The Last Degree: Tang Wanxin and the Fall of the Delong Empire

On April 3, 2004, in a conference room in the Delong Tower in Shanghai, twelve people sat around a long table and said nothing. In front of the man at the head of the table lay a single thin sheet: total assets, 28.4 billion yuan; total liabilities, 28.1 billion.

The man was Tang Wanxin, and it was his fortieth birthday. There was no cake. A month earlier a magazine had published five words — “Delong’s funding chain stretched taut” — that raced through every brokerage hall in China. Banks were calling loans, trust clients lining up to withdraw; the three stocks carrying the group’s entire credibility stood at the cliff’s edge. Around the table sat his brothers: Wanli, the eldest and the group’s public face, aged ten years in a night; Wanchuan, who ran its trading network. Wanping, the third, was absent — a stroke at a negotiating table the year before had ended his working life.

Tang finally spoke, quietly: “If we get through this, Delong will have a better future. If we don’t — we will never sit together again.”

That evening, at a subdued birthday dinner, he retold a story they all knew: a fortune-teller had once read his fate — a career of blazing glory, flowers on brocade, oil on flame, and all of it a dream; at forty he would lose everything, name and fortune alike.

Ten days later a securities firm began dumping one of the flagship stocks. All three went limit-down the next day and kept falling; within a month their combined market value collapsed from 20.68 billion yuan to 5 billion. Delong — China’s largest private business group, claiming 120 billion yuan in assets, five hundred companies, three hundred thousand employees, footholds in twenty industries — came down at the peak of its splendor. The prophecy missed by ten days.

A Frontier Family

The code of the empire was written in a low brick house at the foot of Red Mountain in Urumqi. Tang’s father, a civil engineer trained at Tongji University in Shanghai, had answered the state’s call in the 1950s to build the frontier, rising to chief engineer; his mother, an agronomy graduate, ran the municipal parks bureau — and, without challenge, the household. Theirs was the idealism of educated volunteers, a fervor their youngest son inherited intact, its object changed from frontier to empire.

Five children arrived between 1956 and 1964 — Wanli, Wanhua, Wanping, Wanchuan, Wanxin — the brothers’ names, strung together, forming a phrase that meant ten thousand miles of open plain, all of it new; the lone daughter became an eye doctor and stayed clear of everything that followed. Wanli, eight years the senior, played elder-brother-as-father: a chemistry teacher who in 1992 left his classroom to serve as Delong’s chairman, the respectable public face behind which the youngest brother ruled.

In the early 1970s the five children rode out to Heavenly Lake and their vehicle overturned coming home. Every child was hurt — Wanli’s spine was injured — except the youngest, untouched. Their father pronounced the folk verdict: survive a great calamity, and great fortune must follow. From then on the family granted Wanxin an extra measure of faith and indulgence — enormous courage, and nearly every brake in his path removed.

He enrolled at a petroleum institute in 1981, quit after eighteen months, retook the national exam, scored high enough for physics at Fudan — and was barred by a rule requiring dropouts to return to their original school. He landed at a minor institute in Xinjiang, contracted to run its money-losing farm, lost more, and quit again. Two universities, no degree, two traits fixed for life: reflexive rebellion against fixed tracks, and a rare readiness to abandon sunk costs the instant a direction proved wrong. On December 5, 1986, the scientist’s dream dead, he borrowed four hundred yuan from Wanli and opened a color-photo printing shop in Urumqi called Friends.

Four Hundred Yuan

The shop was a masterclass in leverage before he knew the word. He collected deposits from his own new hires, used the deposits to rent shopping-hall counters, and used the counters to draw customers. With no color-processing equipment in Urumqi, film had to reach Guangzhou, three thousand kilometers away; Tang recruited officials traveling on state expense accounts to carry it, paying them in free developing for their families. Friends grew to more than twenty outlets, bought a secondhand processor, cut prices below 60 percent of market, and took 80 percent of the city’s business. In two years, four hundred yuan became six hundred thousand.

Then he spent three years losing it. A bicycle-lock factory whose clever handlebar lock sprang shut in mid-turn and threw riders to the pavement — lawsuit, license revoked. A satellite-receiver venture whose core engineers absconded with the patents. A hotel in China’s remotest county; furs, feed additives, an aviation club, noodles, software, name cards. By 1990 he was twenty-four, employed over a hundred people, owed 1.8 million yuan, and had thirty thousand left in the bank. He summoned his creditors: believe me and wait, and you will get principal and interest to the last cent; or send me to prison and get nothing. They waited.

A study-abroad consultancy in Hainan earned him three hundred thousand — and, he later said, his first “ideas about finance.” Back in Urumqi he built Xinjiang’s largest computer-parts distributor, cleared 1.5 million in a year, and did something almost unheard of in the early 1990s: paid every debt in full, with interest. The business world drew its conclusion: this young man keeps his word; follow him and you cannot go wrong. In 1991 the sentence was true. Later it became a curse.

The Last Degree

When China’s stock exchanges opened, a well-connected friend led Tang, in 1992, into the primal market for legal-person shares — state-company stock issued at one to three yuan that could rise tenfold at listing. His most storied trade turned ten million yuan of such shares into forty million within months. When cities imposed one-ID-card limits on subscription warrants, he hired peasant workers by the trainload — up to five thousand at a time, fifty yuan a day — to stand in line. By his own estimate, the primary and semi-legal markets earned him seven to eight billion yuan over the decade; quieter channels ran alongside, including some three hundred million yuan raised through bond-repurchase deals around 1994 — the seed capital, many believe, of everything that followed. A Beijing disco he opened in 1994 — Asia’s largest, profits over ten million a year — became the smoke-filled hub where he collected the political friendships his empire would run on.

What the market really taught him was a change of category: the biggest business was not running factories but using capital to control them. In 1995, looking homeward from a failed venture in Toronto, he framed his thesis: Chinese manufacturing was water heated to ninety-nine degrees — vast, cheap, technically capable, but fragmented into thousands of price-cutting workshops with no brands and no pricing power. The missing degree was consolidation. He called it the One Degree Theory, invoked Carnegie, Japan’s carmakers, and Samsung, moved his headquarters to Beijing in 1996, and in May 1997 gathered eleven lieutenants to proclaim the turn from speculation to industry: create new value for traditional industries.

In thirteen months spanning 1996 and 1997, Delong took control of three listed companies. A Xinjiang cement maker became the world’s second-largest tomato-paste producer after Heinz — nine plants, contracts for a hundred thousand farm households, 17 percent of global trade. A Shenyang alloy firm became China’s largest power-tool maker, clawing back pricing power in an industry that produced 70 percent of the world’s volume for less than 1 percent of its profit. A spark-plug factory grew into an automotive platform of more than fifty subsidiaries — gears, brakes, heavy trucks, military off-roaders — first in the country in its core lines. He paid consultants from Roland Berger to McKinsey some 95 million yuan to modernize companies that, he liked to say, could not produce one accurate financial statement when he arrived. Even after the crash, buyers fought over these assets — a state grain giant took the tomatoes, Weichai Power the auto parts. The industrial work was real.

So was the arithmetic against it. The three companies’ combined net profit, in their best year, was barely two hundred million yuan. Tang’s blueprint called for five or six industries at fifty to a hundred billion each. The gap between two hundred million and a trillion-yuan dream had to be filled by something. Its name was finance.

Ten Pots, Nine Lids

From 1996 to 2003 the three stocks rose roughly thirty-seven, twenty-six, and twenty-six times over; through the bear market of 2001 to 2003 they climbed a further 1,100 to 1,500 percent while the index fell by a third. Behind the miracle stood more than twenty-five thousand trading accounts across five hundred brokerage branches in thirty provinces, conducted by Wanchuan: buy, hold, split, lift, repeat. Tang called it the triple win — controlling shareholder, small investors, listed company, all enriched together. It had one premise: the price must never fall.

Propping up the three stocks cost over a hundred million yuan a month from 2000 on. The money came from twenty-seven captive financial institutions — trusts, brokerages, leasing firms, city banks, an insurer — whose wealth-management products promised 12 to 22 percent a year when the going rate was 8 to 10. No business reliably out-earns such funding costs; only new money can pay old money. Ten pots, nine lids, the saying went — solvent so long as the lids moved fast enough. A blandly named Shanghai nerve center, Youlian Management, moved them; on January 2, 2002, Tang took over its daily operation himself — “the firefighting is mine” — and for twenty-seven months, every day without exception, chaired the morning positions meeting: cash balances reported to the yuan, a blackboard, ten minutes of decisions moving money from pot to lid, the lists destroyed after each session. An empire flown by one pilot who had not slept properly in years.

The bell had already tolled. When a rival speculator’s empire collapsed in late 2000, panic reached Delong’s flagship trust and opened a 4.1-billion-yuan hole overnight. In April 2001 the economist Lang Xianping published the first systematic anatomy of the Delong machine, stripping the anonymity of a man who had never given an interview; client renewals fell from 97 percent to 3. That same month, in Hangzhou, the eight-man board voted on whether to let the stricken trust go bankrupt. Seven voted yes. Tang voted no: much of that money belonged to the ordinary families of Xinjiang, he said, and he would not betray them. One vote beat seven, because in an organization built on family trust and a founder’s legend, no one could tell Tang Wanxin no. From that day the healthy industrial companies were bled — some four billion yuan in all — and a manager’s worth came down to a single question: how much money can you raise? The juice maker Huiyuan, seeing 380 million yuan drained from their joint venture, raced Delong to refinance, bought back its shares, and escaped whole — one of the few who did.

By 2002 the paradox was complete. Delong’s most glittering year — the Pudong tower, a Forbes ranking, Wanli, newly elevated in the national business federation, promising the Fortune 500 within three years — was also its most desperate, and still Tang expanded on six new fronts while the fires burned. In 2003 he spent 80 million U.S. dollars on an American mower maker commanding 40 percent of that market and on German aircraft assets, mistaking his organization’s superhuman strain for superhuman strength. A plaque on his office wall proclaimed him second to none; his motto held that only what is wagered with one’s life is truly thrilling. Around him stood no counterweight: brothers bound by devotion, managers loyal to the man rather than any institution, banks and local governments feasting on the growth. That year their mother died, and by September Tang himself lay in a hospital with heart disease. No one — least of all Tang — could say stop.

The Reckoning

After the April 2004 crash erased sixteen billion yuan in a month, Tang did something he had never done in eighteen years of business: on April 26 he walked into the securities regulator’s headquarters, balance sheet in hand. Leaving, he sighed: “Before today, I had never called on a regulator.” One sentence held the whole story.

He flew to Canada, then Myanmar, while furious creditors circulated bounty talk. Fifty days later he came back — because, he wrote to the State Council, everything Delong did was at my command and the responsibility is mine alone; and because the debt web was so tangled that the government task force concluded only its weaver could unpick it. Under house arrest in a Beijing hotel he produced a rescue plan thirty centimeters thick. A Swiss consortium came, looked, circled him with hands clasped behind their backs, and left. The assets were sold for parts. “I built a computer with everything I had,” he said, “and it sold for scrap.”

The wreckage spread across twenty provinces: 2,500 institutions, 32,000 individual investors, 43.7 billion yuan taken in illegal deposits. The state made small savers whole and paid larger ones ninety cents on the yuan, local treasuries footing the bill — Xinjiang alone paid 1.38 billion. The man who would not betray the elders of Xinjiang saw them pay for his dream with their taxes. In April 2006 a Wuhan court gave him eight years and levied a record 10.3 billion yuan in fines on him and his companies. In prison — where a fellow fallen tycoon from his father’s hometown scorned him for robbing the poor to feed the rich — he turned the garment workshop profitable, two million yuan a year: the right scale, at last, for a talent that was always real.

It did not cure him. Paroled in 2008, he was re-imprisoned a year later amid “new Delong” rumors and reports of Mercedes-grade bonuses; released in 2012, he trailed through the shells of small listed companies, three of the four soon under investigation. In 2022 a provincial high court posted a bounty on his hidden assets: two hundred million yuan sought, up to twenty million as reward. Of twenty-nine first-generation market operators someone once tallied, not one converted fast money into a lasting enterprise.

Delong’s collapse was not bad luck; its structure guaranteed that success and destruction would arrive together. Every possible rescue required Tang to do the one thing he could not: stop. He was destroyed not by his flaws but by his virtues — courage, ambition, will — enlarged past all restraint, inside a family that supplied infinite trust and no correction. A family can be an engine; it cannot also be the brakes and the dashboard. Delong’s engine was magnificent. Its brakes never existed.

Tang used to say he wanted to retire before forty and hunt on the grasslands near the Kazakh border — a Toyota racing through the dark, headlights showing six or seven meters of ground, eyes fixed on distant prey, no knowledge of the gully that could flip the car. It was his career in a sentence. Red Mountain still stands over Urumqi. The water he spent his life heating finally boiled. The man who lit the fire was gone.