Two key investments turned him from a timber hauler into a tycoon worth tens of billions.

"Capital tycoon" Chen Fashu has set his sights on Yili, a leading dairy industry leader.

On September 1, Yili Co., Ltd. released an "Announcement on the Shareholding Status of the Top Ten Shareholders Concerning the Share Repurchase Matter", which disclosed the information of its top ten shareholders as of August 26. Chen Fashu, the former richest man in Fujian, ranks as the seventh largest shareholder of Yili Co., Ltd. with 61.4381 million shares, and the market value of his holdings exceeds 1.6 billion yuan.

In the first quarter of this year, Chen Fashu appeared on the list of top ten shareholders of Yili Co., Ltd. for the first time, holding 60.4381 million shares and ranking ninth; in the second quarter, he added 2 million more shares to his position. But entering the third quarter, he reduced his holdings by 1 million shares.

Since Chen Fashu resigned from positions such as director of Yunnan Baiyao in 2024, there has been little public information about him. Chen Fashu has always been low-key — whether it is himself or the people around him, they have all given such evaluations of him. He rarely accepts interviews and rarely appears in public occasions. Even when events such as the past "Tang Jun Incident" and "Yunnan Baiyao Equity Dispute" attracted widespread attention, he never spoke out, but he dares to make bold moves in investments.

In his early years, he invested in Zijin Mining, "China's top gold enterprise", and made a 500-fold profit in 9 years; later, through precise moves, he invested in many star listed companies such as Tsingtao Brewery and LONGi, so he was called "super retail investor" and "China's Warren Buffett"; after that, he had more than ten years of entanglements with Yunnan Baiyao.

From a timber transporter to a 10-billion-level capital tycoon, from his legendary success with Zijin Mining to the entanglements with Yunnan Baiyao, and now betting on Yili. If you dig deeper into Chen Fashu's rise history, you will find that he has his own set of investment logic.

01

Zijin Mining

Before 2007, not many people knew Chen Fashu, and even fewer had met him. He was so low-key that the public barely had any impression of him.

Chen Fashu is from Fuyang Village, Xianghua Township, Anxi County, Fujian Province, born in 1961. He came from a poor family and only studied up to the fourth grade of primary school. After he achieved success, he often said "I am a farmer entrepreneur" and "I only finished the fourth grade of primary school".

In 1982, Chen Fashu took a truck full of wood from Anxi to Xiamen, and then started the timber transportation business. By 1986, he had become a relatively large timber trader in Quanzhou, and purchased his first real estate property in Xiamen.

In 1987, he used his house as collateral, bought a three-wheeled motorcycle, and together with his two younger brothers, started to deliver goods for an 8-square-meter small store. Later, he took over the store and started his business by selling daily sundries.

In 1995, Chen Fashu moved from Xiamen to Fuzhou, and opened a department store called Huadu in the busiest Dongjiekou business district. Two years later, Huadu Group was established, and he was 36 years old that year. In 1998, his younger brother who started the business with him had serious differences with him on business ideas, and the two brothers finally chose to go their separate ways — Huadu was split into two, and Chen Fashu founded New Huadu Group.

In 2003, New Huadu began to speed up its development and expand to Zhangzhou, Quanzhou, Xiamen and other places in Fujian. Gradually, Chen Fashu's business grew bigger and bigger. By July 2008, New Huadu Shopping Plaza Co., Ltd. under his banner was successfully listed. At the same time, Chen Fashu's investments were widely distributed in engineering machinery, real estate, tourism, mining and other fields. Those were also the years when Chen Fashu's wealth grew the fastest.

In the 2006 Forbes China Rich List, Chen Fashu ranked 29th with a personal wealth of 4.859 billion yuan, and ranked first in Fujian Province. For 7 consecutive years after that, Chen Fashu was the richest man in Fujian.

What really brought Chen Fashu into the public eye was his great success in investing in Zijin Mining. Due to his low profile, the history of Chen Fashu's shareholding in Zijin Mining has different versions.

One version says that Chen Fashu's investment in Zijin Mining was an unintended move. Although Chen Fashu had come into contact with Zijin Mining in 1997, the domestic mining industry was not doing well at that time, and he had no intention of investing. In 2000, when Zijin Mining restructured, Chen Jinghe led a team to attract investment but failed. In the end, the local government "talked to" well-known local enterprises in Fujian such as New Huadu and Hengxing Industrial, and Chen Fashu took shares. However, later reports said this was a misinterpretation.

According to the book *Zijin's Global Mining Dream: Innovation, Iteration and Rolling Development of a Mining Enterprise*, in 1997, at the invitation of his fellow Anxi native Ke Xiping, Chen Fashu raised more than 60 million yuan together to buy a batch of mechanical equipment, and had already signed a contract with the next buyer in advance. Unexpectedly, before the delivery, the receiving company went bankrupt, and such a large amount of equipment was left on their hands. Ke Xiping and Chen Fashu sold some small and medium-sized vehicles, but most of the heavy equipment could not find buyers.

In 1998, Zijin Mining was about to carry out large-scale open-pit mining construction, and the two got to know Chen Jinghe, the chairman of Zijin Mining. At Chen Jinghe's suggestion, Chen Fashu and Ke Xiping jointly established Fuzhou Huadu Engineering Co., Ltd., and contracted the earthwork project of Zijin Mountain. Chen Fashu started trading stocks in the early 1990s, and he was considered one of the first generation of stock investors in China. With broad experience, he had already seen a potential gold mine in the capital market at this time.

In 2000, when Zijin Mining was restructured and no one was interested in it, the New Huadu Group controlled by Chen Fashu clearly stated that it would take shares to become the second largest shareholder. In the end, Chen Fashu invested 33.59 million yuan, and then kept buying retail shares at different rising prices. In total, he and the New Huadu Group held about 2.178 billion shares of Zijin Mining.

In 2009, one year after Zijin Mining returned to A-shares, when 4.925 billion restricted shares were lifted, the market value of Zijin Mining shares held by Chen Fashu exceeded 200 billion yuan. In 9 years, this investment of Chen Fashu increased by about 500 times. In 2010, Chen Fashu ranked 12th on the Forbes China Rich List with a net worth of 27.4 billion yuan.

02

Obsession with Yunnan Baiyao

In the process of doing business, Chen Fashu has been learning all the time. In 1999, when the scale of New Huadu's business was not yet large, he had already gone to major business schools to study.

In 2007, Chen Fashu met a leader of Yunnan Baiyao when he was studying at Cheung Kong Graduate School of Business. Later, when he went on a study tour to France, the two walked and chatted in the park during the break, and the latter described the development of Yunnan Baiyao in detail to Chen Fashu. This aroused the interest of Chen Fashu, who was engaged in investment.

He always believed that investing in enterprises like Yunnan Baiyao is valuable. He admitted that he was initially influenced by Buffett buying stocks like Coca-Cola, and when he was bidding for Yunnan Baiyao, he had already bought Tsingtao Brewery stocks. Buffett had a great influence on him. Early reports said that he once participated in Buffett's charity trip to China. During the dinner, Chen Fashu said on stage, "You did a great job, but there are also Chinese people who did well, like me." He said that it is better to have someone do it than no one.

He once conducted research on the Yunnan Baiyao team — so detailed that he had a clear understanding of even the drivers. In the second half of 2009, Yunnan Baiyao began to develop fast-moving consumer goods, and Chen Fashu became more optimistic about the prospects of Yunnan Baiyao, expecting its market value to reach 100 billion yuan within 5 years.

In 2009, Yunnan Hongta Group Co., Ltd. (hereinafter referred to as "Yunnan Hongta"), the second largest shareholder of Yunnan Baiyao, in response to the requirement that "tobacco enterprises withdraw from non-tobacco main businesses", listed and transferred its 65.81 million Yunnan Baiyao shares. Chen Fashu decided to participate in the public auction, offered 2.2 billion yuan, and signed the "Share Transfer Agreement" with Yunnan Hongta in September of that year. To this end, he sold part of his Zijin Mining shares.

After paying the huge transaction amount, Chen Fashu was not nervous or worried at all. He was very optimistic about this transaction and believed that he would definitely make the money back. That day, he even went to play ball with his business school classmates and held a celebration cocktail party.

The subsequent situation was completely beyond Chen Fashu's expectation. After the money was paid, the equity of Yunnan Baiyao was never transferred — China National Tobacco Corporation opposed it on the grounds of "ensuring the preservation and appreciation of state-owned assets and preventing the loss of state-owned assets". He sued Yunnan Hongta in court. The dispute lasted for more than two years, but in the end he still missed Yunnan Baiyao.

Chen Fashu, who suffered a setback, still did not give up. After that, he and New Huadu Group continued to increase their holdings in the secondary market, and once became the fourth largest shareholder. In 2016, the Yunnan state-owned capital restructured Baiyao Holding, the controlling shareholder of Yunnan Baiyao, and Chen Fashu's opportunity came.

He accepted all the conditions, and obtained 50% equity of Baiyao Holding as a capital increase party, with a total capital increase of 25.37 billion yuan. According to Chen Fashu's own account, the pricing negotiation session at that time only took 5 minutes for presentation and 5 seconds for final decision, because his offer was the highest. In order to raise this huge sum of money, Chen Fashu sold many real estate properties he had deployed across the country, and sold or mortgaged the shares of some companies he had invested in before.

Why is he so obsessed with Yunnan Baiyao? Chen Fashu once admitted that entrepreneurs of his generation go wherever there is profit, and do whatever makes money. After doing business for so many years and entering more than a dozen industries, he needs to find a large enough field to pass on the equity to his children. His investment philosophy is to put all eggs in one basket and take good care of the basket. Yunnan Baiyao is the basket he has identified, "Yunnan Baiyao is a century-old store, and it belongs to the pharmaceutical industry with no ceiling."

Chen Fashu and Yunnan Baiyao also had a honeymoon period for a while. At the end of July 2019, the board of directors of Yunnan Baiyao was reorganized, and Chen Fashu and his son Chen Yanhui were appointed as non-independent directors. In addition to the chairman, Yunnan Baiyao also established the position of co-chairman, which was held by Chen Fashu. Chen Fashu once publicly stated that the co-chairman would not participate in management, would not take charge of anything, and only support the chairman.

But Chen Fashu was extremely concerned about the development of Yunnan Baiyao. According to reports, he only took a symbolic salary of 1 yuan at Yunnan Baiyao, and paid for some business receptions out of his own pocket. He donated a total of 600 million yuan to Peking University, of which 500 million yuan was used to set up the "Peking University Fashu Medical Development Fund". At the end of 2019, the "Peking University-Yunnan Baiyao International Medical Research Center" was established. Academic achievements belong to Peking University, and R&D achievements belong to Yunnan Baiyao. "If I hadn't invested in Baiyao, I would have made more money by speculating in stocks with these more than 20 billion yuan. But since I was given this opportunity, I will go all out." He once said.

At the same time, Yunnan Baiyao's movements in capital operations have increased significantly.

Before Chen Fashu served as co-chairman, Yunnan Baiyao's financial reports all showed that there was no securities investment business. In 2019, Yunnan Baiyao used a total of 7.2 billion yuan for securities investment. In addition to bond funds, it held 4 stocks: Jointown, Jacobson Pharmaceutical, Hongta Securities, and China Antibody. In 2020, Yunnan Baiyao used 13.8 billion yuan for securities investment, and invested in many popular stocks such as Tencent Holdings, Xiaomi Group, Hengrui Medicine, Kweichow Moutai, Yili Co., Ltd., and China Biopharmaceutical. From 2021 to 2023, the funds invested by Yunnan Baiyao in securities investment were 10.7 billion yuan, 5.6 billion yuan, and 4.7 billion yuan respectively.

However, in 2021 and 2022, Yunnan Baiyao's investment in the stock market began to suffer large losses, with floating losses exceeding 2.2 billion yuan, which once led to the embarrassment of increased revenue but no increase in profit. In January 2024, Yunnan Baiyao finally announced that it would no longer "speculate in stocks".

In March 2023, Yunnan Baiyao suddenly issued an announcement that Wang Minghui, who had been at the helm of the company for 19 years and whose new term was only 4 months, applied to resign from all positions including chairman for personal reasons. Subsequently, news of the resignation of many senior executives was announced one after another. In May 2024, Chen Fashu and his son Chen Yanhui were also announced to resign and withdrew from the management of Yunnan Baiyao. At that time, there were reports that he was under investigation for being involved in the "Yunnan Baiyao related case".

Since then, there has been no public news about Chen Fashu in the market. However, there are reports that in the past two years, he occasionally appears in local folk activities in his hometown Anxi County. Regarding Chen Fashu's latest position and work status at New Huadu Group, *China Entrepreneur* contacted New Huadu Group, but as of press time, the call was not connected.

At present, he still holds shares in Yunnan Baiyao. The New Huadu Group controlled by him is still the second largest shareholder of Yunnan Baiyao. As of the end of the second quarter of this year, the market value of its position is 18 billion yuan; he personally holds 0.7% of Yunnan Baiyao's shares, with a market value of 593 million yuan.

In recent years, Chen Fashu has made frequent moves in the secondary market, and he often makes contrarian layouts, a typical example is LONGi.