Sun Dawu’s Dream of Capital Socialism, Reveals an Outspoken Chinese Billionaire’s Lifelong Struggle for Social Justice
By Prof. Cheng Tiejun
By: Citizen Press - August 6, 2021
Who is Sun Dawu, what has he done, and why is he in prison? Prof. Cheng Tiejun’s book Sun Dawu’s Dream of Capital Socialism ( in Chinese), published by Citizen Press, the publishing arm of Citizen Power Initiatives for China, provides all the answers about Mr. Sun and his company, including the author’s personal observations of and interactions with Sun Dawu. The book focuses on Sun Dawu’s lifelong dream to bring about social justice in China, particularly Sun’s understanding of the free market, enterprises, private property rights, wealth distribution, and social insurance. Mr. Sun advocates “public governance” and “wealth sharing” on the basis of a market economy and well-protected property rights.
The book’s author, Cheng Tiejun, is a prominent Chinese sociologist and a former professor at the University of Macau. He is a prolific writer, and his writings often offer readers deep insights into the realities of contemporary China.
孫大午的資本社會主義夢 (Traditional Chinese Edition) Kindle Edition
Traditional Chinese Edition by 鐵軍 程 (Author), Tiejun Cheng (Author) Format: Kindle Edition
Entering the Dawu Group, you will inadvertently find slogans and verses about "Dream of Dawu Taoyuan" written on the red brick wall. In Sun Dawu’s own words, the dream is to achieve differentiated common prosperity through labor exchange and democratic management in his privately owned private enterprise, "not for profit, but for development", that is, The six-character maxim of "private, public governance, and common use"
Sun Dawu’s Dream of Capital Socialism is now available in Traditional Chinese on Amazon. It can be downloaded in Kindle format for at https://www.amazon.com/dp/B09BV63Z97
The Yellow Emperor Huangdi 黄帝 (reigned from 2697–2597 or 2698–2598 BCE). He united the tribes by harmonizing opposites. His death mask is carved on Fu Shan in Xushui County, Hebei Province at the bend of the old Yellow River. The large mask which covers the mountain is composed of a fish that has carp features—with one important exception—the fish has visible teeth. On the other side is a reptile that has crocodilian features known as the Jiaolong (蛟龙). Sun Dawu (孙大午)is the guardian of Fu Shan as Confucian poet, philosopher, farmer, entrepreneur and dreamer.
Enhanced image through Corel Draw. On the right is the carp with teeth from three-quarters view. In the middle is the Jiaolong from three-quarters view. Together they make the death mask of Huangdi. On the left is a monkey from frontal view.
孙大午 Sun Dawu and guests at Dawu Group 大午集团
"It is not Sun Dawu that affects rural financial stability, but the monopolistic and rigid financial system."
Mr. Bao Yujun played an important role in Deng Xiaoping's comeback, the restoration of the college entrance examination, and the rectification of intellectuals. After he was transferred from the propaganda department to the All-China Federation of Industry and Commerce, two proposals led to the entry of private property into the constitution, and he repeatedly spoke for private enterprises. He is straightforward and dare to tell the truth. To be honest, it takes courage and is respectable. People call him "protecting a cannon", but I think he is more like a torch that warms private enterprises. He has made a great contribution to China's private economy. Private enterprises should not forget him, and Dawu Group will never forget him. In the celebration of the 30th anniversary of our establishment in 2014, Chairman Bao said: "Dawu Group is self-reliant and gradual! It is not honourable for nothing." We are very touched by this! "Self-reliance" is the portrayal of the 30 years of our Dawu Group. Our future development still depends on "self-reliance".
Sun Dawu 孙大午 : Talk about the protection of legal persons’ property rights
Press also: From November 14th to 15th, 2016, Dawu Group, located in Xushui District, Baoding City, Hebei Province, invited a group of domestic economists and jurists to participate in the meeting room of Dawu Group Business Center. A "Seminar on Inheritance and Governance of Private Enterprise Property Rights." During the meeting, Mr. Sun Dawu, Chairman of the Supervisory Committee of Dawu Group, gave a keynote speech on the issue of "Protection of Legal Person Property Rights", and responded to the questions and questions of some scholars in the field of economics and law who attended the meeting.
This speech by Mr. Sun Dawu is a transcript of the meeting, which was later reviewed and approved by Mr. Sun Dawu. The full text is now released for sharing by Kaidi netizens.
(Yichen at Baoding Dawu Group on November 15, 2016)
The following is the full text of Sun Dawu's keynote speech:
I think that when we talk about the protection of corporate property, we need to start from two aspects, one is government protection, and the other is our own protection.
It can be known from the general principles of civil law that a legal person is an organization that has civil rights and capacity for civil conduct, enjoys civil rights in accordance with the law, and undertakes civil obligations. Legal persons are divided into four types in our country, enterprise legal persons, agency legal persons, business legal persons and social organization legal persons. In terms of definition, the law says very clearly that these four types of legal persons are equal civil subjects.
In our legislation and judicial interpretation, legal persons are equal civil subjects. Although this is set, it is far from the case during the operation. For example, Wu Ying and Zeng Chengjie, after they were arrested, their legal persons were wiped out.
It stands to reason that both Zeng Chengjie and Wu Ying are legal representatives of corporate legal persons, and legal representatives can appoint legal representatives. For example, I am the legal representative of the Dawu Group enterprise. If I am arrested, then I can appoint my son as the legal representative to exercise authority on my behalf. In other words, the legal representative can be arrested, but the legal person organization cannot be eliminated. But in practice, corporate legal persons, especially private enterprise legal persons, hardly exist. As long as the legal representative catches it, this legal person organization is almost gone. The government will seal up the legal person’s property and bank account numbers, and the enterprise will be taken over, even demobilized and auctioned off. When dealing with such problems, the government or public security organs neither follow the procedures for the replacement of the legal representative nor the bankruptcy procedures, but directly eliminate the organization as a corporate legal person.
Is this also true for institutional legal persons, business legal persons, or social organization legal persons? It's not. For example, in Tianjin, the mayor, deputy mayor, and police chief of Tianjin were all arrested, but the Tianjin municipal government was not disbanded. After new officials arrived, the agency still operates as a legal person. State-owned hospitals and schools are all corporate legal persons. These legal persons will not destroy a hospital or school just because of problems with the hospital dean or school principal. Is this equal?
The legal person status of private enterprises cannot be guaranteed. It needs to be emphasized that a legal person crime is not a natural person crime. If it is a natural person crime, we can confiscate his personal property if he is caught; a legal person is a group and an organization, and the interests of a legal person are the concept of legal person property rights. It is very broad, so when dealing with legal person crimes, we must pay special attention to the protection of legal person’s property rights.
What kind of property is legal person property? What is the property right of a legal person? My point of view is: the original part of the legal person’s property is the capital contribution of the shareholders, which occupies a very small part of the legal person’s property, and may not reach one tenth. why? Because once an enterprise is registered as a limited liability company, the enterprise can obtain loans, obtain input from workers (workers are paid first), suppliers can also provide goods, and there will be government taxes and the interests of surrounding communities. and many more. All of these belong to the property of legal persons.
Legal person property is the property that is at the disposal of the legal representative or the legal representative, not the shareholder. This view is very important.
Why do you want to ask this question? As I just said, if the legal representative of an enterprise has a problem, the government doesn't care about the legal person status of the enterprise at all, so do we care about it? Often do not care. Because we often bring the power of shareholders to corporate property. In a legal person, whoever has more shares has a greater right to speak, and shareholders determine the right to speak and the right to control the legal person’s property according to the number of shares. This is a big misunderstanding.
for example. We cooperated with New Hope Group and invested in the construction of New Hope Dawu Company. When negotiating, we accounted for 49% and New Hope accounted for 51%, because New Hope is a listed company, and all joint venture companies have more shares in New Hope. I agreed. When the board of directors was formed, our people served as the chairman of the board, that is, the legal representative, and their people served as the general manager. In actual operation, New Hope will manage the new large company as a subsidiary, and the general manager can arbitrarily mobilize assets and receive millions of dollars in bonuses. We are the legal representatives, but we don't have any power, so there is a dispute. Their executives came to talk to me and said, "In joint ventures, as long as we hold a controlling stake, we will do it. Not only is the new hope doing this, but all companies in the world, as long as controlling stakes, have the final say." I said. "This is not right. It is clearly defined in the company law. The general meeting of shareholders is one share, one vote, and you speak according to money; the board of directors is one person, one vote, and you speak according to ability. What you do is actually inconsistent with the company law. "Before the general meeting of shareholders has formed a board of directors, representatives can be elected to preside, and the major shareholders can have the final say. But once the board of directors is produced, this power is transferred to the legal person, and the legal representative is the ruler of the legal person's property.
The provisions of the company law were originally very clear, but there are large shareholders all over the world where the property of a legal person is dominated, and the domestic situation is even more serious. There is no separation between the property of entrepreneurs and the property of enterprises. Personal property and legal person property are mixed together. Therefore, I said that many of our entrepreneurs themselves did not attach importance to the legal person status of their enterprises. This is very sad.
In reality, there are many situations in which the roles of shareholders and legal representatives are confused. For example, in banks, Dawu Group does not have loans now, but when we loaned out more than ten years ago, I was the legal representative and chairman of the board, but my signature was invalid when the loan was made. why? My wife and son are also required to sign because they are shareholders. Why does a legal person want to make a loan and need all shareholders to sign? Because we don't have the concept of legal person property and legal person property rights in practice. I estimate that all banks across the country are doing this, using this form to deprive the legal representative of the legal representative’s right to represent or control the legal person’s property.
Let's talk about our courts, this kind of problem is even more serious. Ten years ago, I once learned about the grievances between brothers Sun Yingui and Sun Chungui. Sun Yingui wanted to develop the ladder project in Zhangjiajie and hired his brother Sun Chungui to take charge. A few years later, the project was successful, very profitable, and became a money printing machine. At this time, Sun Yingui said, "I will give you three million, and you will go home for the elderly." Sun Chungui disagreed, thinking that this project was his own. Sun Yingui said, "You were hired by me, you worked for me, and I invested the original capital." Sun Chungui said, "I pay the tax, I am responsible for the loan, I hire the labor, and now I earn money. Now, how can you let me go?" The two brothers turned their faces and filed a lawsuit. The court supported Sun Yingui. The original funds belonged to him. Although Sun Chungui paid a lot, the project was not his. Sun Chungui approved the court's decision, and the two brothers signed an agreement. Sun Yingui gave Sun Chungui a retirement fee of 3 million. But after signing this agreement, Sun Chungui felt resentful and went to report Sun Yingui's tax evasion. Sun Yingui was very angry, entangled for a long time, and decided not to give the three million. Sun Chungui took the agreement to the court to sue, but the court still supported Sun Yingui. why? Sun Yingui’s reasoning was “I signed, but I did not hold a board of directors or a shareholder meeting.” Based on this, the court ruled that Sun Yingui won the lawsuit and held that the chairman’s signature was invalid. I think, the chairman is the legal representative, how can his signature be invalid?
Such examples abound. In practice, we ignore the status of legal persons and the status of legal persons' property rights. So I said that to protect the property rights of legal persons, two efforts are required. One is to improve this issue from the law, including legislation and justice; on the other hand, we ourselves should also pay attention to the property rights of legal persons and legal persons. Relatively speaking, our own efforts are easier to control.
How to protect the property rights of legal persons? First of all, from the perspective of the enterprise itself, we should clarify the concept and improve the system. For example, the family property and business property are clearly separated, and the property of the entrepreneur is separated from the property of the enterprise. Similarly, the power of the general meeting of shareholders and the power of the board of directors must be clearly separated, and it is necessary to straighten out which are private power and which are public power.
We need to know that shareholders or your shares are private rights, which are completely inheritable, and it is justified. Property can be inherited, there is no problem. But power, such as the power and position of the chairman, cannot be inherited because it is public power. Even if you are a 100% shareholder, your child may not be the chairman of the board. why? What you need to be a chairman is ability, not the number of shares. Can children fully inherit the abilities of the previous generation? Can a person in his 20s and 30s possess the wisdom and experience of a person in his 60s and 70s? impossible. The future generations have neither this kind of experience nor this kind of ability, how can they be chairman?
For example, Haixin Group in Shanxi, a very large enterprise. The entrepreneur Li Haicang died, and his son became chairman at the age of 22. Is this legal? What reason does he have to be chairman? Just because he is a major shareholder! But this company has nearly 10,000 employees. Can this kind of public power be passed on privately? In the end, the enterprise closed down and nearly 10,000 workers were dissolved, leaving behind tens of billions of debts. How can the local government solve it? The government has a headache. How to deal with more than 10,000 workers and tens of billions of debts?
Including Wang Yongqing of Taiwan, the king of plastics, but after his death, the company cannot pass on. So this is a universal problem, and it is also a worldwide problem. An enterprise should live by those with virtue and those with ability. This is the true meaning of the board of directors, and the board of directors should speak according to their ability. Let the virtuous and capable people control the enterprise. Rather than let the major shareholders take control, let alone the children of major shareholders. Therefore, property rights and legal person property rights are two different concepts. Property rights can be inherited, but legal person property rights should not be inherited. The property rights of legal persons should be public rights, and this issue must be cleared out.
Since the day our Dawu Group started our business, my wife and I have been very clear about the separation of personal property and corporate property. Our family lives on wages. Corporate property is corporate property, and family property is family property. Even when the business was just starting, I needed my wife's approval for spending money, and my approval for her spending money. Later, the company got bigger and established a private enterprise constitutional system. Our board of supervisors exercised the power of shareholders, cutting out 10% of profits to do good deeds, using subsidies to ensure the lives of family members, and other housing and medical services. Regulations. This kind of property is clearly cut, and we are benefiting.
In 2003, more than 20 people in the group were arrested. Our three brothers, plus a few key cadres, financial personnel, etc., but the public security checked so many accounts and there were no problems. Because the property of our family and business is very clear, we have neither paid dividends nor transferred property. It can be said that we earn cleanly and spend our money clearly. In the end, I was convicted of "illegal absorbing public deposits" and sentenced to three and four probationary sentences. My two brothers were originally charged with tax evasion, but in the end they got rid of it.
By the way, it is untenable to sentence me to "illegal absorption of public deposits". At that time, Dawu Group borrowed money, not my Sun Dawu borrowed money. The Dawu Group took deposits, and the IOU was stamped with the official seal of the Dawu Group, indicating that the Dawu Group borrowed money for the construction of the school, and the IOU was stamped. Therefore, neither my Sun Dawu borrowed the money nor my Sun Dawu spent it, but the Dawu Group borrowed the money and built the school. At the time of the verdict, the court found Dawu Group guilty of "illegal absorbing public deposits" and borrowed from 611 households. How to determine that these 611 households are illegal? The court held that these 611 households had no specific relationship with Sun Dawu himself, such as relatives, friends, classmates, or comrades-in-arms, and therefore constituted the crime of illegally absorbing public deposits. This logic is confusing. How can Dawu Group’s loan be convicted of a crime because it has nothing to do with me? These 611 households have no specific relationship with me, but they are all farmers, growers, or parents of Dawu school students, and they have a specific relationship with Dawu Group. Is it logical that the court uses the legal representative to assess Dawu Group’s borrowing facts?
I believe that the property rights of legal persons are a kind of public power, while the general meeting of shareholders is a kind of private power. Property cannot be named public, and public power cannot be named private. Property can be inherited, but the position of the manager cannot be inherited. The position of the chairman is a public power, because the chairman is not the power of the general meeting of shareholders, but the power of the legal person's property rights.
Why does Dawu Group implement a private enterprise constitutional system? In 2003, I was sentenced to three delays and four. According to the law, I could no longer be the legal representative of the company. At that time, my son Sun Meng was acting as the chairman of the company. He found it very difficult and couldn’t do it. He didn’t want to do it. Then Who will do it? The enterprise has no shares, and the shareholding system cannot continue. In the end, under the game of all parties, we finally formed such a system.
Private enterprise constitutional system. Property rights remain unchanged and private; public power belongs to everyone, and everyone is governed by the public. The chairman of the board is elected through democratic election; then the fruits of labor are shared by everyone, and the distribution power is given to the board of directors. In principle, our board of supervisors does not interfere with the distribution plan of the board of directors, but we have a system. For example, the salary of middle-level cadres is not more than 5 times the average salary of employees, and the salary of high-level cadres is not more than 10 to 15 times. In other words, if the annual salary of workers is 50,000, then middle-level cadres can get up to 250,000. This kind of distribution plan is basically fixed. Everyone knows how much bonus they can get this year, how much money they can get after retirement, and so on. Workers have to share the fruits of their labor, such as determining holidays, medical security, maternity leave, school and housing subsidies, etc., there are system regulations. I think this is differentiated common prosperity.
After the introduction of this system, it has been implemented in November 2004, and it has been 12 years now. The benefits are very good. The annual growth rate is 30%, which is very fast. Up to now, Dawu Group has basically no loans, and its development is very good. There is very little corporate corruption. Especially cadres, why? Because if it is embezzled, the loss will be too great. For example, if you have been a director for six terms, you can enjoy a pension that is twice the average worker’s salary after retirement. If the average monthly salary of a worker at that time was 5,000, then you could get a monthly retirement fee of 10,000. The number of directors is three times, eight times is four times, and the highest is six times. Therefore, our cadres have a low rate of attrition, and they will not be corrupted because they have long-term working ideas. So now the Dawu Group is operating very smoothly, and there is very little corruption. What about the workers? Because power is given to the head of the subsidiary, the workers
孙大午,Sun Dawu, 孙大午,被捕11112020,刘会茹,Dawu Group,大午集团 ,私营企业主立宪制度,徐水国营农场,大午农牧集团有限公司,河北省,徐水县郎,五庄,2020年11月11日,November 11,2020,1911,辛亥革命,孫德明, 三民主义,Unirule,天则经济研究所,茅于轼,土地扣押,农民,农业集体 伦理资,本主义,D.Carlton Rossi,拆迁,寻衅滋事,709案,709大抓捕,警察,皇帝,保护伞,儒,武汉华南海鲜批发市场,中国科学院武汉病毒研究所
Sun Dawu,孙大午,Liu Huiru, Dawu Group,DAWU GROUP, Private Entrepreneur Constitutional System, Dawu Agriculture and Animal Husbandry Group Co., Ltd.,Langwuzhuang, Xushui County, Hebei Province, November 11, 2020, November 11,2020,1911,Xinhai Revolution,Sun Deming,Three Principles of the People,Unirule, Tianze Economic Research Institute,Mao Yushi,land seizure,farmers,agricultural collective,ethical capitalism,D. Carlton Rossi,demolition and relocation,picking quarrels and provoking troubles,709 case,709 crackdown,police,protective umbrella,Confucianism,Yellow Emperor Huangdi,The Huanan Seafood Wholesale Market,National Institute of Virology,Winnipeg,National Institute of Virology,Wuhan,Dr.Qiu
Sun Dawu,孙大午,Liu Huiru, Dawu Group,DAWU GROUP, Private Entrepreneur Constitutional System, Dawu Agriculture and Animal Husbandry Group Co., Ltd.,Langwuzhuang, Xushui County, Hebei Province, November 11, 2020, November 11,2020,1911,Xinhai Revolution,Sun Deming,Three Principles of the People,Unirule, Tianze Economic Research Institute,Mao Yushi,land seizure,farmers,agricultural collective,ethical capitalism,D. Carlton Rossi,demolition and relocation,picking quarrels and provoking troubles,709 case,709 crackdown,police,protective umbrella,Confucianism,Yellow Emperor Huangdi
孙大午,Sun Dawu, 孙大午,被捕11112020,刘会茹,Dawu Group,大午集团 ,私营企业主立宪制度,徐水国营农场,大午农牧集团有限公司,河北省,徐水县郎,五庄,2020年11月11日,November 11,2020,1911,辛亥革命,孫德明, 三民主义,Unirule,天则经济研究所,茅于轼,土地扣押,农民,农业集体 伦理资,本主义,D.Carlton Rossi,拆迁,寻衅滋事,709案,709大抓捕,警察,保护伞,儒,武汉华南海鲜批发市场,中国科学院武汉病毒研究所
Sun Dawu,孙大午,Liu Huiru, Dawu Group,DAWU GROUP, Private Entrepreneur Constitutional System, Dawu Agriculture and Animal Husbandry Group Co., Ltd.,Langwuzhuang, Xushui County, Hebei Province, November 11, 2020, November 11,2020,1911,Xinhai Revolution,Sun Deming,Three Principles of the People,Unirule, Tianze Economic Research Institute,Mao Yushi,land seizure,farmers,agricultural collective,ethical capitalism,D. Carlton Rossi,demolition and relocation,picking quarrels and provoking troubles,709 case,709 crackdown,police,protective umbrella,Confucianism