Institutional Investor 1999-06

Brahm pampers the 'Red Capitalists'

Beijing-based Laurence Brahm spends most of his time helping companies such as Eastman Kodak and Roche Group set up in China or participate in joint ventures. But lately, he's also been keeping close tabs on a pet project that's aimed at offering wealthy Chinese businessmen a tast of the imperial past.

This month Brahm's NAGA Group plans to open the Red Capital Club in a restored 200-year –old courtyard home in the historic conservation zone in Beijing's city center. Red Capitalists is the local term for China's emerging Business elite.

NAGA has invested $500,000 in restoring the Red Capital courtyard—making it one of perhaps 50 among thousands of crumbling walled compounds that have been revived to their former glory. Chinese courtyard homes traditionally housed the extended families of middle-rancked bureaucrats and intellectuals in several wings surrounding a tranquil garden, with think outer walls and heavy wooden gates guarded by “lion dog” statues. To ensure authenticity, Brahm brought in craftsmen who had worked on restoring the Forbidden City, former home of the emperors. They are masters of the art of reconstruction using only earthen clay and fitted beams—no nails or cement.

The club—really a restaurant, since there are no membership requirements—will serve the same state banquet food dished out in Zhongnanhai, the much-grander compound beside the Forbidden City where China's Communist leadership lives. It will also offer imperial cuisine and the favorite dishes of current and former Chinese leaders—including the fatty pork cooked in sweet red sauce favored by Hunan-born Mao Zedong. “We are targeting the rich elite with expensive tastes—a very narrow segment of the market,” Brahm says.

The club is just one of several courtyards that Naga plans to renovate. “We find and purchase old, broken-down courtyards in bad condition and will restore them step-by-step to what they would have been at the height of Qing dynasty architecture” in the 18th century, Brahm says. His NAGA Group runs its business out of a courtyard home that Brahm also restored Brahm, who has written more than ten books on China, also advises several provincial governments on how to restructure their state enterprises.

But Brahm's timing for his own version of capitalism might have been better. Just as furious anti-U.S. demonstrations reminiscent of China's Maoist past were dying down, he was putting the finishing touches on his playpen for that nation's capitalist elite. Brahm says he isn't worried that the recent unpleasantness will spoil his club's inauguration. “It is very clear from statements in the Chinese media that international events and business are separate,” he says.

Meawhile, Brahm hopes to exploit his brand by offering a new retail line of “Red Capital” cigars, wines and other accessories of Beijing's good life. Mao, though he might enjoy the Red Capital Club's Hunan cooking, surely would not approve.

--Kazuhiko Shimizu

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