Bid/ask: Sains­bury puts Ar­gos in its shop­ping cart; Fox­conn is still court­ing Sharp

Bloomberg Businessweek (North America) - - Contents - Edited by Pat Regnier

cov­er­age. At an in­dus­try con­fer­ence hosted by Ezubo in June, govern­ment of­fi­cials, cor­po­rate lead­ers, and le­gal ex­perts dis­cussed the de­vel­op­ment of In­ter­net fi­nance and lauded Ezubo’s busi­ness model. The com­pany pro­moted it­self with TV com­mer­cials and by plac­ing its lo­gos on seat cov­ers of the Shang­hai-bei­jing high- speed train.

In early De­cem­ber, when Ding and Zhang re­al­ized that new in­vest­ment in­flow could no longer meet in­ter­est pay­ments for the old in­vestors, they started to move as­sets, de­stroy ev­i­dence, and pre­pare to flee, ac­cord­ing to their con­fes­sions. On Dec. 8 po­lice ar­rested Ding and Zhang. Po­lice used two ex­ca­va­tors and dug for 20 hours to un­earth 80 bags of doc­u­ments that Ezubo ex­ec­u­tives had buried 20 feet un­der­ground on the out­skirts of He­fei, in An­hui prov­ince, Xin­hua re­ported. In­ves­ti­ga­tors found the com­pany had spent heav­ily to buy de­tails on com­pa­nies to help it fabri­cate in­vest­ment projects.

The P2P in­dus­try has grown quickly in China, lend­ing 982 bil­lion yuan in 2015, al­most quadru­ple the to­tal from the year be­fore. Au­thor­i­ties let on­line lenders flour­ish as a way for small busi­nesses to get fi­nanc­ing with­out turn­ing to back-al­ley shadow bankers. In 2012, as P2P be­gan to take off, only 3 per­cent of China’s 42 mil­lion small busi­ness own­ers could get bank loans, ac­cord­ing to the World Bank.

“I think the govern­ment al­lowed this all to hap­pen be­cause it was des­per­ate to pump money into the pri­vate econ­omy as all the other slow­downs started to hap­pen,” Steve Dick­in­son, a Qing­dao-based lawyer for Seat­tle firm Har­ris Moure, said in an e-mail.

Pol­icy ap­pears to be shift­ing. In De­cem­ber the coun­try’s bank­ing reg­u­la­tor said 1,000 P2P com­pa­nies were “prob­lem­atic,” and it an­nounced draft rules to re­strict such lenders and pledged to “cleanse” the mar­ket. “The Chi­nese govern­ment is sup­posed to be seek­ing sta­bil­ity,” said Dick­in­son. “This type of wide­spread fi­nan­cial disas­ter is ob­vi­ously not sup­port­ive of sta­bil­ity.” The bot­tom line China’s peer-to-peer lend­ing in­dus­try is un­der sus­pi­cion af­ter the dis­cov­ery of a Ponzi scheme with 900,000 vic­tims.

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.