Fan Bingbing was fined 900M yuan because of Yin-Yang Contract; how she launder money for big boss?

Fan Bingbing rose to fame from a supporting role in the series My Fair Princess, eventually becoming a powerhouse in the Chinese film industry. In 2013, with an income of 110 million yuan, Fan Bingbing surpassed Yao Ming to become the top of the Forbes China list, maintaining this position for five consecutive years. By 2017, her total income had doubled from 2013, reaching 240 million yuan. At the peak of her career, in 2018, Fan Bingbing was banned in China. She was fined 900 million yuan, about 125 million USD, leading her career into a dark period. Then, on June 14, 2024, Fan Bingbing appeared in Malaysia as a tourism ambassador. What really happened in between? But before we get into the commentary, we invite our audience to like and subscribe to the Decoding China channel for the most unique analyses. Career Advancement Fan Bingbing was born in 1981 in Qingdao, Shandong Province, into an ordinary family. She was very intelligent but from a young age realized that she could not pursue an academic path, as she never excelled in math after the fourth grade. Her parents, noticing her beauty, wisely enrolled her in flute and piano lessons while seeking opportunities for her in the entertainment industry. At 15, Fan Bingbing participated in a TV drama called Strong Woman, playing a character with very few lines. Although the show did not succeed and did not attract much attention, she met her first benefactor, Chiang Yao. This led to Fan Bingbing landing the most significant role of her life as the maid Jin When the series aired, it caused a television sensation in the late 1990s, and despite being only 16 years old with limited acting skills, her radiant beauty drew audience attention. She quickly signed a contract with Chiang Yao as her artist. Fan Bingbing was delighted, thinking her career would soar, but Chiang Yao had too many beautiful and talented women in her entertainment company, not just in appearance but also in experience and skills. Although Fan Bingbing stood out for her beauty, she did not excel in other aspects, so she could only start with supporting roles in Chiang Yao's company. As My Fair Princess became a famous show, Fan Bingbing's beauty also spread widely. Her second benefactor appeared, a wealthy businessman from Zhejiang named Jiayun, who immediately funded and invited Fan Bingbing to be the lead actress. Their romantic relationship quickly became the subject of speculation, but with her captivating beauty, Fan Bingbing had not just one admirer but many others as well. Fan Bingbing quickly transitioned from the small screen to the big screen, participating in around 120 films and numerous reality TV shows. She swiftly succeeded in the Chinese entertainment industry, establishing her own film company in Wuxi, Jiangsu Province, named Wuxi God Love Film and TV Culture Co Ltd, investing in acting for herself. She took on roles from Wu Zetian to powerful modern female leads. In 2013, with an income of 110 million yuan, she surpassed Yao Ming to become the top of the Forbes China list, holding that position for five consecutive years. By 2017, her total income had doubled compared to 2013, reaching 240 million yuan. At this point, Fan Bingbing declared, Media calculated and confirmed her legitimate assets to be over 3 billion yuan. This astonished the public, earning her the nickname, Master Fan. When people thought nothing could impede Master Fan's progress, disaster struck unexpectedly. The yin-yang contract, May 28, 2018, was a fateful day for Fan Bingbing, when former CCTV host, Kui Yongyuan, suddenly posted five screenshots of contracts on his Weibo account, one of which explicitly stated Fan Bingbing's name. What is a yin-yang contract? It is also known as a big contract and a small contract, meaning stars and production companies simultaneously sign two contracts. One public contract is called the yang contract, while the non-public contract is called the yin contract. In Kui Yongyuan's disclosure, the amount in the yang contract is smaller, used for reporting to tax authorities, while the yin contract serves as the star's main source of income, usually many times higher than the yang contract. In other words, the yin-yang contract aims to evade taxes. For example, in a film called Airstrike, Fan Bingbing signed a yin-yang contract. The yang contract stated she received 10 million yuan for four days of acting, but in reality she received an additional 50 million yuan through the yin contract. Her actual total income was 60 million yuan, but she only reported 10 million yuan to the tax authorities. This news drew significant attention, but Fan Bingbing exclaimed, I am more wronged than Dou Yi. Although the yin contract bore her name, the money was not received by her. This was a crucial clue. However, at that time, no one believed her. The General Administration of Taxation of China, after Kui Yongyuan posted the contracts on Weibo, released a statement promising to investigate yin-yang contracts in the entertainment industry thoroughly. Consequently, the tax authorities in Wuxi, where Fan Bingbing's company was headquartered, quickly conducted inspections of her film company, Wuxi Aimei Shen. Five months later, the National Tax Administration published the investigation results, demanding that Fan Bingbing and the company she legally represented repay 255 million yuan in taxes, along with penalties and late fees totaling 900 million yuan. After the announcement, Fan Bingbing became a symbol of artists with a bad history, criticized by the media, and the films and TV shows she participated in were indefinitely postponed. This situation raised two questions among the public. First, why was only Fan Bingbing investigated when Kui Yongyuan had disclosed five yin-yang contracts? Second, how did the Chinese media interpret yin-yang contracts that led to a significant error concerning deep secrets within the film industry and the possibility of Fan Bingbing returning to China? To answer the first question, did Kui Yongyuan reveal anyone else's name besides Fan Bingbing? They included director Feng Xiaogang and writer Liu Zhenyun. Later, Kui Yongyuan hinted at another star couple but did not specify names. Kui Yongyuan had conflicts with Liu Zhenyun and Feng Xiaogang. Fan Bingbing was merely one of the actresses, but why was only she subject to strict tax authority scrutiny? Do Liu Zhenyun and Feng Xiaogang not have money? While we cannot determine Liu Zhenyun's wealth, Feng Xiaogang is also one of the prominent stars in the Chinese film industry, and he surely has money. It's just that he may not be as rich as Master Fan. However, the other star couple that Kui Yongyuan later hinted at had a wealth level comparable to Fan Bingbing. Although Kui Yongyuan did not directly state who this star couple was, based on his information, the yin-yang contract they signed was worth 750 million yuan, while Fan Bingbing's was only worth 60 million yuan. Yet, the tax authorities seemed oblivious to this, allowing this couple to continue their peaceful lives, expressing affection, making new films, and participating in TV shows, keeping themselves busy. Therefore, it can be concluded that the tax authority's target from the beginning was specifically aimed at Bingbing. But why was that? We will analyze this later. But first, let's address the second question posed earlier. The Chinese media's explanation of the yin-yang contract indeed had a major flaw. In the film industry, producers are referred to as Party A, while actors, directors, and others are referred to as Party B. No matter how famous they are, they are still effectively workers hired by Party A. The taxes on the star's remuneration are withheld and paid by Party A. Therefore, whatever amount the stars receive should be after-tax income. Thus, whether Party A promised Fan Bingbing 10 million or 50 million yuan, it should be after-tax income. Signing a yin-yang contract is merely a way for Party A to save money. The issue is why Fan Bingbing, with no additional benefits, had to bear the legal risk and sign this yin-yang contract. This is related to specific rules in each field and may involve certain specific relationships. Thus, Fan Bingbing has defended herself. Later, Ku Yongyuan also told Chinese media that Fan Bingbing may not have actually received the 60 million yuan. If the design of the yin-yang contract was not meant to help the star evade taxes, then what was its purpose? Money laundering in film. Before the 1970s, Hong Kong had numerous gangs and factions. There were primarily four major gangs, Fort Yen Kei, Sun Yeon, Wo Xing Wo, and the New Territories. The leader of the New Territories was Sheng Qian, whose son, Sheng Huacheng, later became a big shot in the Hong Kong film industry. At the peak of the triads, Hong Kong had hundreds of thousands of gang members who collaborated with the police in smuggling, drug dealing, operating underground casinos, and brothels, developing a massive underground economy. By 1974, the Hong Kong government established the Independent Commission Against Corruption to specifically combat criminal activities within the police force, while also enhancing audits of illegal income. The triads began to lose their footing, realizing that the path of organized crime may no longer be viable in Hong Kong. The gangs started seeking other avenues, and their biggest concern was whether the money earned from drug trafficking, illegal gambling, etc. would be lost. How could they launder this money? In the midst of the confusion, Sheng Qian discovered that the film industry was a channel for laundering money, because the costs of film production were very difficult to audit, with many expenses being both complex and untraceable. For example, to shoot a film, they might build an ancient palace and then destroy it. How much did it cost to build that palace? 10,000 or 1 million yuan. The discrepancy between these two figures is challenging for auditors to detect. Therefore, the triads established film production companies to produce films. Here, the triads viewed the film company as a transit point for laundering money, with the funds seemingly paid to contractors for costumes, props, and other contractors within the film industry chain, becoming film production costs. But in reality, these contractors also acted as intermediaries to launder money. After the money circulated, it ultimately returned to the accounts of the gang leaders, becoming their legitimate income. Simultaneously, the triads also funneled money to boost box office revenue. On the surface, ticket sales in theaters appeared robust, but in reality, if you went to count the audience, there weren't as many viewers as claimed. In fact, they also viewed theaters as intermediaries for transferring money. Many tricks were employed, and paying high salaries to stars was one way to launder money, using the very yin-yang contract method. Film companies would prepare a yang contract with a huge salary for stars, for example, a remuneration of 10 million yuan, while in reality, the payment to the star was only 2 million yuan per the yin contract. This is completely contrary to the interpretations of the media in mainland China. In Hong Kong, they downplay the actual salary of the star, while the high-paying contract serves to inflate the film's production costs. So why were Hong Kong stars willing to accept this yin-yang contract? First, because the money-laundering production cycle was usually very short, largely only about a week. No matter how hard the stars worked, they only needed a few days to earn a significant salary. Why not take advantage of it? Moreover, the triads could do anything. If they did not cooperate with their demands, even major stars would be taught a lesson. Many familiar Hong Kong stars participated in these specially-purposed films, such as Chow Yun-fat's God of Gamblers series, Jet Li's Kung Fu Emperor Fang Shiyu, Five Shaolin Masters' Dao Hu Bi Long, and Stephen Chow's King of Comedy, which were all believed to serve money-laundering purposes. Although the motives were not noble, we cannot simply criticize the triads. The film tycoons were still very serious. The films they produced received praise from audiences and had high box office earnings, especially in the early 1990s when gangster and urban films became popular in the Chinese-speaking world due to the triad's self-production and real-life backgrounds, which were very influential. That was the model in Hong Kong. What about mainland China? The mainland Chinese film industry began its commercialization phase in the early 2000s, fully learning from the Hong Kong model. From the early 2000s, it became evident that many of mainland China's commercial films were joint ventures between China and Hong Kong. For example, the film The Road Home, in which Fan Bingbing participated, had one of the producers from the Hong Kong film company Emperor. Therefore, from the perspective of the origins of the yin-yang contract in the Chinese film industry, the contract that Fan Bingbing signed should be similar to the yin-yang contracts of previous years in Hong Kong. The production period was short, and the money came in quickly. Just four days of filming, Fan Bingbing could receive 10 million yuan in salary while helping a certain godfather launder 50 million yuan. Another contract revealed by Kuiyong Yuan was valued at 50 million yuan. Although Fan Bingbing's name was on it, the money likely did not belong to her. Fan Bingbing's defense may be true, but she finds it difficult to articulate the reasons. From this perspective, we can also explain why, after 15 years in the entertainment industry, Fan Bingbing's output is unmatched. In reality, over the past 15 years, she has participated in 128 films and television series, averaging 8.3 works per year, most of which the audience is quite unfamiliar with, such Not to mention viewing, apart from her most ardent fans, most people may not have even heard of these titles. The money-laundering model in the Hong Kong film industry relies on short production cycles and high output, allowing money of unclear origins to flow into film companies quickly, and then flow out again under the guise of production costs, becoming income that can withstand audits. From Hong Kong to China, the deep integration of the film industry and finance is a common phenomenon, but mainland China has its unique characteristics. Not all black and grey money flowing into the film industry comes from triad leaders, it also includes individuals with political power. For example, recently, Zhao Wei was banned in China, and she is very close to Zheng Changhuai, who is the brother of former Standing Committee member Zheng Changhong. The Chinese film industry not only integrates with finance but also with politics, with the three sides closely intertwined. This also explains why, despite yin-yang contracts being a common phenomenon in the industry, the tax authorities only precisely targeted Fan Bingbing. The other star couple that Kui Yongyuan exposed was completely unaffected, precisely because Fan Bingbing stood on the wrong side in the political struggles at the high levels of China. Therefore, the main issue is not whether you participated in money laundering, but whose money you are laundering, and which powerful figures you are connected to. Now after six years of silence, Fan Bingbing has re-emerged abroad, becoming a sensation in Malaysia. It can only be said that Master Fan lives up to her name, finding supportive benefactors even in difficult circumstances. However, if the issue really lies not in tax evasion, but in connections with high-ranking political figures, and she has been defeated in that struggle, unable to reverse her situation, then no matter how hard Master Fan tries, it will be challenging for her to return to China. Please leave your comments below to let us know your view. If you find this video useful, please support us with a subscribe, a like, and a comment to help us improve this channel. We sincerely thank you and look forward to seeing you in the next commentary.