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Confessions of a Shanxi Coal Mining Princeling

Translated by Liu Peng
Cover, issue 440, October 19, 2009
Original article:[Chinese]

Zhang Jinsheng used to own three small private coal mines, but his latest business plans involve investing 300,000 yuan to set up a Sichuan restaurant in Linfen, a heavily polluted city in Shanxi province. He's put his 28-year-old son Zhang Ying in charge of running the business.

The Shanxi provincial government, motivated by a desire to clean up rampant violations of work safety and environmental standards, recently led a drive to consolidate ownership of the province's coal mines, which resulted in all three of Zhang's coal mines, each with an annual output of 300,000 tons, being incorporated into the state-owned Datong Coal Mine Group.

Zhang Jinsheng began his days in the coal industry lugging coal for a living when he was 17 years-old, he's remained in the business for over 30 years and now boasts a personal wealth of more than 100 million yuan.

However, the coal boss is intent on keeping his son out of the family business.

"Coal mining is a high risk industry and you're forced to handle complicated relationships, so I don't want my son to become involved," Zhang told the EO.

"It would be best if he invested in some kind of high-tech industry, but unfortunately my son didn't perform so well in his studies," he added.

However, from Zhang Ying's point of view, "My father expects me to become another Li Yanhong." Referring to the cofounder and current CEO of one of China's most popular websites, Baidu, who also happens to hail from Shanxi province.

In 1999, Zhang Jinsheng heard that the local government planned to remove the controls it had placed on the the coal market and that everyone would be allowed to participate in the industry. He also heard that because of strong demand, buyers would come looking for the coal, all you had to do was dig it up.

Considering that his family could barely make any money in agriculture, he decided to raise some capital and make the shift to mining.

He got in at just the right time, in the second year after he made the decision to invest, coal prices began to shoot up and his family was suddenly rich.

As for how much money the family had earned, Zhang Ying wasn't 100% sure, but he knew that his family had become very wealthy.

"When I was about 20 years old, a bulldozer turned up at the house one day and leveled our single-storey house to the ground" Zhang Ying recalled.

"Three months after that, a three-story western-style building was constructed on the site of the old house. That was the first time that it really hit me that our family had become rich." 

That happened to be the same year that Zhang Ying completed his high school studies, but due to his poor academic record, he didn't even receive a completion certificate. However, he still decided to sit the much tougher college entrance examinations, unsurprisingly his rests were poor.

However, to his surprise, he received a letter of admission from a well-known university situated at Taiyuan, the capital of Shanxi province.

"Later I understood that I had my father to thank for getting me into university" said Zhang Ying.

Because his marks were several hundred points below that required to enter the university, he guessed that his father had spent quite a bit of money helping him get accepted into university. He's since learnt that even if you were just 1 mark short of the entrance requirement, it would cost you about 10,000 yuan to get accepted.

"Ever since I was a child, I've been a bit on the wild side. Despite a dozen years of education, I never really spent more than a few days attending class." Zhang Ying admitted.

"My friends began, one by one, to enter the world, but I somehow managed to be sent off to college. They were jealous of me being able to go to university, but I was envious of them being able to enter society." he added.

It was at this juncture that Zhany Ying began to realize that his family had changed.

Before entering university, Zhang Ying had never really spent that much money. He said that at that time he was confused about what "being rich" actually meant.

On one occasion, when chatting with his classmates, he asked them how much money their parents gave them to cover their monthly living expenses. The most that anyone else was receiving was 500 yuan a month. Therefore he asked his parents for the same amount, but to his surprise, his father decided to give him 3,000 yuan a month to cover his expenses.

After a rough calculation, Zhang Ying whispered: "excluding the BMW 3 series my father gave me, I spent over 700,000 yuan during my 4 years at university."

While he was off at university, things back home were continuing to change. His father bought houses in the provincial capital for his two sisters, and his family moved out of village to Linfen.

When Zhang Ying graduated from college, his father held a party for him and presented him with a bank card, saying "I'll give you six months to go out and play. Go wherever you want - even abroad."

It wasn't until later that Zhang Ying found out that there was 1 million yuan of funds deposited in the account.

The recent round of consolidation in Shanxi's coal mining sector has resulted in nearly all private coal mines being sold to state-owned conglomerates and Zhang Jinsheng decided that it was time for him to leave the industry too, "I have enough money to sustain me for the rest of my life, enough to support my children, even my grandchildren and their offspring."

His only concern was his son, "Although our family is wealthy, young people should do more than just sit around and eat."

Zhang Jinsheng is always urging his son to sit the civil service examination. "As long as his score reaches the enrollment mark, I can guarantee that he'll be able to get a job in the civil service; however, he says he's not interested and isn't going to sit any exams."

Sometimes, Zhang Ying likes to drive to Beijing and catch up with a group of Shanxi friends who now live in the capital. He says that most of them come from a similar family background and, like him, most of them have chosen to stay away from coal mining.

It's not just a personal choice, more importantly, the parents of this generation have never made coal mining part of their plan for their children.

However, there was an exception. Lu Erfei, a friend Zhang Ying met in Taiyuan.

Like Zhang, Lu's father wished his son could have been involved in some kind of high-tech industry. However, Lu justifies his decision by explaining that, "Although it's hard to make money in the coal business, the returns are immediate. The only difficulty maintaining a good relationship with local officials. If that's taken care of, it's much easier to make money."

Lu didn't attend college. When he was 23 years old, he started to work in his father and brother's coal mines. Before this round of coal mine consolidation, he already had his own coal mine. "It's unlikely that I'll be able to continue to remain in the coal business if i stay in Shanxi, but I haven't had enough and still want to be engaged in the industry. Therefore, I am thinking of going to Inner Mongolia, I've already started making preparations."

Zhang Ying, however, has his own plans. "Aside from their mining interests, every coal mine owner has a range of other investments in real estate and the stock market, which can serve as an alternate source of income," Zhang Ying explained.

"Therefore, as our coal mines were acquired by the big state-owned companies, we lost our core business, but we still have many sidelines." 

In 2006, he bought seven properties in Beijing, he has since sold five of them, making a profit of several million yuan. 

However, Zhang Jinsheng doesn't think much of this. "For young people, I think they should have their own enterprise. Even running a restaurant is a kind of enterprise." 

Two months ago, the elder Zhang invested in a restaurant and has persuaded his son to run it.

"It's not easy to manage a restaurant, but after a while you get a sense of achievement, let's see how it goes."

Links and Sources
image of a Rolls Royce with Shanxi plates
Mop: image of the daughter of a Shanxi coal mining boss out partying

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