August 3, 2021

WANDA group and COSCO, two contrasting stories, revealing Beijing’s strategies. – China information and news

61-year-old Guo Shuqing has been the new chairman of the Banking Regulatory Commission since February 2017. Pure product of the Chinese meritocratic course, Guo, who was a student of the Academy of Social Sciences studied at Oxford. Having dual experience in the field and as a public administrator, recognized financial expert, he was appointed to tackle debt issues and curb the bulimia of international investments which encourage capital flight. His business card is impressive. He was indeed governor of Shandong, No. 2 of the Bank of China, chairman of the Stock Market Regulatory Commission, the Construction Bank and the Foreign Exchange Control Commission.

*

Recently the Chinese and international media have reported on financial transactions in the real estate and shipping fields that deserve attention as they clearly reveal the executive’s intentions in China and internationally.

The first concerns the massive sale of its real estate assets abroad by the Wanda group mentioned several times by QC for the wide range of its activities in China and abroad in the sectors of real estate, amusement parks and the cinema ; the second concerns the purchase project by the national carrier COSCO of the Hong Kong group Oriental Overseas.

When viewed against each other, this information expresses the two sides of the international and domestic strategies of power. The first signals an increase in public control over excess investment abroad by over-indebted groups and a serious brake on the public authorities to the bulimic drift of private or public actors that the regulators suspect of promoting the flight of capital. ;

the second is emblematic of the executive’s intentions to create large groups of global dimensions reflecting Xi Jinping’s power ambitions expressed by the “Chinese dream”.

Wanda Group, in the crosshairs of power.



Under the surveillance of regulators since June for over-indebtedness, Wang Jianlin, inset, with astonishing speed got rid of his assets in real estate and leisure. The episode signals that the government is increasing its pressure to curb both unbridled investments abroad and the flight of capital.

*

In the hot seat since mid-June by regulators for his excessive debt, Wang Jianlin, who we remember was at the Elysee Palace in March 2016 [1] for an investment project in the development of Greater Paris, reacted swiftly by getting rid a few weeks later of 76 hotels and 13 leisure parks and tourist programs bought back at the price of 9.3 Mds of $ by the public real estate group SUNAC, based in Tianjin to assets domiciled in the Cayman Islands and whose financial situation is anything but transparent.

Wanda is one of a series of private groups with Zhejiang-based Fosun, Anbang, Hainan Airlines and Rossoneri Sport Investment, all caught in the banking regulatory commission’s radar for over-indebtedness. The review of their current accounts is conducted by a series of well-known public banks (Industrial and Commercial Bank 中国 工 inconnu, Construction Bank 中国 建设 建设, Communications Bank) negative) all well rated by international agencies, at least over the long term, with which the discreet Guangfa Bank (广 发 银行) has been associated, whose rating was recently raised to very passable Baa3 level by Moody’s, which places it roughly at the same level as the Wanda group that it is responsible for controlling.

With the biggest real estate transaction ever carried out in China, the Wanda group considerably loosens the weight of its debts which Wang Jianlin says will be paid off at the end of the year. On the other hand, the assurances given by Sun Hongbin, the CEO of Sunnac have failed to reassure observers who note that the company’s asset-to-debt ratio rose to 121% in 2016 from 76% in 2015.

On July 12, the Fitch rating company of Standard & Poor downgraded Sunnac’s rating to “BB” (speculative risk), considering that, since the Wanda asset buyback project, “the group’s financial situation has become less predictable and more volatile ”despite the existence of significant liquidity in the company’s accounts. For the time being, the group’s shares, up more than 14% on the Hong Kong stock exchange on July 11, benefit from Wanda’s notoriety in China.

But the polished speeches of Wang Jianlin who says he wants to withdraw from real estate and the Hong Kong stock exchange to introduce his group in China (Shenzhen or Sanghai) in the category of “A shares” denominated in Yuan and reserved for Chinese residents , poorly conceal the haste with which the cleaning operation took place under strong pressure from the public authorities [2]. On July 11 the South China Mornig Post lifted a corner of the veil of reality.

A hasty retirement under the watchful eye of regulators.

A year ago, Wang Jianlin’s state of mind was radically different from the modest caution he displays today. For him, his leisure and business parks that are flourishing in China, of which he had offered a copy in March 2016 at the Elysée [3], were “a pack of wolves” who were to circumvent Walt Disney parks such as Shanghai.

Only a few weeks ago, Wang, guest of honor at a dinner hosted by Yunnan No. 1, revealed that he was going to invest 32 Mds the Yuan (4.1 Mds €) to create a package including medical services, a holiday park and a business center. At the end of June, he announced from a “Wanda City” northeast of Harbin. All these projects are now on the list of those that have just been evacuated to the public group Sunac China.

This is probably only part of the image. Many commentators are now wondering about the underside of a case that resembles a retreat decided in disaster by Wang Jianlin with or without the help of the authorities, towards a public group whose financial structure is itself observed with mistrust by rating agencies.

To measure the bulimia of investments of Wang Jianlin read also: Low hand on Chinese cinema in Qingdao.

*

Looking at COSCO, which is battling in a sector undergoing restructuring hit by the slowdown in global trade, one feels, despite the uncertainties, and by contrast, the impression of a solid power benefiting from the unfailing support of the authorities.

Note(s) :

[1] In March 2016, Philippe Grangereau reacted to our article Wang Jianlin targets a flagship project of “Greater Paris”, citing the Financial Times of March 2 where it was indicated that after 20 Mds of investments only in Europe, the Wanda group had put itself in danger by an accumulation of debts. To the point that Standard & Poor’s “Fitch rating” agency had significantly downgraded its long-term credibility rating.

[2] Since 2003, foreign actors have been authorized to invest in “type A” shares, through a program called “Qualified Foreign Institutional Investors – QFII -) but only within the limits authorized by the Chinese authorities.

[3] Wang’s projects (department stores, hotels, leisure parks in the Gonesse region) were part of that of “Europa City” led by Immochan and “Alliances et Territoires”. After the sale of 49.9% of the shares in the Toulouse Blagnac management company to a dubious financial alliance led by Mike Poon, who has now resigned, it is legitimate to wonder whether the French financial authorities hold the right entry keys in China. Read Chinese people in Blagnac: a French bankruptcy.


• Comment on this article

• To read in the same section

Performance, vulnerabilities, dead ends and security risks. Tensions in the microprocessor market

Some underscores of the economic recovery

Economic rebound and major challenges

China, the World and the flow of capital. What are the risks of “decoupling”?

Where is the economic recovery at?

.