The mys­te­ri­ous lure of a failed bus project

China Daily (Hong Kong) - - VIEWS -

Imag­ine a bus with an el­e­vated pas­sen­ger com­part­ment that spans the width of two traf­fic lanes, with its un­der­car­riage fit­ted with wheels rid­ing along the edges of the two lanes to al­low ve­hi­cles less than 2 me­ters high to pass un­der­neath.

Well, a self-pro­claimed in­ven­tor Song Youzhou de­signed such a bus, called the tran­sit el­e­vated bus, in 2010. Last year, his part­ner made a pro­to­type and gave it an easy-to-re­mem­ber name: Batie.

But the pro­to­type failed the road test last Au­gust. It could only travel 100 me­ters in a straight line with­out mak­ing any turn.

De­spite the failed road test, how­ever, Bei­jing-based Huay­ingkailai online fi­nanc­ing com­pany started rais­ing funds for Batie last year on the prom­ise of pay­ing an­nual re­turns of as high as 12 per­cent with the “ticket rev­enue”. In fact, it raised a lot of money.

Worse, Huay­ingkailai has re­port­edly not paid back its in­vestors since the be­gin­ning of this year, and 32 of its staff mem­bers, in­clud­ing board chair­man Bai Zhim­ing, have been de­tained by Bei­jing po­lice on sus­pi­cion of il­le­gal fundrais­ing. The case is ex­pected go to trial soon, and none of the sus­pects found guilty by the court will es­cape pun­ish­ment.

It could be safely said now that the Batie bub­ble has burst. Some me­dia out­lets have quoted an in­sider as say­ing the com­pany owes in­vestors 4 bil­lion yuan ($588.47 mil­lion). Although the fig­ure has not been con­firmed, the com­pany’s debt is in­deed very big, as re­ports said Batie at­tracted at least 40,000 in­vestors.

Two ques­tions arise: How could Huay­ingkailai use a failed project to fool in­vestors and raise a huge amount of money? And how can sim­i­lar frauds be pre­vented?

Bai suc­ceeded be­cause he used his “con­nec­tions” with cer­tain lo­cal of­fi­cials, as Huay­ingkailai’s records show it worked with at least four lo­cal gov­ern­ments on Batie — Zhoukou and Nanyang cities in He­nan prov­ince, a dis­trict in Tian­jin and Qin­huang­dao in He­bei prov­ince.

Ac­cord­ing to lo­cal me­dia re­ports, in De­cem­ber 2015 the then mayor of Zhoukou city at­tended the sign­ing cer­e­mony for a co­op­er­a­tion deal with Huay­ingkailai even though the Batie project was widely crit­i­cized af­ter fail­ing road test, and the com­pany up­loaded the group pho­to­graphs on its official web­site. Such events might have mis­led peo­ple into be­liev­ing Batie was part of a govern­ment project.

That lo­cal of­fi­cials want to at­tract more in­vest­ments is un­der­stand­able, but be­fore sup­port­ing the Batie project they should have con­sulted tech­nol­ogy ex­perts to de­ter­mine whether or not the idea was prac­ti­ca­ble.

Of course, some peo­ple were lured by the high re­turn rate of­fered by Huay­ingkailai, which is sur­pris­ing be­cause the in­ter­est rate for one-year de­posits in banks is only 1.5 per­cent. Be­fore in­vest­ing, peo­ple must as­cer­tain whether the project they want to put their money in is sus­tain­able. In this in­ter­net age, any­body, espe­cially po­ten­tial in­vestors, can eas­ily learn about the risks of in­vest­ing in a com­pany be­fore tak­ing a de­ci­sion.

In this in­ter­net age, any­body, espe­cially po­ten­tial in­vestors, can eas­ily learn about the risks of in­vest­ing in a com­pany be­fore tak­ing a de­ci­sion.

The author is a writer with China Daily. zhangzhoux­i­ang@chi­

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.