The World's Richest Man and China's Richest Man Are Both Changing — 12 Charts on the Story Behind the Shuffle

Gates Is Still the Richest Man

Last week, both the world's richest man and China's richest man changed.

Someone knocked Gates off the top of the world's rich list again — though it lasted only four hours.

On July 27, Amazon CEO Jeff Bezos's net worth hit $90.6 billion, briefly passing the $90 billion belonging to his fellow Seattle billionaire and neighbor, Bill Gates.

Later that day Amazon's stock slipped a little, and Gates took the top spot back.

Nearly 90% of Bezos's wealth is Amazon stock. Because Amazon shares are up 40% since the start of the year, his fortune has grown by tens of billions of dollars.

As the stock moves, the two may keep trading places. For now the gap between Gates and Bezos has widened to $6 billion. Amazon trades at $996; it has to rise another 10% before Bezos can be the world's richest man again.

Gates's fortune, by contrast, has much less to do with a share price. Of his more than $90 billion, only about $14 billion is the value of his Microsoft stock — he has cut his stake from 45% to 2.5%. Most of the rest sits in Cascade, a separate private investment fund he set up.

While the world's richest man changed hands, so did China's rich list. Evergrande's half-year report last week showed first-half net profit would top HK$21.3 billion, three times the same period a year earlier. The stock rose 31% in two days, and Xu Jiayin's net worth reached $31.6 billion, passing Wang Jianlin to make him China's richest property tycoon and third overall, behind Jack Ma and Pony Ma.

Evergrande's stock is up more than 340% since the start of the year, one of the best performers in Hong Kong.

What happens next is anyone's guess. At the start of the year Wang Jianlin was still China's richest man, worth $33 billion. In June, a report that the China Securities Regulatory Commission had asked banks to look into Wanda's overseas acquisitions was enough to set off a selloff of Wanda bonds and shares by everyone from banks to ordinary investors.

Over the Past Three Decades, Only 7 People Have Ever Been the World's Richest

Forbes has ranked the world's wealthy since 1987. In those 30 years, counting Gates and Bezos, the world has produced seven richest men.

Two Japanese property tycoons, Yoshiaki Tsutsumi and Taikichiro Mori, traded the top spot between 1987 and 1994. Japan's ultra-low interest rates in the 1980s let Japanese businessmen pile up fortunes investing in real estate and finance, at home and abroad.

Gates became the richest man in 1995, when he held $12.9 billion in assets — $20.8 billion at today's exchange rate, which would rank only 37th in the world now. Since then he has held the title for 18 of 22 years.

His wealth peaked in 1999 at $90 billion, the equivalent of $132.5 billion today.

Warren Buffett, who drinks five cans of Coke a day, is a good friend of Gates. In 2008, shares of Buffett's investment company, Berkshire Hathaway, surged, pushing his assets to about $62 billion. Microsoft was sliding at the same time, and Buffett briefly overtook Gates to become the new richest man.

Then the financial crisis hit, Buffett's fortune shrank, and he handed the title back.

The Mexican businessman Carlos Slim controls América Móvil, Latin America's largest mobile phone company. He shot to the top of the list in the first months of 2010 and stayed there until 2013.

A Mexican constitutional amendment that could have broken up Slim's telecom empire shrank his fortune badly at the end of 2013. Gates, who was trailing him by only $500 million at the time, passed him in 2014.

Amancio Ortega, founder of the Spanish fast-fashion brand Zara, passed Gates in 2015 and was the richest man for two days. He opened a clothing factory in 1963 and the first Zara store in 1975; it took him 52 years to get to the top. He is still worth $83.7 billion today, behind only Gates and Bezos.

Gates, the Longest-Reigning Richest Man, Pushed the Personal Computer Into Wide Use and Made It the Infrastructure Modern Business Runs On

In the 1970s, mainstream computers were still hulking machines that were hard to move. Software was an appendage of hardware, and no company existed to make only software.

The personal computer changed that. The Apple II, which Steve Jobs and Steve Wozniak tinkered into existence, pushed the company's sales from $2.7 million in 1977 to $200 million in 1980. By 1981, Apple held 23% of a $2.2 billion global PC market.

Microsoft was founded in that era, the first company to do nothing but software.

After 1982, the IBM PC and machines that cloned its architecture began taking share of the personal computer market.

PC hardware architecture converged. Manufacturers built to a common standard, which in turn created a need for software that would run on it.

Microsoft, which had been making software like BASIC, moved into operating systems. Gates bought MS-DOS for $50,000, which made Microsoft the standard software platform for the IBM PC.

Microsoft went public that year. Gates, who held 45% of the company, was worth $350 million.

In 1986, the U.S. Bureau of Labor Statistics wrote that over the previous 25 years, computer and peripheral equipment manufacturing had been one of the most dynamic and fastest-growing industries in the country. New hiring grew an average of 6% a year, nearly ten times faster than manufacturing as a whole. In just five years, personal computer sales went from double digits to 5 million units in 1986.

As Windows spread through the 1990s, Microsoft built a highly efficient business that would last 20 years: a Windows royalty on every computer the PC makers sold. Under that arrangement Microsoft did not have to sell to individual users. It could keep a fairly small sales force and put its attention on software deals with big customers.

In the end, personal computers got cheaper, more people bought them, and PC makers' profits stayed thin. Microsoft kept its own margins high.

When the personal computer arrived, Gates saw how much software and operating systems mattered, and through one common operating system he helped turn the PC into the infrastructure of the information society.

Most of the World's Richest Men Caught a Big Change — and Pushed It Along

The Japanese property magnate Yoshiaki Tsutsumi was the world's richest man for six of the past 30 years, second only to Gates. Another Japanese developer, Taikichiro Mori, held the title for two. Their fortunes came directly out of Japan's low-interest-rate policy in the 1980s and 1990s, which sent capital pouring into securities and real estate and drove property prices up.

Japan's home-buying-age population, 20 to 50 years old, reached nearly 60 million in 1986, half the country's total, and every one of them was a potential buyer. Japanese home prices nearly tripled between 1985 and 1989.

In 2001, Yoshihiko Nakajima borrowed nearly 400,000 yuan — close to the full price of the house — to buy a four-bedroom home in a suburb an hour and 20 minutes from central Tokyo. Everything about the place fit what Japan's middle class then thought a good neighborhood should be: cherry trees along the streets, neighbors who looked out for one another, and a school his two daughters could walk to.

That was not his whole reason for buying there. The 36-year-old Tokyo city employee was also counting on Tokyo property prices rising by double digits a year — sell the house in a few years, pay the loan off easily, keep the difference. A few months later, Japan's property market collapsed.

In a 2005 interview with The New York Times, he said the place was worth half what he had paid for it. He wanted to move back into the city, but he still owed the bank $300,000 and could not.

Japanese companies' overseas property investments rose and fell just as fast.

In August 1986, a Japanese company paid $245 million for a Hyatt hotel near Waikiki Beach in Hawaii. The hotel had last changed hands only two years earlier, and the price had doubled. That did not seem to surprise many people: Japanese investors were snapping up hotels, restaurants, golf courses and other property across Hawaii at astonishing prices.

The Mexican businessman Carlos Slim became the world's richest man in 2010. After graduating from the National Autonomous University of Mexico in the 1960s, he opened a brokerage and began buying industrial companies he thought were cheap, reinvesting what he earned — much like Buffett.

Mexico's economic crisis came in 1982. The country stopped paying its foreign debt and investors fled, leaving some companies trading for fractions of an already badly devalued peso. Slim bought a great many of them cheap.

By the late 1980s, as Mexico's economy recovered, the companies Slim had bought were worth several times what he paid, and he was one of the most successful businessmen of his day. His good relations with the government helped too: when he bought 20% of Telmex, he got a government guarantee of monopoly status for seven years, at a moment when phone companies all over the world wanted into Mexico's emerging market.

In 2006, Slim briefly passed Gates with $59 billion. His family's wealth came to more than 5% of Mexico's 2006 GDP, the companies he controlled made up a third of the Mexican stock market's total value, and his phone company controlled 92% of the country's phone lines.

Starting 40 years ago, Ortega tore down a business model European clothing stores had refined over decades and replaced it with a speed of turnover the industry had never seen.

By 1983, Ortega's Zara had stores in nine places across Spain and a distribution center of nearly 1,000 square meters. Decades later Zara was the world's largest clothing retailer. Ortega's operating logic was simple: give customers what they want, and get it to them faster than anyone else.

So Zara designed around what the top brands were doing and priced at a tenth of what they charged. Where Zara's early rivals spent months going from design to manufacturing to distribution to sale, Zara did it in under a month. That let Ortega's company follow changes in taste much faster, and hold down inventory at the same time.

Running that efficiently let Ortega's company keep growing revenue and profit even as Spain went through what may have been its worst recession in generations.

"They live in a different world," Modesto Lomba told Fortune in 2013. He is president of Spain's Association of Fashion Creators.

Zara's parent, Inditex, went public in 2001. While most tech billionaires watched their fortunes shrink in the dot-com bust, Ortega's grew by $2.5 billion, to $9.1 billion. Neither the 2008 nor the 2012 financial crisis touched Inditex's market value or Ortega's rising wealth, and in October 2015 he was the world's richest man for two days.

History's Famous Tycoons Were the Same: the Ones Who Reigned Longest All Built Infrastructure

The 1870s through the 1900s were America's Gilded Age, a name taken from Mark Twain's first novel, a satire of the greed and political corruption of the U.S. government after the Civil War.

In those years millions of immigrants came to the United States from Europe, and heavy industry — railroads, factories, mining — grew fast, with most of the wealth collecting in the North and West. The South, the losing side in the Civil War, stayed economically depressed and leaned more and more on cotton and tobacco, both of which stayed cheap.

Between 1869 and 1893, the United States built five transcontinental rail lines, one after another. The trunk lines and their branches reached from the eastern heartland into every corner of the Midwest, Southwest and Far West, turning the American mainland into one single market.

The Gilded Age produced fortunes on a national scale: the Morgan family, Andrew Carnegie, John D. Rockefeller, Henry Ford. While they were seizing the chance to get rich, they also turned their industries into infrastructure that shaped generations.

By the 1900s the U.S. population had passed 70 million. No wars at home and a large population base made the United States the world's biggest unified market. That is why, for a long stretch of history, the world's richest man was always an American.

By 1896, railroads had become America's biggest and most important industry. They cut transport costs sharply, moved American shipping from water to rail, and drove freight traffic and the growth of towns along the lines.

Railroads changed business in other ways too, from how companies were put together to how they handled labor. Railroads were the first industry to raise money by issuing bonds.

Pierpont, of the Morgan family, was picked to sell 150,000 shares of the New York Central Railroad. That got him into railroad management: he consolidated holdings, pushed changes at other railroad companies, and ended up controlling a sixth of the country's track.

Steel sat upstream of the railroads, and Pierpont talked the steel magnate Andrew Carnegie into selling him Carnegie Steel for $480 million in 1901, which made Carnegie the richest man of his time.

Carnegie's fortune briefly passed that of Rockefeller, the richest man of the moment. In 1882, Rockefeller's Standard Oil controlled 90% of the American oil industry, and at his peak he was worth $340 billion — and that is without adjusting for inflation.

Because it was a monopoly, Standard Oil was broken into 34 companies in 1911.

Nearly every one of today's biggest and best-known American oil companies traces back to Standard Oil: Exxon, Mobil, Chevron, Amoco, ConocoPhillips and others.

Henry Demarest Lloyd wrote in The Atlantic in 1881: "Very few of America's 40 million people know that for years the production of oil, its export, and its price at home and abroad have all been controlled by a single company — Standard Oil."

But the oil business was growing slowly then. Refined oil was used mostly as lamp fuel.

After Henry Ford introduced the famous Model T in 1908 and it caught on, the oil industry grew quickly, since oil was the most important fuel for the internal combustion engine. The Model T's first-year output reached 10,660 cars, breaking every record the auto industry had ever set.

By the end of 1913, Ford had built the world's first moving assembly line, and the company was already making half of all the cars produced in the country. Fourteen years later, his line turned out a car every 24 seconds.

The assembly line let Ford keep up with rising demand for cars. In the 1920s the U.S. population passed 100 million, more than 50% higher than a decade or so before.

Bigger production runs cut costs, and between the Model T and the moving line, cars got cheap enough for many more people to buy.

Line work was nothing to envy: in Ford's early factories, the number of workers who quit each year was more than four times the size of the factory. In 1914 he announced he was doubling the wage from $2.50 a day, and his workers became Model T customers themselves.

On May 26, 1927, the 15 millionth Model T came off the line. Edsel Ford and Henry Ford drove it 14 miles, a commemorative trip.

At a time when a car was a luxury and a rich man's toy, Ford made it something an ordinary family could afford, and opened a new market.

Most of China's Richest Caught the Chance of More Than a Billion People Buying Homes

Greater China has passed the United States as the place with the most billionaires in the world, yet almost no one there has held the top spot for years on end the way Gates has.

That may have something to do with the fact that, from the 1980s on, private companies in nearly every industry went from nothing to explosive growth. Huang Guangyu of Gome in retail, Zong Qinghou of Wahaha Group in consumer goods, Wang Jianlin in property — each has had a turn as China's richest man.

But whether you look at the Hurun tally, which began in 1999, or the Forbes China list, property tycoons still take up a large share. Between 2004 and 2015, 24 property billionaires made the top ten.

Chinese people used to simply wait to be assigned housing. Commercial housing appeared in 1987, first in the Shenzhen Special Economic Zone. Commercial lending followed in the 1990s, with banks issuing home loans to individuals and companies. And with that, a new market of more than a billion people came into being.

The property speculation that started in the 1990s was not confined to Shenzhen. It also swept Hainan, a newly created province, and Hong Kong. In 1992, Hainan Island, with a population of just 6.558 million, held more than 20,000 property companies. In three short years, the price of commercial housing there went from 1,350 yuan a square meter in 1988 to 7,500 yuan in 1993.

The bubble burst soon enough and the state stepped in. In 1993, Zhu Rongji announced a halt to property company listings and full control over bank money flowing into real estate.

The ones who got out in time made their first fortune. In August 1991, for example, Pan Shiyi and partners registered Vantone and borrowed more than 10 million yuan at high interest to speculate on Hainan property. In a little over six months, Vantone had piled up more than 10 million yuan. Pan Shiyi later left Hainan for Beijing, and Beijing gained a lot of SOHO buildings.

Not long after the Hainan bubble burst, the 1994 tax-sharing reform made land-transfer fees local government revenue. That gave rise to what is called land finance. When home prices fall, the government usually rolls out something to stimulate the market, such as lifting purchase or lending limits on second homes.

In 1998, the State Council issued the Notice on Further Deepening Urban Housing System Reform and Accelerating Housing Construction, formally ending what was called state-owned enterprise welfare housing; a housing subsidy went into monthly wages instead, and commercial housing began to be marketized. To push commercial housing sales, the Shanghai government offered a set of incentives to buyers, including tax rebates and hukou benefits.

According to figures compiled by Caixin, a plot of land in Shanghai sold in August 2016 for a floor price above 100,000 yuan a square meter, the highest unit price ever in China's residential land market. In September, a "land king" plot in Huangjiang Town, Dongguan, went for a premium of 689% over the asking price, a new national record.

After several rounds of tightening and stimulus, investors have settled on one expectation: the government will not let home prices really fall.

Nearly every quarter, the loans Chinese banks have outstanding to developers and homebuyers rise again. As of the end of the first quarter this year, outstanding yuan real estate loans stood at 28.39 trillion yuan, up 26.1% from a year earlier. Of that, outstanding personal mortgages came to 19 trillion yuan — as if every person in China had borrowed at least 13,500 yuan to buy a home.

Property that looks as though it will keep going up has driven household wealth up with it. Deutsche Bank estimated in March that rising property prices in 2016 added 24 trillion yuan to household wealth across 37 first- and second-tier cities. Real estate and the construction industry tied to it have also given national wealth a big push: by Deutsche Bank's numbers, between 2010 and 2015 real estate and construction accounted for 33% and 15% of the growth in local government tax revenue.

China's home-buying-age population peaked in 2015, at 568 million. Research reports show that the main body of buyers today is 25 to 49 years old, and people born in the 1990s have joined their ranks. They are putting down a lifetime's savings and borrowing money from banks that will take 30 years to pay back, to buy a place for themselves or for the next generation.

Apart from Wang Wei, everyone near the top of the list today is either a property developer or the founder of a Chinese internet company lifted by rising U.S. tech stocks.

Bezos and Jack Ma Are the Likeliest New Richest Men on Each Side, and What They Share Is Remaking Retail

In 1994, Bezos left his job as a senior vice president at the hedge fund D.E. Shaw and started Amazon in his garage — at the time, just a company selling books online.

The business went from books to everything, and from online to offline.

At bottom, Amazon is in the same business as Walmart and other physical retailers: buy goods from upstream in the supply chain, sell them to consumers downstream.

E-commerce made people shop more often, and made shopping easier.

Walmart, the old one-stop shop, successfully got Americans to live in neighborhoods a ten-odd-minute drive from its stores.

Now Amazon's warehouses are where people cluster instead: between 2005 and 2016, the share of the U.S. population living within 20 kilometers of an Amazon fulfillment center rose from under 5% to 44%.

Alibaba is mainly in e-commerce too, but its business differs a little from Amazon's. China never went through an era of big-box retailers like Sears or Walmart. It jumped straight to e-commerce.

Taobao launched in 2003. The platform, which let anyone buy and sell online, took direct aim at eBay's EachNet, which had entered the Chinese market not long before. The difference was that Taobao let sellers list free and announced it would charge no fees for three years. When the three years were up, Alibaba extended the free period by two more.

The Chinese-language internet already had plenty of users: by the China Internet Network Information Center's count, China had 59 million internet users in 2003, second only to the United States.

Taobao then turned into a platform, running all kinds of shopping festivals online and off to pull merchants in. But even with Tmall, where every seller is a business, Alibaba's money still comes from platform advertising fees, service fees and commissions.

Alibaba and Amazon both used the internet to remake traditional retail. The brands being remade have signed on, one after another, with Amazon or with Alibaba, JD.com and other Chinese e-commerce platforms, relying on them to move their goods. Today no big brand can refuse e-commerce.

Each company is now the top e-commerce player in its own market, and each is worth more than any offline retailer. Both have moved into physical stores as well — one bought Whole Foods, the other incubated Hema.

Railroads, oil, cars, property, computers: wave after wave has come and gone. Now it is shopping that has become the biggest force capable of making a man the world's richest.

Appendix: the world's top ten richest people as of August 1, 2017

Charts by Feng Xiuxia

Cover image from: Pixabay