China’s second generation rich have a penchant for blowing cashTuesday, 01 March 2011
The press in China, Hong Kong and Macau have been abuzz with reports of the offspring of wealthy Chinese squandering their fortunes on frivolous pursuits, including gambling in Macau. According to the reports, the so called ‘second generation rich’ display ‘irrational gambling behaviour’, and their inflated egos ‘keep them betting big even during losing streaks.’
One prominent recent case was of Shi Yinyin, the 25-year-old son of a Chinese diamond tycoon, who according to media reports last month managed to lose the entire family fortune at the tables. Now, Yinyin—originally from Wuxu in Jiangsu province and who held one of China’s most high profile weddings last year—has disappeared along with his father Shi Changcong and mother Tang Yanfen. The police are investigating the disappearance.
The widespread belief is that the family, who owned Lanyi (Blue Memory) and Zuanshi Jiazhu (Diamond Family) jewellery companies, has gone into hiding to evade debtors. Lanyi, which was established in 2000, recorded annual sales as high as Rmb20 million. All the family’s companies and business outlets have now been closed down, though the family is thought to have transferred some of its assets to North America prior to its disappearance.
Several online forums speculated the family racked up huge debts because of Yinyin’s reckless gambling in Macau last year. Yinyin is rumoured to have lost Rmb1.5 billion (US$ 229 million) at the tables. He allegedly racked up Rmb 300 million in outstanding gambling debts, including Rmb80 million borrowed from his father-in-law.
In January 2010, Yinyin held an extravagant wedding ceremony, which created quite a stir among the people of Wuxi in Jiangsu province. The wedding was widely reported in the mainland and Hong Kong media and featured a motorcade of luxury cars, including a Bentley GT, Mercedes-Benz SLR, McLaren, Lamborghinis, Porsches and Ferraris.
Less than a year after the wedding, Yinyin filed for bankruptcy, which was approved by the Beitang District People’s Court in October 2010, according to Xinhua News Agency. The court froze the bank accounts of the individual members and companies of his family, and also seized homes and properties owned by them, in order to recoup debts amounting to Rmb7.7 million.
Yinyin and his wife are also believed to have divorced. Yinyin’s father-in-law told local Wuxi newspaper Modern Express that he was also searching for the missing Shi family, adding: “The person who had caused this has to bear the responsibilities. The truth will be revealed.”
High profile cases of government officials and heads of state owned enterprises gambling away millions in ill-gotten proceeds at Macau’s VIP rooms are believed to have been a major contributing factor behind Beijing’s previous clampdown on the flow of mainland Chinese visitation to Macau. If further reports of wealthy mainland families succumbing to the reckless gambling of their profligate children come to light, a fresh clampdown could be in the making.