or entertainment.
This magazine is publishing the journal to reveal the difficult conditions that private businessmen have in pursuing their livelihood rather than out of a desire to finger any agency in particular. For this reason, this report omits the names of work units mentioned in the journal.
Lianyuan is a county-level city under Loudi City. It has a population of 1.09 million and is located in the geographic center of Hunan Province, an economically strategic area between east and west Hunan. It is know for its abundant resources: it is one of 100 major coal-producing counties in the country. Loudi recently attracted national media attention for the strong measures its municipal party committee made against collusion between government officials and mining companies. During the ensuing storm, a number of officials, including the director, vice-director, and head of enforcement at the Geology and Mineral Resources Bureau, and a vice-director at the Coal Bureau, all lost their jobs.
The following is taken from the notes made by the two men at the start of their licensing efforts, detailing the gifts they gave and the times they entertained. The time frame is between February and September, 2005.
1. 1 February, 2005: Liang Wenkuan requested 15,000 yuan in five red envelopes: one for 5,000, one for 4,000, and three for 2,000. At the Blue Sky Restaurant, the 5,000 yuan envelope was given to Director W of a Lianyuan government bureau, and the 4,000 yuan envelope was given to Xia Song, a cadre with that bureau. I don’t which leaders the three 2,000 yuan envelopes were given to. Zhou Difan and I were present.
2. 2 February: Liang Wenkuan requested three cartons of Baisha Special cigarettes. Zhou Difan and I were present.
3. 4 February: Liang Wenkuan requested 4,440 in cash to buy tea oil to give to leaders. A 25kg jug for Director W, and a 25kg jug for Xia Song. These were delivered personally by Liang and me. Zhou Difan was present. I do not know where Liang delivered the other tea oil.
4. 5 February: Liang Wenkuan requested two fireworks from Mao Shijian.
5. 13 February: Liang Wenkuan requested eight cartons of Furongwang Special cigarettes, 3,000 pieces of Futianqiao dried tofu, and six cases of fruit. 3,140 yuan in total. Liang Wenkuan said he would take me and Zhou to pay our New Year’s respects to the leaders. Zhou Difan and I were present.
6. 25 February: Liang Wenkuan requested 3,700 yuan in cash from me. Liang took Bureau Director W, Xia Song, and goverment staffers to Hetang to see Zhou Difan’s warehouse and to have dinner in Hetang. Liang Wenkuan stuffed four red envelopes—three for 400 yuan and one for 300 yuan—and said they were transportation fees. He took one carton of Furongwang Special and two bottles of Five Star Jinliufu. He also spent some money that evening on bathing and girls at “Legend of Beauty.” Zhou Difan and I were present.
7. 26 February: Liang Wenkuan requested 2,640 yuan in cash from me. Xia Song took Liang to buy two cartons of Furongwang Special and two bottles of Wuliangye to bring to the home of a Bureau director in Lianyuan. Today neither Zhou Difan nor I accompanied them to the director’s house. I do not know what was done with the remainder of the money.
8. 28 February: Liang Wenkuan requested 3,800 yuan in cash from me. He gave gifts to a Bureau leader in Lianyuan . He spent 600 yuan on dining. Zhou Difan and I were present.
[9-26 omitted]
25. 18 March: Liang Wenkuan requested 20,000 yuan in cash from me to take care of paperwork at a Lianyuan Bureau. He stuffed three red evelopes of 800 each for Department leaders, and left a 2,000-yuan deposit there. The remainder of the money was used later. Zhou Difan and I were present.
26. 19 March: Liang Wenkuan requested 5,000 yuan in cash from me and 11 packs of Furongwang Special. He also handed over 10,000 yuan as a deposit to a Lianyuan Bureau. He purchased 2,600 pieces of dried tofu and 75kg of tea oil for the Loudi Bureau director and two Department directors, which he took to their homes.
27. 21 March: Liang Wenkuan requested 1,600 pieces of dried tofu, two cartons of Baisha Special, fifty eggs, thirty packets of spicy vegetables, and two cartons of Furongwang Special from Mao Shijian. The two cartons of Baisha were given to a department director; the tofu and Furongwang were distributed to Bureau leaders in Loudi.
28. 22 March: Liang Wenkuan requested 5,000 yuan in cash from me, seven packs of Furongwang Special, and five packs of Baisha. Liang sent his wife Chen Lufen with the Furongwang and 2,000 yuan to obtain a Bureau stamp and a certificate. (addendum: the remainder of the money was used on 23 March.)
29. 23 March: Liang Wenkuan requested 4,000 yuan in cash, 1,100 pieces of dried tofu. To obtain a certificate at a bureau branch in Yangshi, eight envelopes of 800 yuan were distributed, totalling 6,400 yuan. Zhou Difan and I were present.
30. 24 March: Liang Wenkuan requested 15,200 yuan in cash from me. Liang invited Liu Bing of the People’s Hospital and five leaders from a city agency to Lianyuan Yinzuo. Eight envelopes of 800 yuan were distributed. Later we split into two groups for entertainment. Zhou Difan and I each went with one group.
31. 25 March: Liang Wenkuan requested 5,000 yuan in cash from me, 45 yuan worth of black bean sauce, and fifteen packs of Furongwang Special. He invited the leaders of a Loudi bureau to go fishing in Shanjiaxiang. Two cars were rented.
32. 27 March: Liang Wenkuan requested 5,000 yuan in cash from me, and one carton of Furongwang. Liang stuffed three red envelopes: two for 1,200 yuan and one for 2,000 yuan. I do not know who he gave them to.
[33-57 omitted]
58. 27 May: Liang Wenkuan requested 5,400 yuan in cash from me and four cartons of Baisha cigarettes. He paid the storehouse auction registration fee.
59. 29 May: Liang Wenkuan requested 5,000 yuan in cash from me, for unknown purposes.
60. 31 May: Liang Wenkuan requested 25,000 yuan in cash from me. Liang and Mr. Cai went to a company Changsha to find someone to find a job for the daughter of a Bureau director in Lianyuan. Zhou Difan and I went along to Changsha. Liang Wenkuan took 8,000 yuan to take a leader to dinner. I am not clear who the leader was; I only heard he was “Department Director Yang.”
61. 5 June: Liang Wenkuan asked for one carton of Baisha Special and one carton of Baisha.
62. 9-10 June: Liang Wenkuan asked for 30,000 yuan in cash from me. 24,000 yuan was payment for a year of Liang’s “legal consultation”; 4,000 yuan for his mobile phone charges, 2,000 yuan for his wife Chen Lufen’s mobile phone charges. In addition, Liang Wenkuan asked Mao Shijian for two packs of Baisha Special and one pack of Furongwang Special.
63. 13 June: Liang Wenkuan asked for 12,000 yuan in cash from me. He said that it was compensation for a warehouse auction for someone with a certain agency in the city.
[64-72 omitted]
73. 20 July: Liang Wenkuan requested four packs of Baisha Special from me.
74. 21 July: Liang Wenkuan requested seventeen packs of Baisha Special and two lighters from me.
75. 22 July: Liang Wenkuan requested four packs of Baisha Special, one box of honey, and two bottles of two-star Liuyanghe from me.
76. 23 July: Liang Wenkuan requested four packs of Baisha Special and six bottles of Jinjiu from me.
77. 24 July: Liang Wenkuan requested one carton of Baisha Special and five bottles of Jinjiu from me.
78. 25 July: Liang Wenkuan requested three packs of Baisha Special.
79. 27 July: Liang Wenkuan requested fourteen packs of Baisha Special.
80. 28 July: Liang Wenkuan requested three packs of Baisha Special.
81. 30 July: Liang Wenkuan requested two packs of Baisha Special.
82. 1 August: Liang Wenkuan requested one carton of Baisha Special.
[83-98 omitted]
99. 7 September: Liang Wenkuan requested five bottles of Jinjiu, one bottle of milk, and seven packs of Baisha Special from me.
100. 8 September: Liang Wenkuan requested 300 yuan from me for fuel fees.
101. 9 September: Liang Wenkuan requested 1,700 yuan in cash from me.
102. 11 September: Liang Wenkuan requested one carton of Furongwang Special, once carton of Baisha Special, and 240 yuan in cash from me.
103. 12 September: Liang Wenkuan requested 2,000 yuan in payment from me for cement fees.
104. 14 September: Liang Wenkuan requested 300 yuan in cash from me.
105. 25 September: Liang Wenkuan requested 1,300 yuan in cash and two cartons of Baisha Special from me.
On 22 November this year, a reporter for this magazine contacted Liang Wenkuan and his wife a number of times, but the two persisted in refusing to confirm Mao Zhijian and Zhou Difan’s record.
Mao and Zhou provided Oriental Outlook with two documents. According to a Business Operating License issued by the Lianyuan Bureau of Industry and Commerce, the Lianyuan Xianglian Fireworks Sales Company (hereafter, Xianglian) was established on 28 April, 2005. However, the Fireworks Sales Permit issued to Xianglian by the Loudi Work Safety Bureau clearly shows that it was issued on 16 March, indicating that even before the company was established, it had already obtained a permit to sell fireworks from the Work Safety Bureau.
Four other investors in Xianglian, Li Fuxi, Zhou Jianming, Qiu Fumei, and Liao Ziqiu, told this magazine that as far as they knew, Mao Shijian and Zhou Difan held 380,000 yuan and 180,000 yuan worth of the company, respectively, as original shareholders. The majority of this money was used in the company’s early stages to entertain and to give gifts—that is, what is recorded in Mao’s journal.
Mao Shijian made a daily record of the gifts because he was the company’s manager and treasurer in its early stages; the ledger was passed on to Zhou and others for review and inclusion as the costs of running the company.
Now that the individuals involved have made a complaint to the Hunan Provincial Party Committee, Mao Shijian’s journal has become the focus of attention among the provincial discipline and inspection leadership, and party, political, and judicial agencies are conducting serious investigations into this case. Is this diary genuine? How will the parties responsible be dealt with? Oriental Outlook will continue to watch the situation.
Note: The names of individuals other than Mao Shijian and Zhou Difan have been changed.
- Oriental Outlook via China Weekly: A small company’s gift diary