The story of the brilliant and multi-talented Fan Li is a remarkable one, and one that is rarely found in ancient Chinese history.
Fan Li, who lived during the tumultuous Spring and Autumn Period, initially served as a talented strategist and minister to King Goujian of Yue (越王勾践). After helping King Goujian rebuild his kingdom, Fan Li retired from politics and made his name as a legendary businessman.
There are very few documented histories of merchants in ancient Chinese records, as ancient government policies followed the law of “emphasising agriculture and de-emphasising commerce”. Fan Li, however, is the exception to the rule.
Revered as the “Chinese Sage of Business” and the “First Ancestor of Merchants”, Fan Li showed that one could still be successful in business while upholding moral ethics – a philosophy that endures in his book, “Golden Rules of Business Success”. Over 2,000 years later, his business philosophy continues to be widely studied by scholars and businessmen today.
From Local ‘Lunatic’ to Strategist
Before establishing his remarkable career, Fan Li had a humble and rather peculiar start to life.
Born to a poor family in the State of Chu, Fan Li was known as the ‘Lunatic of Chu’ in his youth, due to his eccentric speech and mannerisms.
Fan Li’s eccentricity, however, might have been his way of gaining profound insight into his destiny. No one in the village suspected that their local ‘lunatic’ would eventually become a successful politician and merchant.
One day, Fan Li’s window of opportunity opened. For the first time, Fan Li met a confidant named Wen Zhong, who saw through Fan Li’s eccentricity and recognised his talent.
No one in the village suspected that their local ‘lunatic’ would eventually become a successful politician and merchant.
Within their first meeting, the two men were talking and laughing like old friends. This would mark the beginning of a long and fruitful partnership.
When Fan Li was in his mid-twenties, he and Wen Zhong left the Chu State to tour the country. They eventually reached the Yue State, where they became strategists and ministers to King Goujian.
Despite their differing personalities and temperaments, Fan Li, Wen Zhong (文种) and King Goujian would become prominent historical figures of the Spring and Autumn period, with many heroic stories to their name.
Rescuing a Kingdom
During this time, the Yue State and the Wu State were frequently at war. In 496 BC, King Helu of Wu (吴王阖闾) was killed in battle by the Yue army, and was succeeded by King Fuchai (吴王夫差). The new King of Wu swore to take revenge on the Yue State, and secretly began building up his army.
Three years later, an impatient King Goujian launched another attack on the Wu State, acting against Fan Li’s advice. But King Goujian had gravely underestimated the Wu forces — the king suffered a terrible defeat and was captured by the Wu army.
With the Yue State on the brink of destruction, King Goujian deeply regretted ignoring Fan Li’s advice. The humbled king turned to Fan Li again to help save his country.
Fan Li gave King Goujian a few pieces of advice. The first was to “follow a Heavenly path” and avoid greed and pride — after all, it was King Goujian’s impatience for gain that had led to his defeat
With the Yue State on the brink of destruction, King Goujian deeply regretted ignoring Fan Li’s advice. The humbled king turned to Fan Li again to help save his country.
The second advice was to “navigate dangerous times using human factors” — in other words, to find opportunities that arise from people’s strengths and weaknesses. This particular advice would save the Yue State.
The astute Fan Li was aware of the weaknesses of King Fuchai and his ministers. He thus advised King Goujian:
“Suppress your pride and dignity, and play to their weaknesses. Gift them rare treasures and beautiful women, and accord them with your highest respect. In addition, offer yourself as a hostage to King Fuchai.”
As a further conciliatory gesture, Fan Li recommended that he and the Queen of Yue should accompany King Goujian to be hostages of the Wu State. Despite the danger and uncertainty, Fan Li and the Queen remained by King Goujian’s side, accompanying him through the darkest period of his life.
The three of them would spend the next three years in the Wu State, where they lived simple lives as stablehands for King Fuchai’s horses. During this difficult period, Fan Li loyally supported King Goujian and the Queen, continuing to serve his king and queen with utmost respect.
Fan Li’s loyalty touched King Fuchai, who offered Fan Li a position as his advisor. However, Fan Li respectfully turned down the offer. He said, “The sage Confucius once remarked, ‘A disloyal man is as good as nothing to me, even if he is wealthy and powerful.’ Why would you want to hire a man who would break his loyalties to his own country?”
Rebuilding a Country
After three years of unwavering servitude to King Fuchai, King Goujian finally earned King Fuchai’s trust and was allowed to return to the Yue State.
During King Goujian’s absence, his loyal minister Wen Zhong had been helping govern the Yue State and secretly building the Yue State’s power. Now that King Goujian had learned his lesson, he was determined to restore his country’s glory.
Fan Li suggested the following seven principles to rebuild the Yue State, which King Goujian followed:
1. When war is near, strengthen the country’s defences. This is no different from the concept of demand and supply in business.
2. Agricultural yields go through cycles of surplus and shortage. One must be able to predict the movement of the grain market according to changes in yield.
3. During times of drought, horse carriages will be in high demand, while boats will be cheap. This would be the time to stock up on boats. During times of flooding, sell the stocked boats at high prices, and stock up on horse carriages at low prices. Only by going against the norm will the country develop market competitiveness.
4. Control price fluctuations within an optimal range. If grain is too expensive, the merchants will suffer; if grain is too cheap, the farmers will lose money.
5. Ensure supplies are not depleted, so as to maintain a product’s value.
6. Ensure sufficient currency in the market, so that transactions can be carried out smoothly and consistently.
7. When the price is high, sell off your goods freely without any reservations. When prices are low, buy goods and treasure them like gold.
Within a short time, King Goujian had revived the Yue State’s economic and military strength.
During this time, King Fuchai had already been neglecting his duties and living an extravagant life. As the years went by, his ministers lost faith in him, and the power of the Wu State declined.
In 484 BC, King Fuchai sentenced his faithful general, Wu Zixu (伍子胥), to death. After 20 years of watchful waiting, Fan Li recognised that the time to defeat the Wu State had finally arrived.
Two years later, King Fuchai led his troops north to contest hegemony with the Jin State. Acting on Fan Li’s advice, King Goujian seized the chance to advance his army into Wu, defeating the Wu army and killing Fuchai’s heir.
After a fragile truce that lasted nine years, King Goujian finally subjugated the Wu State in 473 BC, and restored the honour of the Yue State.
From Strategist to Entrepreneur
As the Yue State basked in the glory of their success, King Goujian offered Fan Li the highest rewards and rank, in recognition of his vital role in the Yue State’s revival.
But Fan Li made a decision that baffled many. He refused King Goujian’s offer and resigned from his post, saying that he had completed his work.
Fan Li’s actions provide significant insight into the man’s principles. When it came to his career, Fan Li did not care about accruing wealth or power. Instead, his sole aspiration was to fulfil his duties to his greatest efforts, afterwhich he desired nothing more.
Before Fan Li left, he penned a letter to his old friend Wen Zhong, warning him that it would be dangerous to stay with King Goujian. “King Goujian keeps his bow even after the birds have been downed, and slaughters his hounds to eat after the hunt. He is a person who shares only hardships and not successes.”
True enough, Wen Zhong’s outstanding achievements eventually stirred feelings of suspicion and jealousy in King Goujian. The king sentenced Wen Zhong to death, and Wen Zhong spent the final days of his life in bitterness and hatred.
Meanwhile, Fan Li moved his family to the coast of the State of Qi, where they began to make a living for themselves.
Within a short time, the Fan family had amassed a huge fortune. This was accomplished using the seven principles that Fan Li had taught King Goujian. “King Goujian followed half of my seven principles to rebuild his country. Now, I have used my seven principles to feed my family,” said Fan Li.
The Making of Tao Zhu Gong
Fan Li’s success as an entrepreneur soon drew the attention of the King of Qi, who invited him to be his counsellor.
But Fan Li recognised that, like King Goujian, the King of Qi would eventually notice and become resentful of Fan Li’s fame and accomplishments. He remarked, “It does not bode well to carry a high rank for too long.”
He thus turned down the King of Qi’s offer, dispersed his family fortune among his relatives and friends, and left the Qi State with his family.
King Goujian followed half of my seven principles to rebuild his country. Now, I have used my seven principles to feed my family.
Fan Li
With only a small amount of money, Fan Li began rebuilding his family fortune. This time, Fan Li chose to settle his family in the District of Tao (in today’s Heze City, Shandong Province), and he adopted the name Tao Zhu Gong.
Fan Li chose the District of Tao for several reasons: the land was fertile and rich in resources, and it was also strategically situated along major trade and transportation routes.
The District of Tao was surrounded by resource-rich countries, each producing its own speciality goods. Fan Li thus capitalised on the variety of resources to grow his business.
When doing business, Fan Li always waited for the best opportunity to buy and sell products. Additionally, he advocated the principle of selling in large quantities and at small profits, setting his profit margin at no greater than 10 percent.
Over the next 19 years in the District of Tao, Fan Li would amass a huge fortune three times, which he would redistribute to charitable causes.
One important reason for Fan Li’s success was his lack of greed. As a merchant, Fan Li stayed true to his ethical principles and was not blinded by the prospect of wealth. As such, he was not easily seduced by short-term profits, and could make strategic decisions quickly. He also had the knack of making long-sighted decisions, which helped him grow and maintain his fortune.
Fan Li also practiced diversification in his investments. He would regularly examine the current market situation and choose the most suitable businesses to invest in. According to historical records, Fan Li invested in a variety of industries, including agriculture, animal husbandry, fishing, salt production, and ceramics, among others.
Fan Li was also a hands-on investor; he did not just invest money, but also time and effort to realise the greatest value.
One example of his active participation is a book he wrote based on his experience in the fishing industry. Titled “Classic of Fish Farming”, the book remains the earliest known treatise on fish farming in history.
The Generous Businessman
While Fan Li had a vast amount of wealth, he was never miserly with it. During his 19 years in the District of Tao, Fan Li redistributed his fortune three times to the people.
How could such a wealthy man remain so emotionally detached from his wealth? Fan Li believed in the law of equilibrium: when one has accumulated too much wealth, it must be redistributed. If a person accrues too much money, this may disrupt the equilibrium of a country’s economy, and that in turn would affect his finances.
Fan Li believed that wealth should be in constant flux, like how water constantly cycles between the land and the sea. He thus made it a point to regularly redistribute his vast wealth to the needy.
Besides his wealth, Fan Li was generous with his knowledge as well. Fan Li once met a poor scholar named Yi Dun, who admired Fan Li for his talent and morality.
When Yi Dun humbly asked to be his student, Fan Li unreservedly taught him all he knew. He helped Yi Dun develop a business model for rearing cattle, and even provided him with the necessary start-up funds, enabling Yi Dun to make his first fortune.
Throughout the 500 years of the Spring and Autumn Period and Warring States Period, Fan Li is the only person who had a lifetime of moral accomplishments to his name.
Chinese poet Su Dongpo on Fan Li
The great Chinese poet Su Dongpo (苏东坡) once said, “Throughout the 500 years of the Spring and Autumn Period and Warring States Period, Fan Li is the only person who had a lifetime of moral accomplishments to his name.”
Fan Li stands out in history not just for his legendary business acumen and vast wealth, but for his extraordinary moral character as well. This was a man who turned down high-ranking government positions twice, who redistributed his wealth three times, and who was not once beguiled by fame or gain. He instead spent his life diligently and ethically carrying out his work, both as a minister and as a businessman.
To think, this extraordinary man was once known as the “Lunatic of Chu”!
