Who runs Richina?

Richina Leather was sanctioned by China’s environmental authorities every year between 2004 and 2008, but little is known about its management. Xu Shuda looks at the faces behind the corporation.

Residents in Shanghai’s Baoshan district have, for years, endured the ghastly smells produced by Shanghai Richina Leather and other tanneries owned by its multinational parent company, Richina Group. Yet there is almost nothing in the Chinese media about this corporation and few would recognise the name of its boss, financier Yan Ciliang

Yan Ciliang, or Richard Yan as he is known in English, is the founder of the Richina Group and legal representative of all its subsidiaries. Born in China, educated at Harvard, and now a citizen of New Zealand, Yan is vice-chair of the board of directors of the China Leather Association.

At first glance, Yan’s life looks like a classic success story. In 1981, he became the first Chinese secondary-school student to win a Rotary Scholarship to study English at Auckland Grammar School in the New Zealand capital, and he went on to attend Auckland University. In 1985, he worked at Westpac Bank in Sydney, Australia, which later funded his MBA at the US’s prestigious Harvard Business School. Then, in 1992, the American Ziff family became the principal investors in a US$52.5 million (358 million yuan) investment fund and, the following year, Yan and Harvard classmate Susanna Foels founded Richina Capital Partners to manage that fund. Thus was born the Richina Group.

To date, the group’s subsidiaries occupy four main fields. One is Yan’s original line of work: finance. Richina’s financial business is concentrated in its wholly-owned Chinese holding company, Richina Pacific (China) Investments. This company provides a wide range of financial and business services for multinationals headquartered in Shanghai. Its own parent company, Richina Pacific, de-listed from the New Zealand stock exchange in a 2008 restructuring that left many former shareholders unhappy. The firm’s registered office is now in Bermuda with its operational headquarters in Malaysia.

Richina is also invested in tourism, including in the Blue Zoo Beijing and the Jinjiang Inn, a hotel in central Shanghai. The company also runs restaurants, shops and hotel-style apartments and owns car parks and a taxi fleet in Shanghai. Richina’s construction portfolio includes the wholly-owned subsidiary Mainzeal, a major New Zealand property and construction firm.

The group’s interest in leather and associated products is run by Richina Industries, which oversees Shanghai Richina Leather and the Shanghai Leather Company, processing leather, manufacturing leather footwear, clothing, sporting goods, luggage, furnishings and car upholstery and leather chemical products.

On February 27, 2003, New Zealand’s second largest daily newspaper, The Dominion Post, reported that the Richina Group owed its profits that year largely to the Chinese market. According to the report, Richina Pacific had turned a loss of NZ$15.3 million (73.9 million yuan) to a profit of NZ$8 million (38.6 million yuan) in a single year. A significant return from Shanghai Richina Leather, a focal point for the group, was credited with the turnaround.

One name on the list of Richina Group executives is symptomatic of Yan’s highly placed connections. Jenny Shipley, the independent chair of the Mainzeal board, formerly independent director of Richina Pacific and chair of Richina Leather, was once prime minister of New Zealand. In July of 1999, Shipley paid a working visit to China at the invitation of Jiang Zemin.

In May 2007, Yan Ciliang generously funded the Peking University New Zealand Centre, co-founded by Auckland Peking universities. The opening ceremony was attended by New Zealand’s foreign minister, Winston Peters, with a distinguished list of ambassadors and officials.

According to a reliable source, the Richina group is about to reorganise its Chinese operations, relocating its leather production to a new facility in Liaoning and capitalising on the property value of its Shanghai Leather portfolio for residential and commercial development. The relocation will finally end the long nightmare of Richina’s Shanghai neighbours, according to Richina Industries president and chief executive Bob Moore. “By October 2010, we will have built a dedicated leather-tanning plant to take on the production halted in Shanghai due to odours,” he said.

Yan has never responded in person to questions on Richina’s constant environmental violations. Asked what Yan thinks of the company’s environmental record, Bob Moore replies carefully: “Yan Ciliang is the investor and we are his managers. All the responsibility is ours. Yan certainly wants Richina Leather to reach world-class environmental standards and we will work hard to achieve that goal.”

Xu Shuda is a reporter based in Shanghai.

Homepage image from Qinghemen Archives shows Yan Ciliang (middle), founder of the Richina Group.