Venezuela: minting new (Chinese) billionaires

Venezuelan state oil company PDVSA’s ubiquitous propaganda constantly trumpets the fact that it now belongs to “everyone”, since control of the oil giant was wrested from opponents of Hugo Chávez ten years ago.

But to paraphrase George Orwell, one could say that its wealth belongs to some people more than others – take the example of Sun Weijie, the Chinese businessman who has just become a billionaire on the back of a juicy supply contract with PDVSA.

According to Bloomberg, there has been an 18 per cent surge in shares in Weijie’s company – he is chairman of Yantai Jereh Oilfield Services Group, an oil equipment and service provider – since the contract it announced last week with PDVSA to supply equipment and tubes valued at $178m.

As the company’s largest shareholder, with his holdings now worth $1.14bn, the deal has catapulted Weijie into billionaire territory.

Some Venezuelan businessmen will surely be grumbling at the news. You can almost hear them asking: why is it always the foreigners who get to do business with the government, and so rarely us? It’s not just Chinese oil equipment – it’s Belarussian tractors, Iranian cars, Portuguese computers, Russian weaponry, and so on.

Part of the problem is that Venezuela doesn’t produce very much (and exports almost nothing else) apart from oil. With many Venezuelan businesses revolving around making a fast buck, long-term investments in things like factories is not really the done thing.

Another problem is that the Venezuelan government is understandably reluctant to do business with the very same people that tried to overthrow Chávez in a coup d’état a decade ago.

In any case, it’s not as if Venezuelans haven’t been getting rich under Chávez – banking, for example, has proved to be a particularly lucrative sector.

You just have to go about your business in a way that pleases the government.

Related reading:
Venezuela: got food?, beyondbrics
Counting the cost of Chavez’s absence, beyondbrics
Venezuela: hard to find the dollars, beyondbrics