No more easy money for six big companies


Jeremy Goldkorn’s selection of the top stories from China on July 19, 2017. Part of the daily SupChina newsletter, a convenient package of China’s business, political, and cultural news delivered to your inbox for free. Subscribe here.

No more easy money for six big spenders

In November 2016, China’s foreign exchange reserves dropped below US$3 trillion. Here are a few things that happened next:

  • In December 2016, four government agencies issued a notice warning of “irrational outbound investment trends,” pointing especially to acquisitions of property, hotels, cinemas, entertainment, and sports clubs.
  • On July 4, Bloomberg reported that banks and regulators were scrutinizing foreign acquisitions and that this threatened to “end an era of easy access to money for the firms.” The article said that HNA, Fosun, Anbang and Wanda were named as targets for investigation. An earlier South China Morning Post report on the same matter also named “east China’s Zhejiang based Rossoneri Sport Investment — the vehicle used by Chinese businessman Li Yonghong 李勇鸿 to acquire Italian soccer club AC Milan.”
  • At SupChina, we noted on July 12 that Chinese people on social media were worrying about the massive debt load that real estate behemoth Dalian Wanda had assumed to purchase foreign companies.
  • On July 19, central state broadcaster CCTV aired a news segment (in Chinese) in which popular host Bai Yansong 白岩松 interviews a researcher from the Chinese Academy of Social Sciences about foreign acquisitions by big Chinese companies. The researcher said that “most of these companies have high debt ratios domestically, but they borrow money from banks to squander abroad or to buy assets,” and that he could not exclude “the possibility of money laundering.” The South China Morning Post titled its report on the program “China takes harsher tone against big dealmakers, alleging ‘asset transfer.’”

This is essentially what everyone wants to know: WHERE DID THE MONEY COME FROM and what is it being used for?

The companies under scrutiny that have been mentioned most frequently in the news recently are:


  • Anbang is an auto and property insurer group that chairman Wu Xiaohui 吴小晖 turned into a global firm with flashy assets such as New York’s Waldorf Astoria Hotel.
  • Anbang was also in talks — that failed — to invest in a debt-laden Manhattan building owned by the family of presidential son-in-law Jared Kushner. Wu was detained for investigation by the authorities in June and it would seem that Anbang’s foreign spending spree is over for now.

Dalian Wanda

  • Wanda is a real estate developer founded in the northeastern city of Dalian by Wang Jianlin 王健林, whose position at number one on the list of China’s richest people depends on the vagaries of the markets, and whose son is a notorious brat.
  • Investors have been spooked by recent scrutiny of debts Wanda may have assumed to fund its overseas spending spree. One result: U.S. movie theater chain AMC, which Wanda acquired in 2012, has, according to the New York Times (paywall), “tried to distance itself…from debt concerns around its Chinese parent company,” while Variety reports that film producer Legendary Entertainment, acquired by Wanda in 2016, has “denied any direct impact from the current political and financial woes of its Chinese parent company Dalian Wanda.”
  • Meanwhile, Wanda’s attempts to offload its amusement park assets — which in 2016 Wang Jianlin promised would destroy Disney’s chances in the industry in China — have gotten more complicated. The South China Morning Post reports that Wanda has roped in a third party to buy some of the theme parks: a large real estate developer called Guangzhou R&F Properties.


On July 6, Reuters reported that “Chinese conglomerate Fosun saw shares in its listed units fall…prompting it to refute online rumors that it had lost contact with its billionaire chairman, Guo Guangchang 郭广昌.” On July 18, the South China Morning Post reported that Fosun had issued 2 billion yuan ($296 million) of short-term “commercial paper,” to raise funds in a difficult environment “amid heightened scrutiny of financial risks.” The article says that “Fosun intends to use the entire proceeds to repay existing debt.”


This acquisitive group that started as Hainan Airlines and now owns a variety of assets across the globe, including about 10 percent of Deutsche Bank, has been mentioned in discussions about overseas acquisitions, but has apparently stayed out of trouble. The New York Times published an investigative report (paywall) that looks at the ownership structure of HNA, finding an opaque “web of family ties” behind the company, but no evidence of any kind of wrongdoing.

Rossoneri Sport Investment

Rossoneri, the owner of AC Milan Football Club, has stayed out of the news since its inclusion in the list of deal-making companies to be scrutinized, but the Italian football community has noticed the anxiety coming out of China.


This white goods retail giant purchased Inter Milan Football Club in 2016. The Financial Times reports (paywall) shares in the Shenzhen-listed company “fell by as much as 6.5 percent” on July 19 after the broadcast of the CCTV program mentioned above, in which host Bai Yansong asked specifically about Suning.