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Smuggling Kingpin or Local Boy Made Good?

Some say that Xiamen owes its economic head start to local hero (but public enemy number one) Lai Cai Xing. Currently under house arrest in Vancouver, Lai escaped the mainland when it was discovered that he had built up his billion-dollar business on bribes and smuggling. At the time, he ran an empire so powerful that locals used to joke that Xiamen should change its name to the name of his company, Yuanhua. Lai earned a reputation as a modern-day Robin Hood, a big-hearted billionaire who helped out folks far more than most stingy government cadres ever did. The trickle-down benefits of the operation were immense. In the city and its suburbs, Lai built hotels, residences, a port, and a full-scale model of Beijing's Tian'an Men Gate. He opened homes for the elderly and showered associates and government officials and their relatives with gifts, money, and trips abroad. Investigators reckon he spent $2.5 million on gifts during the 1997 lunar New Year celebration alone. For his generosity, Lai was charged as the mastermind behind China's largest-ever smuggling ring. In the ensuing investigation, 14 officials were executed and another 300 imprisoned.

According to a recent online poll, more than 80% of Chinese university students believe China's biggest companies are corrupt. Even Lai admits, "The whole system in China is corrupt. To get ahead, you have to become part of that system." Xiamen residents are bitter that their city has been targeted, when, they say, corruption is equally rampant in other Chinese cities. More resentment has followed as this has opened the door for rich investors from other cities such as Wenzhou, to force up property prices in Xiamen.

With dozens of police, Customs, and mayoral staff in jail, Xiamen quickly became a pariah in the eyes of domestic and foreign investors. Yuanhua, it turned out, was intertwined with hundreds of local companies from tour agencies to flower shops, many of which were closed, turning one of China's more prosperous and promising cities into a place of financial and social gloom. The only companies that were excluded from the effects of this citywide crackdown were, unsurprisingly, those operated by the People's Liberation Army. What for many years had been one of China's most prosperous and free-spirited cities became a gloomy wreck of halted building projects and shuttered nightclubs. Xiamen recorded blistering growth of 17% a year in the second half of the 1990s. Most worrying for local officials is that foreign investment plunged precipitously -- down 23% in the first year after Lai's arrest.

To recover some of the losses, government officials tried without success to auction Lai's holdings, including the Tong'an Forbidden City Film Studio and the 88-story Yuanhua International Hotel, where a lake of stagnant water had begun to fester. Eventually the downtown location was sold to a Hangzhou tycoon who now operates a Sheraton on the site at Jiahe Lu.

The only evidence that remains is Lai's notorious pleasure palace. From the outside, the infamous Red Chamber (Hong Lou) on Hua Xing Lu, Near Yong Shen New City (bus no. 109) looks like any other office building in Xiamen -- a drab and dusty complex covered in red tiles. Leased to Lai by the local Public Security Bureau in 1996, the building held four opulent dining rooms for the culinary amusement of his friends. On the third floor, the sensual pleasures became more dizzying: four massage rooms, two Jacuzzis, a sauna, and a steam room. The fourth floor boasted a 40-seat movie theater, a karaoke parlor, a bar, and three mini dance halls. Both the fifth floor and sixth floors were made up of guest rooms, including several presidential suites where top officials could slip in through secret entrances for trysts with procured entertainment.

The Red Chamber reopened briefly as an anticorruption museum but was quickly shuttered when tourists seemed to take its opulence as an inspiration instead of a warning. In its first 4 days, more than 8,500 people paid about ¥10 each to see how their homegrown Al Capone did business. Tong'an Film City is located in Wu Xian Town of Tong'an district (tel. 0592/730-2870) and can be reached on bus no. 67 leaving from the harbor near the Lujiang Hotel for ¥6. For more background on this captivating character try reading Inside the Red Mansion: On the Trail of China's Most Wanted Man by Oliver August.

Note: This information was accurate when it was published, but can change without notice. Please be sure to confirm all rates and details directly with the companies in question before planning your trip.