On Valentine’s Day 2015, the two biggest in China mobile start-ups, one backed by tech giant Alibaba and the other Tencent, announced they would merge after burning through hundreds of millions of dollars in a price war. Brokering the deal while managing the egos of militant founders and investors was Bao Fan, the initiator of China’s tech industry.
His company, China Renaissance Investment Bank, further advised and invested in many of China’s most successful technology companies, taking them public in Hong Kong and New York.
“If you don’t know Bao Fan,” the industry says, “you haven’t made it.”
Eight years later, last week on Valentine’s Day, rumors began to circulate that Mr. Bao had disappeared. His company later confirmed his disappearance in the regulatory filing. Chinese media said he was summoned by authorities to help investigate a former executive at his company who previously worked at a state-owned financial institution.
China’s tech world is watching closely to see what happens to Mr. Bao, who knows or has worked with almost every mover and shaker in the industry. It is not as well known outside the business world, but it is as much a symbol of the growing presence of the industry in China as Jack Mathe co-founder of Alibaba, who largely disappeared from the public eye after falling out with the government in 2020.
Mr Bao’s disappearance undermined Beijing’s new priority to restore business confidence after ending its “zero Covid” policy and crackdown on the private sector. They threaten to form a government promise that it encourages private enterprise and provides legal protection to the business class.
And the episode, while Mr. Bao will soon reappear, also shows how China’s technology industry, once the country’s most globalized and independent sector, has become entangled with the government.
“When the rabbit dies, the fox mourns for fear there will be another; when the lips are dead, the teeth will be cold,” said an executive who has known Mr. Bao for more than a decade, mixing Chinese idioms to describe the mood among his peers.
“This matter should not be seen as just an individual matter for Bao Fan,” he said, speaking on condition of anonymity for fear of retaliation like other traders I spoke to. “It’s an industry-wide event. It has to do with the survival of investors and entrepreneurs.”
A tech founder who worked with Mr Bao on the deals wrote on social media that the entrepreneurs were like “scared birds”. “Trust builds slowly but fades quickly,” he wrote. “Without trust, who will build factories, start companies and invest in the future?”
These people fear that the authorities can make anyone disappear without due process and that it can happen to anyone, anytime, anywhere.
Mr Bao, 52, is one of many Chinese born in the 1960s and 1970s who benefited from policies that opened up the country. His parents were diplomats and he was exposed to the outside world earlier than most of his generation. He earned his bachelor’s and master’s degrees in Norway and after graduation worked for Morgan Stanley and Credit Suisse.
In 2004, Mr. Bao founded China Renaissance to target a fledgling Internet industry that was too small for big Wall Street firms that were busy chasing state-owned giants such as China Mobile and PetroChina. He knew all the great successes in technology when there were none and he knew little about raising money.
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He became their banker when they needed financing and advice. The best years of the China Renaissance were between 2015 and 2017, when hot Chinese startups raised as much funding as their Silicon Valley peers. Mr. Bao helped pull together three of the four megamergers in 2015 that created dominant Internet companies such as Didi, China’s answer to Uber, and food delivery giant Meituan.
As technology grew, so did Mr. Ba’s ambitions. In addition to the dominant stores, his company started investing in start-ups.
He became as famous as the founders he helped shepherd, and was a sought-after speaker at conferences in China and beyond. He has always cultivated the image of a rowdy boy and likes to talk about his hobbies, such as boxing and Formula 1 racing. Like many people in China’s technology industry, Mr. Bao believes in the free market and wants minimal government interference.
But the Chinese government under the leadership of Xi Jinping has strengthened control over the economy. The tech industry has had to learn to deal with it. Companies have expanded their government relations teams, hiring former officials and SOE executives to communicate seamlessly with the mandarins.
China Renaissance was no exception. In 2017, ICBC International, a division of state-owned banking giant ICBC, provided the investment bank with a $200 million credit line. Mr Bao backed the loan with shares in his firm and promised to repay it after China Renaissance goes public in Hong Kong next year. It fulfilled that promise.
In 2020, he hired Mr. Bao Cong Lin, the head of ICBC International, as the chairman of a brokerage company founded by China Renaissance. Last September, Mr. Cong became the target of a government investigation related to his dealings before he joined China Renaissance. He left the company around the same time.
Even without these troubles, 2022 was a bad year for Mr. Bao. Government regulatory crackdowns on technology, education and other business sectors have dried up deal-making, and a tough “zero Covid” policy has thrown hundreds of millions of people into lockdown, halting economic activity.
In the first six months of last year, China Renaissance’s revenue fell 40 percent, and the firm lost $23 million, compared with a profit of $179 million in the same period a year earlier.
China Renaissance’s share price has fallen more than 20 percent since news of Mr. Bao’s disappearance broke.
Mr. Bao was already changing his style to accommodate the country’s leadership. He has maintained a much lower media profile in recent years. Speaking at a major internet conference in 2021, he cited Mr Xi’s instructions for the digital economy, using government jargon like “a new era” and “a community with a shared future in cyberspace”.
On a national holiday last October, he wrote on WeChat: “My hearty congratulations on the 73rd anniversary of the founding of the People’s Republic of China!” His company produced a red digital card for the occasion. It probably wasn’t something that Mr. Bao would have done in the past.
It is not just the government that has become hostile to the business class. On Weibo, a social media platform, some people said Mr. Bao’s disappearance proved that he was greedy and lacked judgment.
Last Saturday was the 26th anniversary of the death of former Chinese Supreme Leader Deng Xiaoping. Some people wrote articles or posted on social media in his memory, recalling the days when China opened up to the world and its leaders focused on building the economy.
A popular one article he was also nostalgic about Mr. Bao. Its headline was “Would Bao Fan Stay in 2016? That year was the highlight of Mr. Ba’s career. Many fear that this may also have been the pinnacle of China’s technology industry.
