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By Root 5540 0

Fenglei. As Lim was introducing him to this fireplug of a man with a bad comb-over, Wadsworth thought that Fang Fenglei looked more like somebody’s driver than a bank executive. How could this guy who looks like he just arrived from the countryside possibly be capable of bringing in billion-dollar deals to CICC? He can’t even speak English, Wadsworth thought to himself. No one will ever take him seriously. The cavalier attitude the Chinese showed toward the personnel provisions of the contract really began to grate on Wadsworth’s nerves when Tang, the HR director, began rejecting Wadsworth’s nominees. A pattern seemed to be emerging. If Wadsworth’s candidate knew Western finance and spoke fluent Chinese—exactly the kind of person Wadsworth thought CICC needed—Tang rejected him. It was pretty clear to Wadsworth that the China Construction side of the joint venture didn’t want anybody representing Morgan Stanley who could speak Chinese. It was better from the Chinese viewpoint to be able to talk about the Americans without somebody overhearing and reporting back to them.

Yet had Wadsworth been able to have a man-to-man talk about all this with Wang Qishan he would have heard a very different interpretation. For Wang and his colleagues from the China Construction Bank, the establishment of China’s first true investment bank was a critical step in China’s efforts to rejoin the world economy. They couldn’t fail. They needed the best people they could find, both Chinese and American. Yet Wadsworth couldn’t convince the best and brightest at Morgan Stanley that CICC was an important undertaking, and the Chinese he was hiring were all overseas Chinese who knew nothing about how business worked in China. Wang felt strongly that he was getting second-rate, perhaps third-rate, players from his American partner.

Wadsworth suspected that Tang was behind the griping and grumbling that occasionally reached Wadsworth about compensation policies. Three distinct salary levels had emerged at CICC. At the top were the Morgan Stanley people with their huge salaries, cars, drivers, and luxury housing. Far below, at salaries ranging between $80,000 and $150,000, were the Western-trained Chinese executives recruited by Wadsworth and Lim. At the bottom were the China Construction Bank officials assigned to CICC, most of whom were paid less than $10,000 a year. Wadsworth had assumed that information about compensation would be held in close confidence. But Tang had access to all that information and now, apparently, so did everyone else in CICC.

The first casualty was Edwin Lim. Lim knew finance, but he wasn’t an experienced investment banker and he didn’t know management. He was in over his head running an investment bank and both he and Wadsworth knew it. What’s more, Wadsworth was unhappy that Lim didn’t assert Morgan Stanley’s interests more firmly in the early days of the joint venture. Only three months after CICC opened its doors, Lim resigned to return to the World Bank.

Wadsworth promoted Lim’s deputy, Harrison Young, to the CEO’s post. Young had worked with Wadsworth at Morgan Stanley in the early 1980s before leaving for senior positions at the Resolution Trust Corporation and then the Federal Deposit Insurance Corporation. Wadsworth recruited him to China in the belief that Young’s background as a mediator would be useful in dealing with the Chinese government, as well as in soothing over any misunderstandings that could erupt between the partners.

Wind and Thunder

Even as Harrison Young was settling into his new job as CEO, it was beginning to dawn on Wadsworth that he had overestimated the role the CEO would play in the joint venture. Tang Shisheng, for example, seemed to have an amazing amount of power for an HR executive. In the United States, the CEO of a company was a virtual dictator and the HR director was several levels down on the organization chart. But here in Beijing, virtually all the Chinese working at CICC owed their jobs to Tang and he let them know it every day. Only if Tang approved something would it happen.