Page 58 - Ray Dalio - Principles

introduced us to the tradition of drinking shots of Moutai
while shouting Ganbei! (Bottoms up!) and generally showed
us a great time. This first trip, which I made with my wife and

a few other people, began an incredibly rewarding thirty-plus-
year journey that has had a profound impact on my family and
me.

There were no financial markets in China at the time;
eventually a small group put together by seven Chinese
companies (including CITIC) known as the Securities
Executive Education Council began to develop them. They

started in 1989, just before the Tiananmen Square incident,
which set them back because such market developments were
still seen as too capitalist. They operated out of a small hotel
room and hardly had any financing. I can still picture the big
garbage bin under the metal stairway going up to their office. I
really respected the risks these young people were taking by
doing this at such an unsettled time, so I made a small

donation to give them a hand and was excited to share my
knowledge with them. From nothing, these people built
China’s markets and the government’s securities regulatory
arm.

In 1994, I set up a company called Bridgewater China
Partners. By then, I was convinced that China was poised to
become the greatest economy in the world in the twenty-first

century, but hardly anyone was investing in China yet; good
deals could still be struck. I could bring money to the table by
introducing my institutional investment clients to
opportunities, and I could provide know-how by introducing
Chinese companies to American ones. In exchange, we would

get a stake in these companies. Essentially, I was setting up the
first U.S.-based private equity firm in China.

I launched the company by bringing a small group of
institutional investor clients, who together managed $70
billion in assets, to China for a visit. When we got back, we
agreed to move forward by setting up a jointly owned
merchant bank in Beijing. While I knew that entering a

territory where few had been before would require a lot of
experimentation and learning, I soon realized I had sorely
underestimated the complexity of the task we had set for