On Valentine’s Day in 2015, two of China’s biggest ride-hailing startups, one backed by the tech giant Alibaba and the other by Tencent, announced they would merge after burning through hundreds of millions of dollars in a price war. Brokering the deal, while managing the egos of combative founders and investors, was Bao Fan, the rainmaker of China’s tech industry.
His company, the investment bank China Renaissance, went on to advise and invest in many of China’s most successful tech companies, taking them public in Hong Kong and New York.
“If you don’t know Bao Fan,” goes a saying in the industry, “you haven’t made it.”
Eight years later, on Valentine’s Day last week, rumours started circulating that Bao had gone missing. His company later confirmed his disappearance in a regulatory filing. Chinese media reported that he had been summoned by the authorities to assist in an investigation of a former senior executive of his company who used to work at a state-owned financial institution.
China’s tech world is watching closely what will happen to Bao, who knows or has worked with nearly every mover and shaker in the industry. He is not as well known outside the business world but is just as symbolic of the industry’s rising presence in China as Jack Ma, co-founder of Alibaba, who has largely vanished from public view after falling out with the government in 2020.
Bao’s disappearance has undercut Beijing’s new priority to restore business confidence after ending its “zero-Covid” policy and crackdowns on the private sector. It threatens to upend the government’s promise that it supports private enterprise and would provide legal protections for the business class.
And the episode, even if Bao resurfaces soon, also illustrates how China’s tech industry, once the country’s most globalised and independent sector, has become entangled with the government.
“When the rabbit dies, the fox grieves for fear it would be the next; when the lips are dead, the teeth will be cold,” said an executive who has known Bao for more than a decade, mixing Chinese idioms to describe the mood among his peers.
“This matter shouldn’t be seen as just an individual issue for Bao Fan,” he said, speaking on the condition of anonymity out of fear of reprisal like other businesspeople I spoke with. “It’s an event that affects the entire industry. It’s related to the survival of investors and entrepreneurs.”
A tech founder who had worked with Bao on deals wrote on social media that entrepreneurs were like “frightened birds”. “Confidence is slow to build but quick to dissipate,” he wrote. “Without confidence, who will build factories, start companies and invest in the future?”
These people are concerned that the authorities can make anybody disappear without legal processes, and that it can happen to anyone, anytime and anywhere.
Bao’s background
Bao, 52, is one of many Chinese born in the 1960s and 1970s who benefited from policies that opened up the country. His parents were diplomats and he was exposed to the outside world before most of his generation. He got his bachelor’s and master’s degrees in Norway, and worked for Morgan Stanley and Credit Suisse after graduation.
In 2004, Bao founded China Renaissance to focus on the budding internet industry, which was too small for the big Wall Street firms that were busy chasing state-owned giants such as China Mobile and PetroChina. He got to know all the big shots in tech when they were nobodies and knew little about raising money.
He became their go-to banker when they needed financing and advice. China Renaissance’s best years were between 2015 and 2017, when hot Chinese startups were raising as much funding as their peers in Silicon Valley. Bao helped put together three of the four megamergers in 2015 that produced dominant internet companies such as Didi, which was China’s answer to Uber, and the meal delivery giant Meituan.
As tech grew, so did Bao’s ambition. In addition to dominating deals, his firm started investing in startups.
He became as famous as the founders he had helped shepherd and was a sought-after speaker at conferences in and outside of China. He had always cultivated a rowdy boy image and enjoyed talking about his hobbies such as boxing and Formula 1 racing. Like many people in China’s tech industry, Bao believed in the free market and wanted minimal government intervention.
Government crackdown
But the Chinese government, under the leadership of Xi Jinping, intensified its control over the economy. The tech industry had to learn to deal with it. Companies expanded their government relations teams, hiring former officials and executives of state-owned enterprises, to smooth communications with the mandarins.
China Renaissance was no exception. In 2017, ICBC International, a division of the state-owned banking giant ICBC, provided the investment bank with a US$200 million credit line. Bao backed the loan with shares in his firm and promised to repay it after China Renaissance went public in Hong Kong the next year. It delivered on that pledge.
In 2020, Bao hired Cong Lin, the head of ICBC International, as chairman of a brokerage business China Renaissance had formed. Last September, Cong became a target of a government investigation related to his dealings before he joined China Renaissance. He left the company around the same time.
Even without this trouble, 2022 was a bad year for Bao. The government’s regulatory crackdowns on tech, education and other business sectors dried up deal-making, and the harsh “zero-Covid” policy put hundreds of millions of people under lockdowns, halting economic activity.
In the first six months of last year, China Renaissance’s revenue fell by 40 per cent and the firm lost US$23m (NZ$37m), compared with a US$179m profit in the same period a year earlier.
Since the news of Bao’s disappearance came out, China Renaissance’s share price has fallen by more than 20 per cent.
Bao was already changing his style to accommodate the country’s leadership. He had kept a much lower media profile in the past few years. In a speech at a big internet conference in 2021, he quoted Xi’s instructions on the digital economy, using government lingo such as “new era” and “a community with a shared future in cyberspace”.
On National Day last October, he posted on WeChat: “Warm congratulations on the 73rd anniversary of the founding of the People’s Republic of China!” His firm made a red digital card for the occasion. It was probably not something Bao would have done in the past.
It’s not just the government that has grown hostile to the business class. On Weibo, a social media platform, some people said that Bao’s disappearance proved that he was greedy and lacked judgment.
Last Saturday was the 26th anniversary of the death of China’s former paramount leader, Deng Xiaoping. Some people wrote articles or social media posts to commemorate him, reminiscing about the days when China was opening to the world and its leaders focused on building the economy.
One popular article about Bao was nostalgic, too. Its headline was “Would Bao Fan want to remain in the year of 2016?” That year was the peak of Bao’s career. Many people fear it also might have been the peak of China’s tech industry.
This article originally appeared in The New York Times.
Written by: Li Yuan
Photographs by: Adam Dean and Gilles Sabrie
© 2023 THE NEW YORK TIMES