Yan Jiehe, CPCG: the Chinese billionaire turned debt collector

On January 26 Yan Jiehe, China's seventh richest man with a fortune estimated at $14.2bn, acquired another claim to fame. After telling the Financial Times that he intended to sue six local governments for late payment on infrastructure contracts, Mr Yan arguably became his country's best known debt collector.

In an initial telephone interview, the 55-year-old founder of China Pacific Construction Group boasted that the lawsuits were the first of their kind in China. Analysts, who have long worried about the Rmb18tn ($2.9tn) in debts accumulated by local governments, were inclined to agree. None could think of a similar case.

For Mr Yan, the lawsuits were just another first in the course of his remarkable career. A private entrepreneur from eastern Jiangsu province, he made his money in an industry dominated by large, politically well connected state and military-owned enterprises. CPCG has built large interprovincial expressways and bridges, as well as smaller "build and transfer" projects at municipal and county levels.

Mr Yan also sticks out on the Hurun Report's annual China rich list as a bricks-and-mortar magnate surrounded by a new generation of technology billionaires, epitomised by the rise and rise of Alibaba's Jack Ma.

Last year CPCG debuted on the Fortune list of the world's 500 largest companies and is, according to Hurun, China's largest private sector business by revenues. It was ranked No 166 globally by Fortune with annual revenues of $60bn, about seven times Alibaba's.

A few days after his bombshell, the Shanghai-based billionaire discreetly brought two FT reporters into CPCG's Beijing office in the back of a Mercedes with tinted windows. Because the office is located in a larger military compound, foreigners are not supposed to enter.

Mr Yan, however, says he does not have any real ties to either the People's Liberation Army or the ruling Chinese Communist party, and is proud of his upbringing by a family of teachers who fared poorly during Mao Zedong's Cultural Revolution.

"In England, educators are respected. In Mao's China, we were valued less than pigs and dogs," Mr Yan says. "When the east turned red and the sun rose, Mao emerged and the sky and earth were turned upside down. China was set back 100 years."

After ascending to CPCG's Beijing offices in a glass lift worryingly in view of the compound guards, Mr Yan's visitors are escorted to a typical Chinese receiving room - two large chairs for the tycoon and his guest, each flanked by a row of seats for their associates.

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Mr Yan is a trim, energetic man who does not dye his greying hair - a vanity common among other Chinese executives and officials of his generation. He also never seems to sit back and enjoy his comfortable chair, as more portly men do, but instead perches on its edge and turns sideways to face his guest.

Mr Yan's receiving room also has an unusual feature worthy of a Bond villain's lair. At the other end of the room is a large, blue aquarium with five sizeable Asian arowana or "red dragon" fish - an aggressive freshwater species that hunts other fish.

To Mr Yan, the arowana are an apt symbol of his own commercial achievements. "In my industry, large state companies often rely on connections and are susceptible to paralysis," he says. "They think they need [political] patrons and move slowly.

"I don't have patrons. I completely trust, rely on and revere the market," he adds. "In the sea of the market economy I am a fortunate and formidable red dragon fish." While Mr Yan handed over the reins of his company last year to his 28-year-old son, he still talks like a man who is used to calling the shots.

In China's rough-and-tumble marketplace, where cynics claim no successful businessman is without an "original sin" or two, Mr Yan seems to claim a virgin birth of sorts. He also sees vindication in the sweeping and unprecedented anti-corruption campaign launched by president and party general secretary Xi Jinping.

< > "Xi Jinping is a real boss, like Deng Xiaoping," he says approvingly, referring to Mao's successor and the architect of China's reform and opening. He then contrasts Mr Xi favourably with his more recent predecessors: "When Jiang Zemin was president, Deng had the final say. When Hu Jintao was president, Jiang had the final say. Now Xi has the final say."

The Chinese word for patron, kaoshan, includes the character for mountain and Mr Yan plays on this in referring to Mr Xi's purges of political rivals such as Zhou Yongkang, Bo Xilai and Ling Jihua. "A patron can quickly turn into a volcano," he says. "The volcanic eruptions of Zhou, Bo and Ling brought disaster to so many bosses.

"I respect the party but I do not participate in it," adds Mr Yan, who also has a daughter and five grandchildren. "I am not a party member and do not allow my family to participate in politics. It is enough to love the country and be socially responsible."

The tycoon then draws a connection between his confidence that one can in fact become fabulously wealthy in China without a political patron - and without ever paying a bribe - and his willingness to sue six municipal and county governments for overdue payments. A sceptic might say it is one thing to shun political entanglements in China but quite another to challenge local governments directly, even in small cities and counties.

Mr Yan, however, sees himself as much more than a debt collector in this possibly dangerous errand. He says suing local governments for unpaid debts will help strengthen the rule of law in China, which is a stated priority of the Xi administration and the subject of the Communist party's most recent annual autumn conclave.

"If local governments don't respect the law, how can the country develop the rule of law," he asks. "I think President Xi will be very happy that we are helping to advance the rule of law."

Dovetailing with this noble aspiration is also a practical one. It is no accident that CPCG has only provided details about the money owed by two of its smaller local government debtors, totalling Rmb178m.

In doing so, the company has given larger debtors an incentive to settle before they too are shamed, while also sending a signal to all of CPCG's counterparties that they could be similarly embarrassed in a court of law if they fail to pay.

"So far their response has been positive," Mr Yan says of the local governments he is suing. "No matter whether it's a mayor or a county head, it will be pretty embarrassing if they have to sit in the defendant's chair in court. I am striking the mountains to shake the tigers."Additional reporting by Wan Li

Second opinion: The rich list compiler

"There are very few Fortune Global 500 companies that are owned by a single shareholder," says Rupert Hoogewerf, who compiles the Hurun Report's annual China Rich List and has known Yan Jiehe for a decade. "In that respect he is extremely rare."

Mr Hoogewerf also describes the founder of China Pacific Construction Group as one of the most colourful - and one of the boldest - Chinese tycoons that he has ever met, unafraid to criticise Mao Zedong or sue local governments.

"For a private company of [China Pacific Construction Group's] size to be suing what are effectively its customers in public like this is extremely unusual. It's a fascinating case," adds Mr Hoogewerf.

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