China tames ‘grey rhinos’ after foreign shopping sprees
BEIJING: ‘Grey rhinos’ have become a hunted species in China, where government regulators are clamping down on powerful private conglomerates amid fears they are racking up dangerous debt levels.
Coined by an American policy analyst, the rhino reference points to long-visible threats that can charge suddenly and wreak havoc, as opposed to unforeseen ‘ black swans’.
In China, it refers in particular to four huge companies with diverse global empires: HNA (aviation, tourism, finance), Fosun (tourism, entertainment), Wanda ( real estate, cinema, amusement parks) and Anbang (insurance, luxury hotels).
These are the crown jewels of China’s private sector but are now viewed as a threat to financial stability.
Their voracious acquisitions include Fosun’s takeover of Club Med, HNA’s stakes in Deutsche Bank and Hilton hotels, Anbang’s purchase of New York’s historic Waldorf Astoria, and Wanda’s control of Hollywood studio Legendary Entertainment and 20 per cent of the Atletico Madrid football club.
According to data provided to AFP by analytic firm Dealogic, they spent a combined US$ 83.3 billion on overseas mergers and acquisitions since 2013.
China had long encouraged the buying frenzies but has reversed course, and it emerged in June that regulators were investigating potentially risky loans to these companies.
“It was absolutely predictable. The debt level was growing way too rapidly,” Christopher Balding, an economics professor at Peking University, told AFP. — AFP