BEIJING London, New York, Zurich, Tokyo, Sao Paulo, Vancouver, Singapore, New Delhi. Liu Xiaoguang ticks off the cities he has visited this year to drum up interest in Capital Group, the state-owned property and infrastructure company he commands.
The 49-year-old executive has come a long way since his days as an obscure Communist bureaucrat.
When government leaders asked him to shake up 17 sleepy state-owned enterprises, or SOEs, in 1995, he had just 100 million yuan ($12.1-million U.S.) in cash at its disposal.
"We started with nothing," he said with a hint of nostalgia. "There were days when I didn't think we'd survive. My strongest hope was that the 1,000 people working for me wouldn't lose their jobs."
Now he runs a sprawling conglomerate with 6,000 employees, 14 billion yuan in assets and interests in banking, road and rail construction, real estate development and high-technology manufacturing. In Beijing alone, his companies are building two-luxury housing developments, an entire $1.8-billion satellite town and a $2-billion subway line, all part of China's rush to build infrastructure for its rapidly urbanizing population.
Mr. Liu isn't satisfied yet. He wants to build Capital Group into a world-class company with international financial backing and efficient Western-style management.
"We have no excuse for not growing up," said Mr. Liu, leaning forward in his chair and fingering a pack of Marlboros on the table. "All we need is Western operating methods and the discipline of an international environment."
As an executive, Mr. Liu is something of a hybrid -- a former party functionary now trying to sell a corporate dream to bankers and investors.
He grew up in Beijing, the son of government officials, and joined the People's Liberation Army at the age of 15 to avoid the chaos of Mao Zedong's Cultural Revolution. After studying business in university, he joined the civil service and began a 30-year climb that culminated with his appointment as deputy head of the State Planning Committee.
Since taking charge at the Capital Group, he's transformed himself into a hard-driving businessman. Gary Coull, a Hong Kong-based Canadian investment banker, met Mr. Liu five years ago. "After 30 seconds, you could tell you were talking to someone very different from the typical guy who runs a state-owned company in China," Mr. Coull said. "He's pretty straightforward. You don't get a lot of rhetoric or platitudes."
The Capital Group is itself a kind of hybrid -- a state-owned business that's looking for outside investment and expertise. But that's the norm in China today.
In the first three months of this year alone, Chinese companies -- most of them state-owned -- announced plans to raise $22.7-billion on overseas markets in 2004, triple the amount raised in all of 2003.
Many companies are buying up foreign assets, as well. China's three major state-owned oil companies have expanded into more than a dozen countries. Its biggest steel maker, Baosteel, also state-owned, has set up 13 operations abroad and, of course, in Canada, China Minmetals Corp. is in talks with Toronto-based Noranda Inc. about a $7-billion takeover.
Beijing's aim is to fashion these companies into multinational titans and give China the presence it deserves on the international corporate stage. They have a long way to go. Only 15 Chinese companies have enough revenue to make the Fortune Global 500. They include power company State Grid (No. 1 in China), state oil companies China National Petroleum and Sinopec (No. 2 and 3), cellphone firm China Mobile Communications (5) and car maker Shanghai Automotive (15) -- all of them state owned. While Japan has Sony, South Korea has Hyundai and even Finland has Nokia, China still has no globally recognized brand or company.
Most of the Chinese companies with global ambitions are SOEs, still hamstrung by the legacy and the limits of state ownership. The World Bank said last year that fully half were still losing money The government has taken big steps to make them more efficient, freeing executives such as Mr. Liu to lay off redundant workers, shed assets and reorganize management. Most recently, it has talked of tying executive pay to performance and giving directors more power to supervise SOEs.
Even so, most directors and many executives are either current or former government officials and just about all are Communist Party members whose ultimate loyalty is to the Party, not shareholders. The government usually allows foreign investors to own only 25 to 30 per cent of big companies.
"They want to make firms more efficient and profitable, but still be able to have control," said Nicholas Lardy, a China expert at the Institute of International Economics in Washington.
It is a different model than the one followed by South Korea or Japan during their early boom years, when government fostered and protected strategic industries, but usually didn't own them.
Economics professor Jean-Christophe Iseux told a recent conference in Beijing that many SOEs today are "a reverse of what Mao Zedong accused Deng Xiaoping of being: 'a capitalist running dog under a communist coat.' " Liu Xiaoguang wants to change that. He calls for reforms to give executives more independence. "Autonomy does not make an SOE private," he told the conference. "For example, if I don't have the authority to designate a vice-president, or make decisions on investments, then my company is doomed if it wants to compete globally."
Mr. Liu is no tycoon. He goes to work most days in an open-necked shirt, keeps a spare, undecorated office and runs Capital with a management staff of just 29. He won't talk about his salary, allowing only that he now makes tens of thousands of yuan a month instead of merely thousands.
But his aspirations are anything but modest. He wants to raise $4-billion on world stock markets, and increase Capital's profit sevenfold by 2008. Given Beijing's headlong growth, that does not seem so far-fetched.
But Mr. Lui wants to dominate infrastructure development all across China. The country has 670 cities and 400 of them need new water systems, he points out. So Capital is trying to raise $2.8-billion on foreign markets to buy water plants nation-wide. The company's first step is seeking strategic partners, a handful of big foreign investors who would take a stake in the company. No firm commitments have been announced yet. By the second half of next year, it hopes to take a second step and have an initial public offering of company stock to overseas investors on stock markets in Hong Kong and perhaps New York.
Mr. Liu said earlier this year that he would be willing to sell foreigners up to half the company's stock.
"With a little international help, we can take great steps," he said.
Some doubt that he can do it. One Hong Kong analyst who studies the company said that many of Mr. Liu's own staff don't understand why he is offering shares abroad.
SOE executives such as Mr. Liu tend to "overpromise and underperform," the analyst said.
Mr. Liu insists that his global strategy is sound. Whether or not others believe in Capital's global future, "this is our dream."