Du Shuanghua, chairman of Rizhao Steel Group and one of China’s most famous entrepreneurs, is now in deep trouble. Du was the first entrepreneur to start a steel company from scratch and built it up into an international corporation with $7 billion worth of assets. However, as early as 2010, he sold his stake in Rizhao Steel for $1.5 billion to Shandong Heavy Industry Co., Ltd. The sale allowed him to maintain control over the management team and helped protect his reputation within China. However, the sale of Rizhao Steel was a turning point in Du’s career.
Unfortunately for Du, he failed to foresee that the government would crackdown on private enterprises by restricting their ability to borrow money and forcing them out of business through high taxes or bankruptcy. His company became unable to pay off its debt and was forced into bankruptcy. This ultimately led to Du Shuanghua’s arrest in 2014, where he is currently facing corruption charges associated with the sale of Rizhao Steel Group.
Currently, it is believed that Du can pay his debt and survive as a private enterprise under new rules. However, if he wishes to remain in control of Rizhao Steel Group (and avoid bankruptcy), he will face issues with creditors and government regulators.
The story of Du Shuanghua and Rizhao Steel is a fascinating one. As an entrepreneur, he built up the company from scratch into what it is today. Du Shuanghua is a cautionary tale for all entrepreneurs. It highlights the importance of doing due diligence when selling a company and the potential consequences of dealing with corrupt officials. In an era where the Chinese government is becoming increasingly hostile to private enterprise, it will be necessary for business owners to be aware of the risks involved in doing business in China.