Tesla plugs into grow­ing new-en­ergy car mar­ket

Au­tomaker plans big ex­pan­sion to tap into chang­ing pub­lic mood to­ward ve­hi­cles

China Daily (Canada) - - LIFE -

An­bang In­sur­ance Group, a lit­tle-known Chi­nese in­surer sev­eral years ago, has trans­formed it­self into a for­mi­da­ble player both at home and abroad, as the group’s net profit and to­tal as­sets bal­looned last year.

Net profit of its four sub­sidiaries ex­ceeded 30 bil­lion yuan ($4.6 bil­lion) in 2015.

The high­light was its life in­sur­ance business, with net profit surg­ing 131 per­cent to 19.66 bil­lion yuan, ac­cord­ing to its lat­est an­nual fi­nan­cial state­ment.

Thanks to ag­gres­sive in­vest­ment and global ac­qui­si­tions, An­bang Life In­sur­ance Co’s to­tal as­sets ex­panded to 921.6 bil­lion yuan, 6.7 times higher than the pre­vi­ous year’s 120 bil­lion yuan.

An­a­lysts said that the ag­gres­sive ex­pan­sion un­der­scored An­bang’s as­set-driven business model, which helped it gen­er­ate abun­dant cash flow and re­turns.

“An­bang’s ex­plo­sive growth was pri­mar­ily led by its ag­gres­sive in­vest­ment ac­tiv­ity, dom­i­nated by ac­qui­si­tions in over­seas in­sur­ance mar­kets, as well as in the prop­erty and hotel sec­tors,” said Wang Guo­jun, an in­sur­ance pro­fes­sor at the Univer­sity of In­ter­na­tional Business and Eco­nom­ics in Bei­jing.

Known for its high-pro­file pur­chase of New York’s famed Wal­dorf As­to­ria hotel in 2014, An­bang has con­tin­ued with its over­seas buy­ing spree.

Its most re­cent tar­get was Al­lianz Life In­sur­ance Korea and Al­lianz Global In­vestors Korea, the South Korean op­er­a­tions of German in­surer Al­lianz SE.

That deal fol­lowed the pur­chase of a con­trol­ling stake in Tongyang Life In­sur­ance Co last year as well as a slew of high-pro­file deals in Europe, in­clud­ing the pur­chase of Dutch in­surer Vi­vat and Bel­gian in­surer Fidea in 2014.

While in­vest­ment in­come of An­bang’s life in­sur­ance business grew by 110.9 per­cent last year, its in­sur­ance pre­mium rose a more mod­est 20 per­cent, the fi­nan­cial re­port showed.

But an­a­lysts said An­bang will be un­der pres­sure to op­ti­mize its li­a­bil­i­ties so it can sus­tain the ag­gres­sive ex­pan­sion pro­gram.

“An­bang has re­lied on an as­set-driven business model,” Wang said.

“It now tends to pay greater at­ten­tion to its li­a­bil­i­ties, mean­ing an im­prove­ment to the weaker part of its business, its in­sur­ance pre­mi­ums

The com­pany’s first quar­ter fi­nan­cial data for 2016 could of­fer some in­sight into such a tran­si­tion, which saw An­bang Life In­sur­ance record a rapid rise in its pre­mium in­come to 125 bil­lion yuan, mak­ing it the third-largest Chi­nese life in­surer af­ter China Life In­sur­ance Co and Ping An Life In­sur­ance Co.

But some an­a­lysts have warned that An­bang’s growth seems too ag­gres­sive, and risks may arise against the back­drop of neg­a­tive in­ter­est rates glob­ally and the short­age of high-yield as­sets in the do­mes­tic mar­ket.

“Chi­nese in­sur­ers will this year be un­der in­creas­ing pres­sure to look for new in­vest­ment tar­gets, given that both the equities and fixed-in­come as­set mar­kets have de­clined,” saidto cre­ateCao Hengqian, sus­tain­able an an­a­lysten­ergy at ve­hi­clesGF Se­cu­ri­tieswhich are Co. af­ford­able to the gen­eral pub­lic.

On April 27, Xin Guobin, vice-min­is­ter of in­dus­try and in­for­ma­tion tech­nol­ogy, had a meet­ing with Jon McNeill, Tesla’s pres­i­dent of global sales and ser­vice in Bei­jing.

Tesla did not dis­close the de­tail of the meet­ing, but the min­istry said on its web­site that it was about the de­vel­op­ment of Tesla’s China business and fur­ther co­op­er­a­tion.

Sev­eral me­dia out­lets said onWed­nes­day that the meet­ing was about the de­tails re­lated to build­ing fac­to­ries in China.

Duan Zhengzheng, the se­nior PR man­ager of Tesla China, said that the au­tomaker is cur­rently in­ves­ti­gat­ing that most ap­pro­pri­ate lo­ca­tion for its China plant, and could not dis­close any fur­ther de­tails.

How­ever, a num­ber of Chi­nese me­dia out­lets have re­ported that Suzhou in Jiangsu prov­ince may be its lo­ca­tion.

“Lo­cal­iza­tion will help its sales for sure,” said Zhang Yu, man­ag­ing di­rec­tor of Au­to­mo­tive Fore­sight Co, “lo­cal pro­duc­tion means Tesla will get sub­si­dies from the gov­ern­ment, but it needs to hurry, as the sub­si­dies of­fered to man­u­fac­tur­ers and cus­tomers are set to de­cline over the next fewyears.”

An­bang’s ex­plo­sive growth was pri­mar­ilu led by its ag­gres­sive in­vest­ment ac­tiv­ity ...”

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