One Billion Customers - James McGregor [47]
With Fang out, Levin became the de facto Chinese boss of CICC. La Roche tried to cultivate him, but it was like chasing a ghost. Levin was a quirky individual. He usually came to work in the late afternoon and stayed until the early morning hours. He didn’t answer e-mails. He secluded himself in his office, communicating with others through his secretary. CICC bankers and analysts who wanted to see Levin stayed in the office at night, drinking coffee at their desks in hopes of a post-midnight audience. Nonetheless, Levin understood Western systems and recognized their value. He supported La Roche’s strategic plan for systems and accountability. To preserve his own privacy and privilege, of course, he had to be exempt.
When the frustrated La Roche resigned and returned to New York in June 2000, CICC was turned over to a management committee. The committee, of course, deferred to Levin for decisions. From the Chinese point of view, CICC had gone from being Fang Fenglei’s company to Levin Zhu’s company.
Despite the severely dysfunctional management, CICC had by then become wildly successful. The quality of management doesn’t much matter when you’re the only game in town. CICC had the charter as China’s one and only investment bank. If an overseas listing was to be done, CICC was part of the deal. It turned out that Morgan Stanley’s exasperating efforts to impose controls and systems on the company hadn’t been in vain. The joint venture could handle domestic stock market listings and Fang and his team had been remarkably successful in generating business. More importantly, though, CICC could work well in tandem with international investment banks for overseas offerings. After basically breaking even each year from its inception, CICC brought in $170 million in gross revenue in 2000. The bank paid back the original investors their entire $100 million and surprised its Chinese bankers with million-dollar bonuses. Fang, forced out in January 2000, didn’t get a bonus.
A Black Hole
After Elaine La Roche left CICC, management of CICC became a black hole from which no information flowed. Levin sometimes didn’t show up at the office until 10:00 P.M. and when he did arrive, he would often be unshaven and wearing a rumpled sports coat. He had few friends. He lived in hotels. An emaciated chain-smoker, Levin was hospitalized for a period and ran the firm from his hospital bed. Levin had an accountant’s obsession with numbers that drove the analysts and investment bankers at CICC to distraction. They were always forced to do more and more modeling and data input, even though they knew that the numbers at the state-owned enterprises were mostly meaningless. Underlings at CICC believed that Levin’s obsession with tiny details was a way to mask his relative inexperience in investment banking.
Levin Zhu remains at the helm of CICC today. He makes decisions by himself, with little input from others. He has his father’s stubborn self-confidence. People who disagree with Levin are frozen out. Decisions pile up at CICC because Levin is hard to find. But he also is a hard worker. He made CICC the equivalent of a better-managed state-owned enterprise. The venture positioned itself as the trusted hand-holder of Chinese companies that provides protection from the sharks at the foreign investment banks. Levin framed CICC’s mission as the restructuring of Chinese state industry.
In 2002, Morgan Stanley threw in the towel, turning over complete control to the Chinese. CICC became a “portfolio investment” from which Morgan Stanley would collect annual dividends and perhaps realize a big gain in the event of a future CICC public listing. As one Morgan Stanley executive