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Red Roulette Author Speaks at House Hearing

Red Roulette Author Speaks at House Hearing

Desmond Shum, a former Chinese tycoon living in exile in the United Kingdom, recently traveled to Washington to appear before the Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party. Mr. Shum is the author of Red Roulette, a 2021 memoir that exposes the secretive power and money entanglements between the most privileged families of the Chinese Communist Party (CCP) and China’s private enterprises.

On the evening of July 13, Mr. Shum shared his experiences and answered questions from members of the U.S. House of Representatives about the risks U.S. companies face when doing business with China. In his testimony, he recounted three personal stories that, he said, “illustrate the essence of doing business in China.”

American Chicken ‘Not Good for Chinese Customers’

Mr. Shum’s first story dates back to the summer of 1990, when, as a college student, he worked as an intern at his father’s company Tyson Foods, which exported U.S. chicken to China. His father was the first employee of Tyson Foods in the Greater China region.

“My father’s business took a hit that summer,” Mr. Shum recalled. It was not because of any problems with the chicken, or with pricing. It was because American–Chinese relations were running into difficulty.

He found that every time there was a problem in the U.S.–China relationship, the Chinese customs authority would suddenly find issues with Tyson’s custom duty. His father told him, with resignation, “that whenever the U.S.–China relationship had a rough patch, American chickens would not be good chicken for Chinese customers. ”

“[The] CCP sees American business in China as hostage to be used for its own purpose,” Mr. Shum said. “That was my first lesson of China business: rules of the game are whatever the Party says they are at that moment.”

The Rise of Huawei

Mr. Shum went on to say that in 1997 he worked for a U.S. private equity firm and invested in a company that was laying telecom cable to help build China’s internet network. That was when he first heard of Huawei and was able to witness firsthand the technology company’s rapid rise.

The reason for Huawei’s meteoric success, according to Mr. Shum, is that the Chinese authorities required state-owned telecommunications companies to procure from Chinese manufacturers exclusively, excluding all international equipment suppliers, “despite cost and equipment deficiences.”

At that time, Mr. Shum also visited the offices of AT&T in China. The American company was planning to get into the telecom market in China. However, although the CCP promised to open up the telecom market when it joined the World Trade Organization, this promise has never been fulfilled. More than 20 years later, not a single foreign telecom company has entered the Chinese market.

“My lesson [is], in China, there is no such a thing as a level playing field. You either prosper when favored by the state or you perish when you are not,” Mr. Shum told the committee.

Chairman Mike Gallagher (R-WI) (C) joins fellow committee members during the first hearing of the U.S. House Select Committee on Strategic Competition between the United States and the Chinese Communist Party, in Washington, DC, on Feb. 23, 2023. The committee is investigating economic, technological and security competition between the U.S. and China. (Photo by Kevin Dietsch/Getty Images)

The Disappearance of Whitney Duan

Mr. Shum’s then recounted his third story, a “personally very sad and bleak one.”

Mr. Shum and his ex-wife Whitney Duan were once well-connected in China, with strong political and business ties. The couple used their deep connections to high-ranking CCP officials to build successful careers in the business world. But as their wealth and social status climbed to the top, danger loomed as the CCP leadership changed hands.

Mr. Shum worried that the political climate in China was becoming too hostile for entrepreneurs. He wanted to expand overseas, while Ms. Duan did not. The couple had a falling out.

In 2015, the two divorced, with Mr. Shum opting to leave for the United Kingdom and Ms. Duan staying in China.

Two years later, Ms. Duan suddenly went missing.

“In September 2017, Whitney was disappeared by the CCP state. For four years, no one heard from her—not her parents, not I, not our children. Her phone number became deactivated. Whitney’s mother, until her death in June 2021, had made a habit of calling her daughter every day, refusing to give up the hope that one day Whitney may answer the phone. But her wish was never granted. She passed away not knowing whether her daughter was alive or dead,” Mr. Shum said.

He went on to say that Ms. Duan was never charged with any crime and no reason was ever given for her disappearance.

“As a matter of fact, the CCP state has never even acknowledged that it has taken her. I assume her disappearance was because of the shifting landscape with the rise of Xi Jinping,” Mr. Shum added.

It was only on the eve of the publication of Mr. Shum’s memoir that Ms. Duan reappeared. She called Mr. Shum, using the number that had not been used for four years, and asked Mr. Shum to revoke the publication of Red Roulette.

In a 2021 Time magazine inteview, Mr. Shum described the conversation: “Then she asked me to stop the book launch, saying: ‘how would you feel if something happened to our son? And what would happen to our son if something happened to me?’ I took that to be a threat.”

“Moral of the story: political power trumps everything else in China. There is no rule of law; instead, China is rule by law. [The] CCP is above the law in China, and Xi Jinping is a modern day emperor, on top of the CCP and the state,” Mr. Shum told the House committee.

Defending the Economic Order of the Free World

He believes that when stressing the importance of safeguarding America’s economic interests in the context of competing with communist China, one needs to “make a clear distinction between corporate interests and national interests.”

“’What’s good for corporate America is good for America’ is a myth that has proven to be questionable,” he said.

“Corporate management, as capitalism dictates, is driven by self-interest and short term in nature,” Mr. Shum continued. “The de-industrialization of America and the wholesale relocation of [the] supply chain to China in the past decade are a testament to that.”

Mr. Shum concluded his testimony by placing American economic interests in the context of the free world:

“In Democratic societies and countries, elected officials should be the true guardians of national interests and the long-term well-being of its people. I believe it is very important to keep that in mind when you are presented with advocacy of re-engagement, rapprochement, from corporate executives. I believe economic interest is national interest. Defending America’s economic interests and American leadership in the global economy is defending [the] economic order of the democratic world.”

A Sensational Bestseller

Born in 1968 in Shanghai, China, Mr. Shum moved to Hong Kong with his parents at the age of ten. In 1989 he traveled to the United States to study, earning degrees from the University of Wisconsin and Northwestern University.

In 2001, he met Ms. Duan, an entrepreneur at the time, in Beijing. The two became business partners and got married. They were given some of the most coveted construction projects in the country, such as the luxurious Bulgari Hotel and the Beijing International Airport Air Cargo Logistics Center.

Mr. Shum had been a member of the Chinese People’s Political Consultative Conference (CPPCC) for ten years and was honored as a model entrepreneur.

Ms. Duan was very good at dealing with CCP officials. The close relationship she built with many high-ranking officials over the years enabled her to become very successful in the business circle. However, one day in September 2017, two years after Mr. Shum left China, Ms. Duan and three of her employees suddenly disappeared. Since then, Mr. Shum has been unable to find out anything about Ms. Duan’s current situation.

It is widely believed that Ms. Duan’s disappearance was related to the downfall of Sun Zhengcai, former Party boss of Chongqing. Mr. Sun was arrested due to an internal power struggle, and later sentenced to life imprisonment for taking bribes. He was seen as a political rival to Mr. Xi, with disastrous consequences for Ms. Duan.

It was after Ms. Duan went missing that Mr. Shum decided to write a book. In fact, he had no intention of publishing it at first, only hoping that his son would understand his parents through the memoir. However, he had grown up in Hong Kong, and the 2019 anti-government movement there deeply touched him.

“When I see these young people sacrificing themselves, [I feel that] I should be brave enough to take a step forward,” he said.

He then decided to publish Red Roulette, despite the consequences. “I signed my life away when I decided to publish this book,” he told Time.

Author Desmond Shum (2nd R) talks about the Chinese edition of the memoir, Red Roulette, at the book launch event in Taipei, Taiwan, on March 12, 2023. (Zhong Yuan/The Epoch Times)

The book not only tells the story of how Mr. Shum and Ms. Duan met and did business together, but also describes in detail how they dealt with the top circle of the CCP, including many relatives of the top officials. In the course of their dealings with the CCP’s elite, the two witnessed up close the lavish lives of the “Red aristocracy” and how they used their parents’ power, inside information, and regulatory approvals to make fortunes.

The book was published in English in September 2021. Its true stories and intriguing details shook the Western world.

To date, the book has been translated into at least 15 different languages. The Chinese translation was released in Taiwan in March of this year.

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