By Erin Prelypchan
HANGZHOU, China, Oct 27 (Reuters) - Karl Marx would be rolling in his grave if he knew what was going on at Chinese chemical and farming group Transfar.
About 150 employees at the 16-year-old private firm on China's rich eastern coast meet each month to discuss gravely how Marxist thought -- which fervently opposes private property -- can help them become better capitalists.
"Communist Party membership serves two functions in a private company," says Chen Jie, who proudly hands visitors to Transfar's showpiece farm a business card proclaiming him to be both the group's vice president and party secretary.
"Communist Party members are model workers for the other employees, and its organisation helps corporate solidarity. It improves the quality of work."
Transfar added a party committee to its management structure in 1995 and now 10 percent of its 1,500 employees attend monthly party meetings.
Chen says those discussions yield some of the company's best ideas, such as a strategic decision in 1996 to move away from specialised chemicals and into detergent and soap.
Transfar says it controls 30 percent of China's market for textile dyes, and its smart greenhouses outside the eastern industrial city of Hangzhou are filled with row upon row of poinsettias. Their colour, appropriately, is a rich, dark red.
"Capitalism develops and enriches traditional Marxism," said the 37-year-old vice president Chen, a party member for 16 years, with no trace of irony.
GOOD FOR BUSINESS
Chen's is one of a stunning variety of interpretations that private businessmen in China -- once denounced as capitalist exploiters -- are giving to the changing political landscape which Beijing calls "socialism with Chinese characteristics".
Politics and business are set to become even closer at the 16th Party Congress opening November 8, where entrepreneurs will be enshrined for the first time in a party that swept to power in 1949 on the strength of peasants and workers.
At the congress, President Jiang Zemin's "Three Represents" theory is expected to be written into in the party charter -- advocating that the party represents the society's most advanced productive forces. That is code for entrepreneurs and other strata of modern Chinese society.
Private business is driving China's booming economic growth, and now accounts for 50 to 70 percent of GDP while state-owned enterprises from the planned-economy era struggle with bloated payrolls and poor management.
In Zhejiang province, a nexus of Chinese private enterprise, businessmen say they're getting the recognition they deserve.
Many of them have been in the party for years anyway -- some party members who drifted into the private sector, and others businessmen with an eye to political contacts.
"I was a capitalist first, but I joined the party because it's a Communist country. It makes it easier to do business," said China's fourth richest man Lu Guanqiu, whose car parts firm the Wanxiang Group is a few minutes down the road from Transfar.
The former peasant started Wanxiang Group as a bicycle repair shop, turning it into a conglomerate with 10 billion yuan ($1.21 billion) in assets, 8.6 billion yuan ($1.04 billion) in profits last year, and a subsidiary listed on China's stock market.
WHICH COMES FIRST?
The boisterous 57-year-old Lu perhaps embodies the contradictions inherent when the party enters business, and when business enters the party.
Lu, whom Forbes magazine estimates to have wealth of $570 million, has been a delegate to two previous party congresses and now attends annual parliament sessions where his pet issue is tax evasion.
Men once a few rungs above Lu on Forbes's list of China's wealthiest men are under arrest or on the run for dodging taxes.
But Lu is not your typical socialist revolutionary.
"The gap between rich and poor is getting wider and wider," said Lu. "It's a universal problem, not just in China. But it's not my obligation as a corporate leader to solve it. I think I should leave that problem to the politicians."
They, he adds, "have always been open to my ideas".
In an industrial park across town, another corporation draws a clearer line between politics and business.
Nasdaq-listed telecoms company UTStarcom -- founded by Chinese born, Western-educated tech buffs -- doesn't know how many of its employees are party members, and Chief Operating Officer Johnny Chou said he doesn't much care.
"It never even entered my mind," said Chou, standing on one of UTStarcom's shop floors in Hangzhou as workers in lab coats assembled circuit boards for its wildly successful alternative to cellular phone systems.
"I never even asked my senior management whether they were party members," said Chou, who was born on China's eastern coast but is now a citizen of the United States.
"I just do business, and as long as it doesn't interfere with business, I don't care." ($1=8.276 yuan)