Lai Changxing is a former Chinese businessman and entrepreneur. He was the founder and Chairman of Yuanhua Group, based in the Special Economic Zone of Xiamen. He imported foreign products like cars, cigarettes and was responsible for one-sixth of the national oil imports at one time. In the late 1990s he was implicated in corruption scandals involving a large smuggling ring.
Lai was the eldest child born to Lai Yongdeng and Wang Zhuzhi in Jinjiang, Fujian province in 1958, the year the Great Leap Forward began.He was the first of eight children. He grew up in Shaocuo village. He nearly starved to death due to the Great Chinese Famine, but his family survived because his father converted a swamp into a personal vegetable field during the most difficult years.
Lai received almost no formal education as he spent one year in school before the Cultural Revolution shut his school down. According to some sources Lai received three years of education, and that the highest level of school he attended was fourth grade.
After a few years growing and selling vegetables and digging wells, in the late 1970s Lai pooled together $150 with a couple of friends and started an automotive parts factory. China had just opened up to the idea of private enterprise, and Fujian Province was one of the first regions to embrace Deng Xiaoping’s economic reforms. With barely any private enterprises around, his only real competition was the lumbering state-owned sector. Lai found that paying his employees slightly more than the state made them work harder which in turn helped make him rich. Over the next few years, he reinvested the profits from his little car-parts plant into a series of new ventures. Soon the automotive factory had spawned a textile machine plant, a print shop, an electronics store, an umbrella factory, a shipping enterprise, an investment company, a cigarette plant, a paper-products factory and at least half-a-dozen other enterprises. Before he moved to Hong Kong in 1991, he had already amassed a substantial fortune.
In Hong Kong, Lai registered and established Yuanhua, and began to speculate in real estate and learned to play the stock market. Two years later, he returned to Xiamen, and launched Yuanhua Group, and started building his business empire there. People describe him as being very good at making guanxi (approximately: personalized net-works of influence) and all kinds of connections. Lai started trading in imported goods in the 1980s, and as alleged by the investigative report from the government, he used his access to once hard-to-get luxuries to corrupt officials from government, police, and the military. Realizing that connections were crucial to his business, Lai hired the children of high officials in customs, the prosecutors’ office, police, and border patrols, offering high compensation. Famous for his generosity, Lai maintained a seven-storey guesthouse in Xiamen known as the Small Red Chamber. This was Lai’s notorious night-club-cumbrothel, where he wined and dined officials. It was here that he allegedly invited government officials to cavort with prostitutes. Investigators claimed that he then captured them on hidden cameras and used the videos to blackmail and manipulate them. By this means the group seduced a number of government officials, forcing them to create an outlet for their illegal activities.
In his heyday of 1996, two years after he set up Yuanhua, Lai bought Xiamen’s soccer team, built a 30-storey hotel, a replica of the Forbidden City as a tourist attraction, and started construction of the 88-storey hotel and office complex, the Yuanhua International Center, in Xiamen. When investigators finally cracked the smuggling case in 1999, Lai fled to Canada through Hong Kong, tipped-off by a high ranking official from Fujian. While Lai is fighting the extradition charges, China remains hopeful that the Canadian Government will deport him as soon as possible. According to the government investigation, Lai’s Yuanhua Group operated a massive scheme smuggling cars, oil, cigarettes, and other goods worth $6.4 billion into China and cost the Chinese treasury another $3.6 billion in lost import duties. China’s state oil companies estimated that they lost $360 million a year because of his smuggled oil. Trials in the Yuanhua case have so far led to the death sentence for 18 individuals; seven of them have been executed. In addition, at least 12 individuals are currently serving life sentences while 58 others went to jail for their involvement with Lai and the Yuanhua case.