FORTUNE Small Business
Small and Global Full coverage

A Tiananmen rebel turns capitalist

After fleeing to the U.S., an entrepreneur returns to do business with his former oppressors.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Richard McGill Murphy, FSB Magazine

shen_tong.03.jpg
Tong, in front of the Great Helmsman's jacket, during a business trip to Beijing.
CHINA INC.
The perils of doing business in the Middle Kingdom
More small U.S. enterprises have been entering China in recent years, attracted by low-wage manufacturing and a middle-class consumer population of more than 100 million.
China is not an easy place in which to operate. Corruption is rampant: One Beijing-based U.S. businessman budgets $20,000 a year to bribe officials. The average bribe is $250, often payable in retail gift cards.
The bureaucracy can be dauntingly complex. "The government isn't just one Sauron," says a U.S. entrepreneur who has had his share of run-ins with Chinese officials. "It's more like a lot of orcs." One U.S.-backed Chinese travel website, Qunar (qunar.com), faced state wrath in January when it ran an aggressive ad comparing its lower fares with those of a politically connected Chinese-owned competitor. Although it wasn't clear that the ad was illegal, officials forced Qunar's marketing officer to apologize at a press conference.
The American Chamber of Commerce in China site (amcham-china.org.cn) has more on local business conditions.

(FSB Magazine) -- I'm standing in an elevator on the ground floor of the Information Science and Technology building at Tsinghua University in Beijing. It's a cold, sunny morning. A stiff breeze has banished the city's habitual blanket of brownish-gray smog, and the air outside is crystalline. I start to introduce my translator to Shen Tong, an American entrepreneur, and his team of Chinese engineers and sales representatives. But Tong shakes his head sharply, and I fall silent. We are not alone.

What kind of U.S. entrepreneur gets followed around Beijing by agents from the Public Security Bureau, China's version of the FBI? Answer: A Chinese-American software developer who was once a political dissident right here in Beijing. An entrepreneur who helped lead the pro-democracy movement that led to the Tiananmen Square massacre of 1989. A young capitalist who now sells Internet software that could open up Chinese society - or help keep it closed.

Tong's story is modern China writ small. The Communist Party still claims the exclusive right to make and enforce the rules by which citizens live. But China's astonishing economic growth is being driven by freewheeling entrepreneurs such as Tong, not by the government.

In 1990 the state controlled 83 percent of the Chinese economy. Today about 70 percent of China's GDP is generated by the private sector, which is dominated by small and medium-sized enterprises. Much weighs in the balance. Will the private sector's growing power eventually make China more democratic (and more open to U.S. exports and investments) or trigger more repression?

A black Audi Sedan with government plates trails Tong as he makes his way around the Chinese capital from his office in a new technology office park in northeast Beijing. He's come to make sales calls at CNN's Beijing bureau and at an Internet software research center here at Tsinghua, an elite technology school often compared to MIT.

Usually the watchers keep their distance, but this morning one of them actually pushes his way into the elevator with Tong. In the corner of my eye, I see a nondescript man of about 40. He wears a black leather jacket and clutches a cell phone in his right hand. The man stares straight ahead, as if he were minding his own business and not Tong's.

Later Tong tells me that he doesn't usually speak to the watchers. "They would consider it offensive," he says dryly. "They're supposed to be undercover." But the entrepreneur was driven to address his minders on one occasion last year, during a business meeting in the lobby of the China World Hotel in Beijing. Public Security agents commandeered waiter uniforms from the hotel restaurant, he says, so that they could spy on him more discreetly. It didn't work. Tong recalls, "I walked up to one of [the agents] and said, 'You look ridiculous. You know that, right?' And the guy blushed!"

At 39, Tong runs a New York City software startup, VFinity (vfinity.com). His main product is a browser and search engine that universities, broadcasters and the like can use to manage their multimedia archives. Think video Google (GOOG, Fortune 500). The software allows anyone who owns, creates or edits a video to tag it and put it on a company server or anywhere on the Internet in a way that makes it easy to find. The company's biggest market to date has been university libraries.

A card-carrying member of the international hipoisie, Tong lives in downtown Manhattan, favors black clothing and collects Chinese contemporary art with an aesthete's devotion and a businessman's keen eye for future appreciation. During his one free afternoon on a recent business trip to Beijing, he sauntered through a series of galleries in Beijing's über-trendy Dashanzi ("798") district, an industrial area near the airport that has been transformed in recent years by an influx of artists, gallery owners and chic cafés.

Tong bought a pair of paintings, posed for pictures near an outdoor sculpture of an empty Mao suit, and pointed out Chinese graffiti scrawled on one of the old factory walls. "Freedom belongs to the people," Tong translated for me. "Wow! I'm surprised to see something that bold here. And look underneath: It's signed '007'!" Tong laughed. Fifty yards down the street, his personal Agent 007 loiters in the late-afternoon gloom, wearing a short zippered jacket with a fur collar.

Chinese government concern about Tong dates back to the late 1980s. As a biology student at Beijing University, he became deeply involved in a wave of student activism that was sweeping campuses in Beijing and other cities across China. At the peak of the movement in the spring of 1989, some one million Chinese students, intellectuals and labor activists staged a peaceful occupation of Tiananmen Square in central Beijing, calling for more democracy and less government corruption. During the Tiananmen occupation, Tong ran a movement press office that published an underground newspaper and operated a pirate radio station that broadcast out of his dorm room.

"He was a poster boy for the student movement: good-looking but also bright and thoughtful," recalls Jaime FlorCruz, a veteran China watcher who covered Tiananmen for Time magazine and now serves as CNN's Beijing bureau chief. (Time and CNN, like FSB, are owned by Time Warner.) Tong also participated in efforts to negotiate a peaceful end to the standoff between the student dissidents and the Communist regime led by Premier Li Peng.

Those negotiations failed. On June 4, People's Liberation Army tanks rolled into Tiananmen Square. Hundreds, if not thousands, of unarmed Chinese civilians were gunned down in the streets surrounding the square. A much smaller number of police and soldiers were beaten to death by enraged demonstrators after the shooting started.

Tong evoked the violence vividly in his 1990 memoir, Almost a Revolution: "Hundreds of people rushed into the avenue to put up barricades, but as soon as they reached the middle of the street, a spray of machine-gun fire scattered them. People who had been hit fell to the ground and lay still. Those people are dead, I thought to myself. The bullets are real."

A 'charmed life'

The police came looking for Tong at his college dormitory and at his family's house in Beijing. He went into hiding when the shooting started and fled China a few days later. He made his way to the U.S., took a biology degree from Brandeis, and pursued graduate studies in political philosophy and sociology at Boston University, living on scholarship, consulting and freelance-writing income. He also launched a nonprofit called the Democracy for China Fund, dedicated to supporting dissident networks in China.

For a few years after Tiananmen, Tong traveled the world, speaking about the Chinese democracy movement, hobnobbing with international icons such as Vaclav Havel and the Dalai Lama, and generally leading the charmed life of a romantic young dissident who had played a prominent role in perhaps the most dramatic popular uprising of modern times.

"What he did was courageous, but also prudent in a long-term way," said the distinguished political philosopher Harvey Mansfield, a Harvard professor who mentored Tong during his graduate-school days. "He wasn't just angry for the moment. He also had big plans, and I think still has big plans for a democratic China. We have to hope that they come true."

But by the late 1990s, Tong had turned his attention decisively from politics to commerce. He founded VFinity in 2000 and has since raised more than $10 million in angel financing. The closely held company has 45 employees and maintains offices in New York City, Taipei and Beijing. Clients include Brandeis University, Taiwan's National University and various branches of the Chinese government.

Tong is understandably reticent about his government contracting work in China. For the record, he denies that VFinity sells software to the Chinese military or other state security agencies. But Tong admits that he can't control who buys his products through local resellers.

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
For sale: Steve McQueen's 1967 Ferrari The red 1967 sports car is expected to fetch millions at auction. More
The 13 most WTF gadgets From the weird to the gross, these 13 gadgets will make you wonder why they even exist. More
Best-loved cars in America These cars and trucks topped J.D. Power's APEAL survey, which measures how much owners like their new vehicles. More


Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.