#mengde

On Dong Zhuo

Dong Zhuo was never a real gangster/mafia; he dabbled in societies a little when he was young, but he was too physically weak, and too smart to rise through the ranks and stay there. But he kept his contacts with the underworld. That was how he met Lü Bu, then a bored, incredibly violent young gangster who had a zeal for fame and fortune. 

Dong Zhuo’s main company is a holding (parent) company--I can’t think of a good name, so let’s pretend everyone refers to it as Dong Zhuo Holding (”DZH”) for now--that has its fingers in a lot of big (state owned) infrastructure companies. The biggest companies in China are still mostly state-owned or state-monitored, through state-owned companies controlling the shares and/or the director/supervisory boards (China has a peculiar system mashing together independent directors and a supervisory board, the two monitoring systems found in civil law corporate governance, although it seems none works effectively alone, and even less so together). After years of hustling/blackmailing/bribing hardwork, Dong Zhuo managed to cobble together an impressive portfolio in these companies; he was the largest non-state owner in a significant proportion of them. He also managed to get himself or his people on the boards of many of these companies and maintained a huge influence on others. He knew how to play the fear and greed game very well. 

DZH’s stocks are traded in the stock exchange, although Dong Zhuo and his people retained a lot of control in stock ownership and board constituency. He increasingly gave Lü Bu more and more power in DZH--he didn’t have family he could trust, and he kept dangling shares and positions in DZH as carrot and rewards to Lü Bu, who always completed his tasks spectacularly. He didn’t think of Lü Bu as a crude vulgar boy who even understood this sophisticated world until too late. 

An anomaly in DZH’s portfolio is a wholly-owned construction company he acquired unceremoniously ('robbing’ would be a good term for it) from a Liu clan. It’s not a public company, but when Dong Zhuo got on board it started doing very well due to a portfolio of big projects from state officials (cough) and intricate highly beneficial networks. When Dong Zhuo took over the company, he screwed over a lot of minor shareholders and investors, including Cao Cao, who was declared bankrupt and had taken loans from not very nice people in order to start up his business. If Chen Gong hadn’t helped him out, he might have ended up in several rivers several provinces away. 

Cao Cao got back on his feet with his family’s help (both Xiahou and Cao) as well as some other talented individuals he managed to win over. Xiahou Yuan, during his stint in the military, stumbled upon signs of a new mine in the west (he was a geology student; the degree that doesn’t seem useful until you stumble upon black gold or liquid gold while walking around). He worked together with some of the more established infrastructure and mining players such as Ma Teng (Yuan Shao was willing to share some contacts) to exploit the new mine. 

Cao Cao could now set his sight on Dong Zhuo. The Yuans were interested; everyone was. But even with their combined financial might, that didn’t mean they could take Dong Zhuo or DZH on; Dong Zhuo’s web of corrupt and/or terrorised officials and his underground connections proved to be as an effective deterrence as his iron-fist grip on DZH’s board and shareholders. 

The Yuans were willing to provide the project with some funds--it was a half-hearted gesture, something that was barely a ripple in the Yuans’ coffers, and it would be sourced from offshore shelf companies that would not be easily connected to the Yuans if anything went wrong. 

But Cao Cao managed just fine. Guo Jia came up with a plan to make DZH finance its own hostile takeover. They managed to pile ownership of cheap DZH stocks through various agents and companies using tactics that might not be as dirty as Dong Zhuo’s--but every corrupt official has their price. 

It was Xun Yu who came up with the idea to go to Lü Bu. 

Guo Jia had meticulously planned and timed each event of the climax of this story. The deluge of public exposure of Dong Zhuo’s evilness and corruption (many evidences of which were anonymously provided by Lü Bu) brought down the share prices; it took everyone by surprise (the surprise less being the scale of it and more that such a powerful and well-connected figure could be exposed like this), except for Cao Wei, who was already buying the shares as rapidly as they were being dumped. Cao Wei became the highest non-Dong-aligned owner within a few hours, with influence on a handful of other shareholders, enough to force a shareholder meeting. 

The police were forced to act on the scandal quickly and moved to arrest Dong Zhuo, only to find him dead in his luxurious condo--he had committed suicide from the sheer shock and fear of what was going to happen now that all the dominoes had fallen. No one contested the will, the will that named Lü Bu beneficiary of Dong Zhuo’s shares in DZH. Lü Bu became the most powerful member of the board by virtue of everyone else’s fear of him. He easily persuaded them to approve of the takeover. 

And just like that, in the space of one night, Cao Wei became the modern corporate David vs Goliath story. 

Housecleaning

Xun Yu was the one who warned Cao Cao and everyone else of the danger Lü Bu posed. Lü Bu had hardly popped his celebratory champagne open when he found that Cao Wei had started a derivative action suit suing him for breach of director duties. Even though the case went for settlement, it ended up with him declared bankrupt.  

The Yuans (represented by their army of companies) managed to get a bigger proportion of the war spoils (the damages from the settlement; Lü Bu’s and Dong Zhuo’s shares) than the proportion of their contribution towards the takeover. They quickly gained more control in the shareholders and in the board than Cao Wei had. Their greed were too obvious; they were especially lusting after DZH’s portfolio in the state-owned companies. 

Cao Cao was more modest in his goals; he only wanted the construction company Dong Zhuo had, the same one he was booted out of some years ago. He didn’t want to share this with the Yuans or other DZH stakeholders, but the construction company wholly owned by DZH, meaning any decision to the company was still made by the DZH board. The Cao Wei people also realised the urgency of getting the fuck away from the Yuans for now, especially when they were now a minority in DZH. 

The wolf 

Guo Jia had a plan. It hit a snag for a bit because of a seventeen year old kid who was too cool to play games like any other kid and instead got his kicks off the stock exchange. They thought his name was Sima Lang because he used his older brother’s credentials to sign up for an account. When Cao Cao asked Cao Pi about Sima Yi, he said he only knew him by name since they were in the same class; he was smart, but quiet in class. Cao Pi had never talked to him. 

The plan was something like this:

DZH shares had been steadily improving since hitting rock bottom when they got rid of Dong Zhuo and Lü Bu.

Since they already didn’t trust one another, Guo Jia wanted to exploit that mistrust and further rouse the Yuans’ (and those of other DZH shareholders) suspicions that Cao Wei was planning to takeover the Yuans’ ownership of DZH. He had a plan to crash the DZH stock prices to bring about that suspicion. Sima Yi foiled this when he posted online that this was Cao Wei’s bluff, and that people shouldn’t buy into it and dump their shares, and he argued very convincingly that DZH’s shares were instead very worthwhile now. The post went viral, the share price didn’t drop and instead increased in price. Sima Yi sold his DZH shares then for a quick fortune and was about to laugh on his way to the bank when a bunch of big men in black brought him to Cao Wei’s office at Soho Sanlitun. 

Guo Jia was annoyed that he had to come up with an alternative plan, but what had to be done had to be done, and it was easy to farm the culture of suspicion and mistrust already brewing in the DZH board. 

When DZH shares went down again (hmmmm...) Cao Wei suggested to the DZH board to sell the construction business since anyway DZH hadn’t been managing it well since Dong Zhuo’s downfall, and really it was more trouble than it was worth especially when compared to DZH’s other portfolios. Cao Wei put on the pressure and the board hurried agreed to sell it to this small company owned by some construction startup from the west.

After the sale, it was not a good idea to have this big influx of cash in DZH, and Cao Wei humbly suggested a buyback scheme... maybe theirs? They would even sell it for a discount, lower than the already low market price for DZH shares now. Cao Wei again put on the pressure, and the Yuans were already thinking that it was a good idea to also put some distance between themselves and Cao Cao. Even though some of Yuan Shao’s advisers advised against it, they agreed to buy Cao Wei out of DZH. 

The small company they sold the construction business to was owned by Zhang Xiu, who was primed for a merger with Cao Wei. After the merger, the new Cao Wei now owns the construction company.

As it stands now

Cao Wei as a parent holding company has several businesses, such as the mining company, and then now the construction company that is growing bigger by the day. The shares in Cao Wei construction is owned in a majority by Cao Wei, the employees (compulsory by law anyway), a bunch of of Cao/Xiahou family members, Zhang Xiu and his family etc. It has been open for a limited foreign investment for sometime now, and it is also now trading preference stocks without voting rights in public. 

The Yuans aren’t in the construction business (another reason why they didn’t worry too much about Cao Cao running away with the construction company); they’re an old family business dealing in property development and management. But Cao Wei is rapidly seeking to expand to that field (that’s why Guo Jia is obsessed with Tao Qian’s shophouse and the neighborhood it’s at), and the both of them would have to contest a rapidly developing and urbanising north/north-east China. For now, the property development part of Cao Wei is still a department under Cao Wei constructions (more specifically a bunch of folders on Guo Jia’s shelf). 

Lü Bu re-enters the picture here when he and Chen Gong approached Yuan Shu about crippling Cao Wei, Lü Bu desirous of getting back what he thought was stolen from him, with interest in vengeance increments. He will do whatever it takes, even if it means slipping back underground and giving up this humble hard life at the carwash even he was quietly enjoying. 

Cao Wei has some leverage over Lü Bu in that they could any time go to the justice system with some evidences of the terrible things he had done under Dong Zhuo’s orders, but their hands were tied since Lü Bu himself was smart enough to keep evidences--or get them from terrified officials he could easily scare--of Cao Wei’s underhand methods they resorted to when they were trying to take over DHZ from Dong Zhuo. Lü Bu knows he’s the underdog against Cao Wei and it suits him just fine; if Cao Cao could do it last time, there was no reason he couldn’t now.