As the second-richest person in the world, and with a half-century record of investing success, Warren Buffett is a household name worldwide. In China, though, he is something more: a celebrity.
In March a special edition of Cherry Coke, featuring a cartoon image of the 86-year-old investor, hit Chinese shelves: Buffett not only loves the sugary beverage, but also is Coke’s largest shareholder. On May 6 thousands of Chinese investors will descend on Omaha for the annual meeting of Berkshire Hathaway, his holding company, and many more will tune in a live-stream of the event. Mandarin is the only foreign language into which the proceedings will be simultaneously translated. Those who miss the broadcast can pick up one of the hundreds of Chinese books about his approach to minting money.
Buffett’s stature in China stems partly from good timing. China’s modern stock market was launched in 1990. As neophyte investors grappled with earnings reports and trend lines, the Oracle of Omaha’s reputation as the world’s best stock-picker was blossoming.
Compared with the regular booms and busts of the Chinese stock market, the steady returns of Berkshire Hathaway are beguiling. For Chinese investors who do make it big, there are few greater accolades than to be dubbed “the Warren Buffett of China.” This title has been conferred on or claimed by no fewer than 10 tycoons.
They might want to think twice, however. In the Chinese context declarations of Buffett-like investment abilities have, during the past couple of years, proved less a badge of honor than a warning sign. In rapid succession his putative disciples have run into trouble. One was jailed for manipulating the stock market. A second has been held incommunicado in custody for months. A third was hauled in as part of a government investigation.
This chasm between the veneration of Buffett and the travails of those who supposedly model themselves on him points to the messy reality of Chinese finance. Investors are becoming more sophisticated, with professional fund managers, once marginalized, playing a bigger role in the country’s markets.
Buffett is held up as the gold standard of value investing, respected for his long-term view in selecting stocks. When they get down to business, though, many Chinese investors still opt for hard-driving, debt-laden, risky approaches. They are products of a stock market that is not yet three decades old and an economy that, during that time, has seen few serious downturns.
Lost in all the hype about these supposed Buffetts of China is that there are in fact companies which have been more Buffett-like: big, boring, mainly state-owned insurers. Hewing to official rules, they have been more cautious about using debt. Benefiting from China’s growth, their performance—measured by book value per share, Buffett’s preferred gauge—has topped Berkshire Hathaway’s during the past decade, albeit with more ups and downs.
They also share one other trait with Buffett, who is famed for his humility: They have not boasted about their success.
© 2017 Economist Newspaper Ltd., London (May 6). All rights reserved. Reprinted with permission.
Image credits: Greg Baker/Agence France-Presse/Getty Images)