Electric vehicles entrepreneur from China stumbles in US
Electric vehicles partsmaker has string of California projects delayed or canceled for lack of cash. But research center for electric vehicles and other green power is funded and operating.
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Chung had expressed confidence that U.S. imports would find buyers among owners of private Chinese companies, despite high shipping costs, import duties and taxes on vehicles with large gas tanks.Skip to next paragraph
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"People who are above middle class will welcome this car for family trips," he said.
Michael Dunne, head of a Hong Kong consulting firm focused on Asian automotive markets, said an "outdoor culture" of getaways to the country is emerging in China, taking advantage of "thousands of miles of new high-speed multi-lane expressways that sometimes rival German autobahns."
Starting with pricey imports would establish "a sort of cachet or allure" in China, where the "wealthy set spend outrageous money on imported cars," Dunne said. "The Mercedes S-Class can retail for more than $350,000 after taxes and China is the largest market for S-Class Mercedes in the world."
During a visit to the Balboa Bay Club in October, the roly-poly Chung was exuberant, laughing loudly and seeming to bounce up the stairs from the yacht moorings to a conference room where he fielded questions from reporters.
Chung said he planned to buy or build a Southern California factory to manufacture lithium-ion batteries beginning this year. The goal is to create a cluster of Southland companies to make electric-powered tour buses, campers, yachts, limousines, shuttle buses and taxis. His target, he said, was annual sales of $3 billion.
Described in some news accounts as a billionaire, Chung chuckled last January when asked about his wealth. "Only God can know," he quipped. He listed his net worth at $533 million in an unaudited filing with the city of Newport Beach.
But the road to fortune has been rocky at times.
Chung was fired in March as head of Hong Kong-based Thunder Sky Battery, where he was a major investor and technical guru. The company claimed in a Hong Kong High Court lawsuit that he lied about his sales of the company's stock, launched competing businesses and otherwise violated his obligations to the firm.
Denying wrongdoing, Chung countersued in Shenzhen, where his manufacturing takes place. He charged that Thunder Sky, now renamed Sinopoly Battery Ltd., failed to pay his companies for batteries.
The dispute spilled into a Riverside County Superior Court lawsuit in August. Sinopoly Directors Miao Zhenguo and Jaime Che said they teamed up with Chung to invest in MVP, only to see him cutting side deals to the detriment of their partnership.
The suit said Chung promised Williams $310 million to burnish his reputation as a "green" investor, hoping to participate in Chinese President Hu Jintao's state visit to the U.S. last January. But, it contended, he's "never has taken any steps to make such an investment."
Court records show Chung sought to buy out his aggrieved partners and a tentative settlement of the Riverside suit was reached recently on undisclosed terms. The complex litigation in Hong Kong and Shenzhen is pending.
Until the recent setbacks, Chung was a deal-making dervish. In addition to MVP RV, his investments include Krystal Koach Inc., a Brea stretch-limousine company, and Balqon Corp., a Harbor City maker of battery-powered trucks and electric power drive systems.
Executives at the U.S. companies, where Chung holds the chairman's title, praised his leadership. They said he sets goals and challenges them, but doesn't micromanage.
"Every time I go back to him, he says: 'You're the CEO _ go figure it out,' " said George Gaffoglio, whose Gaffoglio Family Metalcrafters, a Fountain Valley manufacturer of concept cars and other specialty vehicles, won a $32 million investment from Chung in March.
"He says, 'You build something revolutionary, and I'll worry about selling it.' "
At the Balboa Bay Club, the staff buzzes about Chung arriving in a Gaffoglio creation _ a battery-powered, stretched version of a London taxicab, painted bright orange instead of the traditional black.
Chung also pledged to build a clubhouse at the golf course, modernize 145 aging apartments that are part of the 15-acre Bay Club property and pay off $29 million in club debt. He even pledged to replicate the famed Orange County club in China.
To cement his offer to buy Cage's former mansion from the current owner, Nevada casino and gas station mogul Jerry Herbst, Chung said, he put down $1.7 million. He said he wouldn't lose that deposit because he plans to complete the purchase in March.
Other buyers could emerge, however. Robert Giem, the real estate agent with the listing, said the Newport Harbor waterfront estate had fallen out of escrow and is back on the market at $28.5 million.
Some China watchers said the problems were nothing new. Walt Disney Co. needed 12 years from the start of negotiations to break ground on a Shanghai theme park, said Marc A. Ross, spokesman for the U.S.-China Business Council, which represents American corporations.
Cal State Channel Islands professor Sung Won Sohn, a foreign trade expert and former top economic advisor to the White House and Wells Fargo & Co., said Chung may have run afoul of the complex Chinese bureaucracy.
"If the government officials are not happy with you for whatever reason, you won't get permission to invest overseas even during the best of times," Sohn said.