And for This He Read Poetry?

By Michael Schuman/ Hong Kong

JONATHAN ZHU

MORGAN STANLEY CHINA, HONG KONG

Jonothan Zhu, chief executive officer of Morgan Stanley China, calls himself an "accidental banker"--and for good reason. In the late 1980s, the Shanghai-born Zhu was studying the poetry of William Wordsworth in a Ph.D. program at New York's Cornell University. Wordsworth, he says, wrote his best work during the French Revolution, a period Zhu felt reflected his own experience in Mao's China. But in 1988, Zhu's life changed forever when he joined other Chinese studying abroad on a special tour of his home country, organized by the communist government. He met farmers and fishermen, visited the new Volkswagen factory in Shanghai and realized for the first time how rapidly China was changing under the economy's new market reforms. "There was a tremendous amount of tension in China," Zhu says. "There was a lot of dislocation, but people weren't seeing the benefits yet."

When he returned to Cornell, Wordsworth had suddenly lost its appeal. "I wanted to be involved," Zhu recalls. "I wanted to do something more useful than studying poetry written by a dead person." He took a leave from the doctorate program--never to return--shifted into law school and in 1995 joined Morgan Stanley as an investment banker. Since then, Zhu, 42, has made himself very, very useful to the Chinese economy. Morgan Stanley has raised $20 billion for Chinese companies, mainly through initial public offerings of stock, and Zhu has been involved in nearly all of them, including mobile-phone-service provider China Unicom, Ping An Insurance and oil giant Sinopec. Zhu has an additional $10 billion in deals in the pipeline. He also hooked up France's Thomson with Chinese electronics company TCL--a deal that in 2004 created the world's largest television maker after it merged both companies' TV-manufacturing businesses under TCL management.

Zhu believes that the deals he has done have helped Chinese businessmen become savvier, smarter competitors. He recalls working with a Chinese airline in 1997 that had trouble even calculating its revenue and employed teams of workers to match used plane tickets and payment receipts by hand. Now, he says, Chinese executives can talk high finance with the world's best. "Chinese executives have become much more sophisticated," he says. "The level of understanding of accounting and financial concepts had been much lower." Still, Zhu realizes that Chinese firms face steep hurdles in international business, especially with foreign acquisitions. Chinese firms, he says, are figuring out how to handle foreign workers and woo big-name customers. Penetrating foreign markets is "a matter of trust," Zhu says. "It's not as simple as having a product that is cheaper than everybody else's." --By Michael Schuman/ Hong Kong