Zhang Xin - Chief Executive, Soho China HARDtalk

World Championships. It is now time for HARDtalk.

Welcome to HARDtalk. My guess is one of only 24 self-made female

billionaires in the world. Hers is a true rags to riches story. As a

teenager Zhang Xin worked in a sweatshop in China. By her 20s she

worked for Goldman Sachs and, disillusioned by Wall Street,

returned to China to make a fortune in property development. What kind

of China, a country heading for economic problems or an emerging

democracy as well as an emerging personal story is quite

extraordinary. Your parents were purged in the cultural Revolution.

Your teenage years were spent partly in a sweatshop in Hong Kong. How was

that? How did that seem to you? Did it seem like punishment or did it

seem like this was the real world you are going to live in? I was born

during the cultural Revolution in China, so I did not know any other

way. Everybody grew up in China in those days were poor, deprived of

any material means and wearing the same clothes, living in the same

kind of apartments. We would go to schools and we learnt the same way

of speaking. Even ideological, we were kind of guided in a certain

way. Those were the days when before China was opened. By the time I

moved to Hong Kong, even though I was working in the factory, it was

an eye opening experience for me because the colours, the freedom,

the noise, everything is so different. So it was a happy time?

When I say working in a sweatshop you think it must have been

terrible, but it was something you remember as enjoyable. I don't know

I was that unhappy in China. Even when I was living in the cultural

Revolution environment, it was a simple life that I as a child

enjoyed. One of the observations of that time stuck with me. The workers

in the short sharp -- sweatshop woodwork elsewhere for a slight

increase in pay. Why did they do that? Because those were the days

when Hong Kong was the manufacturer in China. -- manufacturing centre.

That has now moved to China. Factories are not like what we

imagine a big factory would be. The factory was in a high-rise building.

One floor was a factory. One factory would be making the sleeves, another

would be selling the zippers, another putting the collar on. If

you are a worker and somebody above you pays you - because they pay by

the peace dashed just pay by the peace - and want to pay you more,

then you go. You studied at Cambridge. Your observations about

the left-wing observations -- intellectuals and your professors

had an interesting view of communism which didn't correlate with what you

had seen. Not so much the professors, it was the students. I

went to a club and a group of leftie students were very idealistic. They

were idealising Marxism, socialism. I was sitting there and thinking,

you have not been to a real country that is a socialist country. You

really ought to be there and get a sense of what it is really like.

This was the period with the slogan to get rich is glorious. Did you

feel that this was a real period of change, that the Maoist past was

being broken up? I came to this country in the 80s, just at the

beginning of the opendoor policies. Very few have alleged Chinese like

me were able to leave China. I came via Hong Kong. On the one hand I was

fascinated in the Western world. On the other hand I was also very much

focused on where China is leading to because everybody in China was

talking about the future, the reforms, the open doors. What it

meant to modernise China. That was also the beginning of the paradox,

which we will get onto later, which is it was open and liberating, but

he also kept a lid on. It was the period of Tiananmen Square as well

as the openness. Two things going on in parallel. This is the thing about

open doors. You open the door and people see something and they want

more. There is no way back. You cannot say I open the door, opened

as part and don't open another part. It is hard. It is still hard. You

ended up in Wall Street. You are headhunted. This was the time people

really wanted to invest in China. You didn't entirely like Wall

Street, did you? I had a great training with Wall Street banks. I

learned a lot about financial markets. I eventually benefited from

a knowledge of the capital markets. It was also the kind of style of

work that I did not enjoy so much. It was very hierarchical. It was one

way of thinking only. You work on Wall Street, this is a glorious

place and everything that you are supposed to subscribe to. As much as

I enjoyed it, I was also dying to leave. You said, people spoke

crassly that, treated each other badly, look down on the poor and

adored the rich. It does sound like important of the greed is good

generation. Wall Street bankers are undoubtably cutthroat and

aggressive. I have seen a lot of that. Was there something about the

amorality of it that really irritated you? Even though you are a

very rich woman now, you are quite correct in your daily life. You

don't give your kids a kitchenette of money. You don't travel first

class. Is there something about that you just didn't like? I didn't feel

it was a moral, I just felt it was very aggressive. The general

environment was aggressive and competitive to the point that I felt

that it was suffocating. I didn't feel that... I didn't attach any

moral values to that. You went back to China, you make your husband, you

became business partners as well as marital partners. The China that you

live in now, the President talks about the China dream. What does

that mean for you? To be honest, I don't know what the China dream

means. People talk about it in China so much because every president in

China, every generation of leaders will come and they will have some

things that belong to them. For the President now it is the China dream.

I don't know what it is in the eyes of the government. I know what the

China dream is in the eyes of the Chinese people. It is to live

better, to modernise, to live freely, to speak freely. That is the

dream of everybody. Is it a dream that has not quite been met,

particularly on the live and speak freely aspects? Freer than my days.

This is the thing about the character of freedom. People only

want more and more and more. That is unstoppable? That is unstoppable.In

terms of the economics, part of the miracle is that more people have

been pulled out of poverty in China in the past 20 years than in any

other country in history. Do you worry that the boom bust eventually?

That the property boom that you have been riding on robust? China at the

moment is going into a challenging time. In the early stage, when it

was relatively easy to just grow, exploit and open eyes. They lot of

that has been exhausted. The migrants are moving from rural China

into the cities. That has largely been exhausted, that surplus of

labour. Also, urbanising cities and most of the cities in China are open

eyes. -- urbanised. Clearly China is no longer growing like this. It has

some challenges. People like us, who build buildings, are wondering what

will be the next stage because you have built a lot. Someone who runs a

-- an enormous property company says that if the bubble busts the result

will be catastrophic. It seems as if he and you what he managed to slow

down, rather than the inflation to just pop. I think China's growth has

been previously driven by investment. A lot of it is

government investment. Investment needs to have a return. When you see

building standing there not being used, that is not giving a return to

investors. That is when investments should slow down. That is what we

face now. That is a very difficult decision for the government, isn't

it? Your generation have certain expectations. It was pretty rough

and it has got a lot better. The young generation, the teenagers now,

may have varied different expectations. I think people want

opportunities. I think there are plenty of opportunities in China. If

you live in China and come to London you will see the vast difference. In

nearly every effort -- in nearly every industry, we do not have it in

China and we should do that. Some clever person will think about it as

a business and as a profit. One of the problems with doing business in

China, one of the works at every foreign businessmen loans, is

connections. Some people equate that that

that a difficult problem with full China? I think there is no doubt

that there is a degree of corruption in China and a degree of

relationship of connections that brings opportunities and profits to

people. Bear in mind that we have also been given a tremendous

technology today with social media and everything else. Things are so

quickly exposed. That itself is the check and balance of the powers.

Relationships in the matter when someone has absolute power. One

person has the power and duty to benefit from it, then you make the

relationship. A novelist once said that China used to be 70 70% talent

and 30% and actions. As money made it worse? I operate in China and I

can say that you can still operate without connections. I am not the

daughter of anybody. I don't have a close relationship with any

politicians. We still operate as a publicly listed company in China.

The market is becoming more and more open. If I were to compare ten or 20

years ago, yes there is corruption. Because of the openness, we are able

to see the corruption. We find out more about it but it may not be any

worse than it was before? You get so quickly exposed through the social

media. You have 6 million followers on the Chinese equivalent of

Twitter? Yes. Why? I write every day and people just like to read about

stories of people. I think this is pushing the Chinese society to

become progressive and open. Remember, 530 million people

registered on Chinese Twitter. Anything you write will be instantly

published. That itself is giving the grassroots incredible power.

there. It has helped the government to regulate itself. It puts a lot of

pressure on the government. One example. There was a local public

security and there was an accident happened. The head of the police

went down to see the accident and somebody took a photo of, he smiled

and this tragedy. People said why is he smiling? He should be serious and

worrying. And then people immediately start searching about

his background. They found out he owned 14 different watchers

different watchers, roll it is. He is a public servant who could not

afford Rolex. Within hours, photos of him wearing these different

things came out. He was dubbed the watch uncle. Within 24 days, he was

prosecuted. Where do you think this openness will lead? There is still

the Chinese fire well -- firewall on all these things. Where do you think

the will lead the government to go to? Is China going to be an emerging

democracy? China is going to become more open. It is not something

anyone can stop. We have been given this incredible to knowledge he,

this is what is available for humanity. Anyone can Twitter, can be

online, information is instantly available. That is a great check and

balance the power. But is it? One Chinese diplomats described this as

flies coming in. Things that are not entirely welcome. But what can you

do? The only way you can do is to close the door you cannot close the

door. One writer says that if China was to move towards democracy, it

would become catastrophic. It is to big. It would be as if the river is

flooding and people were drowned because democracy would not work in

China. I think we would look back in this period of history in humanity

and realise that from the 20th century to now, humanity, in

countries around the world, are embracing democracy. China is no

different. The Chinese people are no different to any other people.

have talked about socialism with Chinese characteristics. Could it be

a democracy with Chinese characteristics? Could it be very

slow because it has to go through the party. I do think that one thing

is that the demand is there. The public desire is there. The tools

are there. In terms of voicing the public through the online social

media. The government, the way the government needs to deal with it is

to respond to it. Not to deal with it pretending it won't come. It is

precisely this question with Tiananmen Square. You have an

economic slowdown. It may not be the bubble busting. But you have

questions about economic reform. In the past that has led to the

opposite of what you are talking about. Everybody keep in mind, that

is where our prosperity will take us. Not the freedom and chaos that

we saw in Russia when they moved from communism. That is a long time

ago. That is pre- information time. Every bit thing is -- everything is

moving in a different direction now. You are very optimistic aren't you?

Yes. You mentioned that everybody looked the same in Mao 's China. Is

there a place for women in Chinese business? I would say that being an

entrepreneur in China is probably easier than in many other

countries. Passe this because I have seen a lot of successful Chinese

women -- I say this because I have seen a lot of successful Chinese

women entrepreneurs. If you look at China, if you are just given man and

women and equal opportunity, you would very often see women do quite

well. I do not know the exact number, but I do know that for

instance, the Olympic gold-medallists for China, there

were far more women than men. This was a free competition. This is not

about relationship is there is no glass ceiling. When women are given

free and equal opportunities, in China they tend to perform better.

But in politics. In politics, no. All addicts excels not been open to

anybody. Men women. -- in politics not has been -- politics has not

been open to anybody. It has to change. It is inevitable. We are

seeing it around the world. Let us talk about the future. What would be

the good scenario that you would like to see, in terms of the

economy. You think that the slower rate of growth can be managed? What

do you think that there is a bubble and it will burst? I think that the

economy is getting into a very difficult time and I think that the

change, because the exports, the economy cannot rely on exports and

investment alone. There has to be a different way of managing the

economy. We have not seen anything coming out from this new government

yet. But I am optimistic in thinking, I don't believe that

moving from high growth to relatively solid growth means a

collapse of the economy. I don't believe that. I think companies,

governments, individuals will adjust to that. It is a matter of

certainty. Governments need to come out with a clear idea of where it

where it is guiding the economy. Have you got idea of what that

should be? It will be domestic consumption driven. Empowering the

Chinese consumer to spend more? Do you think that is not the new

government will consider? That will be something they have to do. If you

are not relying on export, it has to be consumption. Consumption is so

small as a percentage of GDP. Compared to the UK or the US there

is huge room for growth. So for the ordinary Chinese person to spend

their money wisely. And in terms of politics, trust the ordinary Chinese

person to express what they believe freely, even if it is critical?

And it is already happening. And is it being tolerated? Yes. It has been

quite tolerated. I think it is also giving the government pressure to

change for the better. Do you trust the government to react positively

to this? I do not know. But it is a general public desire. The

government has to respond to it. Ignoring it is not the way. So the

big lesson is, the wealth will trickle down to ordinary people, who

will have more say in how their country is one. That will be the

Chinese dream. Right. And if the 14 -year-old sewing away in the switch

at -- sweatshop in Hong Kong, what would see so? Different what would

she say? I think she would want the same opportunities. The single

element that changed my life is education. If I did not have the

opportunity to live -- leave the Hong Kong sweatshop, to go to the UK

and get an education, I would not have the opportunity to go to Wall

Street and do what I do. If we look at Chinese society, it is so

important, education. The government is doing quite well in terms of

providing enough education. Everybody gets free education up to

nine years in China. The quality of the education is still not quite