Charles Cheng (M.89)
The Singing Dealmaker
Beijing. Charles has very unusual background but also a very well-known job: Managing Director of Goldman Sachs in China. As a man who likes to get it done, he feels very comfortable in the investment banking industry. But Charles is not only a straightforward dealmaker, he is also a very open-minded and passionate man, who speaks perfect French and who dedicates a lot of his time to help, as chapter’s president, the HEC community growing in Beijing.
Read full transcript…
HU: Hi Charles, thank you very much for coming to this beautiful studio. Let’s start with our little Chinese portrait. So if you were, a color?
HU: An animal?
HU: A meal?
HU: A song?
HU: What is your favorite version of it? Yves Montand’s?
C: My version! I used to sing this song and I performed it many times with my chorus. It’s a chorus of 10 men and we sing together on a regular basis.
HU: Would you like to sing Le Temps des Cerises?
C: Why not! (he sings, with a beautiful and subtle voice)
HU: Wow… Thank you! It’s very nice, maybe better than Yves Montand’s version.
C: Thank you very much, that’s very nice to say.
HU: Let’s get back to it. If you were a movie?
HU: An object?
C: The compass.
HU: A sport or a game?
C: Rowing. Rowing a boat.
HU: A book?
C: One Million questions and answers.
HU: A (super)hero?
“M&A is a low probability game, because an operation has between 5% and 8% chances of success from the day you get a file until the day you really get it close. Most of the cases will fail.”
HU: Now, can you try to sum up your professional background in just 30 seconds?
C: My first job is teaching in China, and then I was a psychologist researcher for Peugeot, in Sochaux (France). Then I did my MBA at HEC and after that I worked in insurance in MetLife in Canada. Then I was a management consultant in the United States. After I was at JP Morgan in Chicago and Hong Kong. Lately I was the CEO of Standard Chartered bank Corporate Finance in Shanghai and my last job is at Goldman Sachs China.
HU: Wait a minute. What does “psychologist researcher for Peugeot” mean exactly?
C: I was an intern with Peugeot and there was a Joint Venture opportunity with a Chinese company at that time, so I was translating for them: I was helping the French to deal with the Chinese and the Chinese to deal with the French. But during negotiations, there were so many things I didn’t understand that it triggered my curiosity. They were talking about numbers, marketing, strategy… I applied to several MBAs in France, I was accepted by all of them but I decided to go to Jouy-en-Josas! (laughs)
HU: What are you doing with Goldman Sachs today?
C: It’s a covering job, so we cover the major Chinese corporations for all investment banking services, including many mergers and acquisitions, mainly cross-borders, but also financing, meaning equity and debt.
HU: What makes you happy to go to work every morning?
C: Everyday is a challenge. Everyday we have a new case and you never know the result, which makes you curious, because you want to find out the truth. M&A is a low probability game, because an operation has between 5% and 8% chances of success from the day you get a file until the day you really get it close. Most of the cases will fail. So you just ant to find out the truth, so the sooner the better.
HU: Is there a particular transaction you are particularly proud of?
C: One of the deals I did was China’s largest investment in Africa. I helped Sinopec, one of the Chinese largest oil & gas companies to acquire Block 18 in Angola. It was about 10 years ago, for a value of $2.5 billion, which was huge at the time and it remains China’s largest investment in Africa. It was such a big thing that I was invited in the media and I even appeared on national television! That was one of the high points in my career.
“Valuation is something that is very useful not only in finance, but also when if you start your own business, or in any other job.”
HU: Have you coped with a difficult choice in your professional life?
C: I think there is no difficult choice, the question is about changes. Are you ready to take a new challenge, to go to a new company, a new country or a new position, or do you want to stay where you are? My answer has always been the same: I want to change, to try new countries. That makes you much more connected and much more diversified, which I think is very important in today’s world. It is becoming rare to do only one thing in your entire career, so you need to be very open-minded.
HU: What is your typical working day?
C: It’s very irregular, but I usually start around 9:00am and finish at 8:00pm. We also may have conference calls between different time zones, so sometimes at midnight, because there is a 12 hours difference with New York and more than 6 hours with Europe. That is something we have to deal with. I travel a lot so I work in the planes or in the trains. I check my emails every 30 minutes but it’s some kind of professional standard.
HU: What is Goldman Sachs’ strategy in China?
C: Our objective is to become the most value-added bank, as well as the best international investment bank in China. We want to help Chinese corporations to go overseas, trough fundraising (IPOs…) or acquisitions. And vice versa we take international companies to China: we have them sell assets to Chinese companies or we help them to invest in China. 80% of our job is cross-border.
HU: Many HEC graduates start their career in the M&A industry. What are the qualities you value as a recruiter?
C: There are a lot of technical skills we would require: methodology, valuation and modelling are among them. Secondary, I want to hire resourceful young men and women, who will be able to find the good information, to do the proper benchmark. Finally, I would like to see good communication skills as well as good and concise summary in terms of recommendations.
“Beijing is the Chinese city that has the most important cultural heritage.”
HU: Would you advise young graduates to start their career in M&A?
C: M&A is a place to start, because you can learn so basic methodology that you can apply during your entire career. Valuation is something that is very useful not only in finance, but also when if you start your own business, or in any other job.
Spending a few years in M&A also means that you have strong abilities in terms of resistance to pressure. Sometimes you have got to learn a lot about an industry in a very short amount of time, sometimes you have half a day but you need to become a semi-expert, so it reinforces your learning capability.
That being said, it is not the only way to learn!
HU: Now, let’s talk a bit more about Beijing. Were you born here?
C: I was born in Southern China, Hunan Province. The map of China looks like a rooster. Beijing is the “gorge” (i.e the throat), which is important, because if you cut it the country would die: that’s the capital. Shanghai is the stomach, producing a lot of money of being the center of the economy. Hunan is the leg, so it’s more an agricultural region, producing the food.
It gives you an idea of what China is.
HU: We never thought of it in this way!
C: And Hong Kong is the feet, walking very fast. This is my version! (laughs)
“Mae Tse Tung, when he built the new China, in 1949, said: “I want to see chimneys on all roofs of Beijing” and many years after we achieved it… But the definition of what makes a modern society has changed, and we realize we now have a problem: pollution!”
HU: You have lived in Beijing for a long time now. Where do you hang out on Sunday afternoons?
C: Beijing is spread out and there are many places to go, so I change regularly. One place I like to go to with friends is old Beijing, in Hutong. It reflects 600 years of history. The Forbidden City is very nice too, it gives you a good layout of the city, it’s very symmetric, organized and there are 10,000 rooms… So it’s huge and you can understand a lot about Chinese history, culture, music, painting, but also about the imperial intrigues, politics or assassinations… It’s a very nice place to go to.
Although the air is very polluted and the weather bad, Beijing is one of my favorite cities in the world, because it is very heterogeneous: you meet different people. A few days ago I met a Brazilian in the street. I asked him: “What do you do?” and he answered: “I am the ambassador of Brazil to China!” and it happens that he speaks French, like me, because he worked for UNESCO! It’s just one example of the variety of people that you can meet in Beijing. This city is a good mix between Asia, China and West, whereas Shanghai is, in my opinion, more predictable. Beijing is more grandiose, even if it is less refined that Shanghai. We also say in China that Beijing is a male city, when Shanghai in a female city.
HU: Imagine you have only 24 hours left to live here, what would your last day in this city look like?
C: I would go to the “colline de parfum” (i.e the Fragrance Hill), just behind the Forbidden City. That’s the highest point in Beijing City, where you can have a panoramic view of Beijing and it can bring many good memories: each building or each area can remind you the time or the moment spent with your friends, your family or your lovers… That’s a great place to hang around. There is a nice walk from there to the Beihai Park, which is also nice.
HU: What do you like with people from Beijing?
C: There are two types of people in Beijing. The old and traditional people from Beijing, who live in the Hutong, there are very nice, warm and simple people. If you ask them your way, they are always going to help you and to give as many details as you need. This is the old Beijing people. Beijing is the Chinese city that has the most important cultural heritage.
The other side is the modern Beijing, which is us, all the people who have lived at least many years in Beijing, who bring the new trends from the rest of the country and the rest of the world. There are many universities and high tech industries in Beijing.
In every city there is always this balance between the new culture and the old one. It’s difficult to have both and generally, when one is strong the other is weaker. I think the mix in Beijing is great, because people from Beijing, in general, are quite embracing and open-minded to new ideas and new cultures.
HU: What is, in your opinion, Beijing’s main challenge?
C: Beijing has the challenge of most big cities. First of all, air pollution. Everybody talks about it here, because the issue is not new. China has moved from an agricultural society to an industrial society and today it has to move to a cleaner society. Mae Tse Tung, when he built the new China, in 1949, said: “I want to see chimneys on all roofs of Beijing” and many years after we achieved it. But the definition of what makes a modern society has changed, and we realize we now have a problem: pollution!
Pollution is issue number one, the second one being congestion. About a third of China’s medical and educational resources are based in Beijing. Many good schools and hospitals are there, so people come to Beijing for those reasons. I didn’t see many people flying from Marseille or Lyon to go to Paris when I was living in France, or from Texas to NYC, for a medical treatment! People have good treatments locally but not in Beijing and there is too much congestion.
I think the government is aware of these two issues. It might close many cement plants and coal mines in the region, and move part of the Central government functions to other parts of Asia. We’ll see how it’s going to work!
“My motto is: The more you are connected, the more you are empowered.”
HU: Let’s talk about HEC now. Let’s go back in time, you are an MBA student at HEC, in 1989. What is you favorite place on this campus?
C: The lake! I liked it. I would jog around the lake and in the forest everyday, we sometimes had barbecue there with the class and I used to play rugby with the MBA rugby team on the rugby pitch nearby. These are great memories from this place, where we could escape from the classes!
HU: What is your best memory from this MBA?
C: My working team. We were 5 members of one team, including one doctor, one engineer, an economist, and I had a psychology background so we liked to hang out together and we are still very connected. We organize events during which we invite each other at home. We had a great time together on the campus.
HU: Would you advise someone to go to HEC today?
C: I think HEC offers one of the best MBAs in the world, as we have very solid general management, finance, or entrepreneurship programs. Paris is in the heart of Europe, getting more and more integrated to the rest of Europe, and Europe is the place to go to transit! Let me explain: China has 6,000 years of history, Europe 2,000 and the US 400. So if you want to do a business school you should go to the middle: Europe, where HEC is the best place to start, for sure.
HU: Which advice would you give from a young graduate from HEC?
C: Don’t wait! Try to get out, connect with people and try everything you can instead of waiting for the best opportunity. When I finished my MBA at HEC my dream was to enter McKinsey. But even after several rounds I never made it, but today, I am working with Goldman Sachs! I never thought I was going to work with Goldman Sachs one day. My first job was at MetLife, an insurance company, maybe not the most appealing one for a young graduate from HEC, but it doesn’t matter because I had a great training there and then I moved to the next opportunity.
I would also say: don’t look for money, because well-paid jobs are maybe not the best for you to start your career. What matters, for your first job, is the training you can get. Try it for a good two years, solid, and then think about the next move. But don’t jump too often, that’s not good neither.
HU: HEC’s motto is “the more you know, the more you dare.” What would be your motto?
C: My motto is “The more you are connected, the more you are empowered.”
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