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February 21, 2011

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Writer gets his share of trouble

SHANGHAI writer Yu Qiuyu is in trouble again.

But this time it's not about money he promised to earthquake victims, it's about how an upcoming listing that could make him very rich overnight.

The 65-year-old writer is under increasing online questioning about his stake in state-owned Shanghai Xujiahui Commercial Co, which is due to list on the Small and Medium Enterprise Board in Shenzhen tomorrow.

The retailer raised 906 million yuan (US$138 million) by issuing shares at 12.95 yuan each.

The stock is expected to jump to 30 yuan after the debut, which will boost Yu's wealth by as much as 150 million yuan on account of his 1.5 percent stake.

Yu bought his stake, equivalent to 5.19 million shares, for 2.41 million yuan in 2001, making him the 10th biggest shareholder in the retail group. The unusually low price drew criticism that the author took advantage of the shares restructuring of Xujiahui Commercial Co a decade ago.

In 2001, the company cancelled its staff's 24.5 percent shareholding as China's Securities Regulatory Commission rules that firms can't get listed if they have more than 200 shareholders.

The company then resold the shares to another two firms along with 31 senior Xujiahui executives and four outsiders, including Yu.

Yu says in his new book, "I Can't Wait," that the company manager invited him to buy the shares because "the move can boost employees' confidence in the firm who all happened to be his fans."

He was finally persuaded to buy his stake, despite being "utterly unsure" about the prospects of "these old-style department stores" because of a warm memory they evoked in him, Yu says.

In the book, he recounts the tale of an overcoat he bought at one of the company's stores decades ago, which helped him survive a freezing cold winter.

However, he also said in a TV interview that he didn't buy the coat because he didn't have enough money.

The story of Yu's imminent wealth aroused discontent among netizens who considered the whole story unfair to the company's employees. They were the ones who had worked all their lives for the company but would end up with nothing when it got listed, Pi Haizhou, a finance analyst told The Beijing News.

Xujiahui Commercial owns Huijin Department Store, Huilian Plaza and Shanghai No. 6 Department Store in the prime Xujiahui commercial area. The three stores take a combined 43.37 percent share of the retail market in the area.

In 2009, Yu was at the center of a donation scandal after he had pledged 200,000 yuan to Sichuan earthquake victims. But the money failed to materialize until after an outcry in the media.


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