The Chinese regime’s credit information agency disclosed on Dec. 10 that Suning Holdings Group pledged all its shares to Taobao, a subsidiary of Alibaba. On the same day, a high-level Chinese official visited Suning Holding’s headquarters in Nanjing, the capital city of Jiangsu Province. But it seems the investigation was merely a political show and an attempt to conceal the company’s financial troubles.
Suning Holdings was founded in 1990 by Zhang Jindong in Nanjing. The company has businesses in retail, real estate and financial services, and well-known among consumers for selling home appliances and electronics in 1,600 outlets across China, according to Chinese media reports. The company owns Shenzhen listed Suning.com and Suning Sports, which acquired a majority stake in European soccer club Inter Milan in 2016.
Suning Group ranks second in the All-China Federation of Industry and Commerce (ACFIC) annual list of the nation’s “Top 500 Private Enterprises” in 2020, and its subsidiary Suning.com is one of the three largest e-commerce platforms in China. It’s hard to imagine that a big company like Suning Group could ever fail.
The high-profile visit by the head of Nanjing’s officialdom, Zhang Jinghua, is intended to conceal the company’s recent troubles, but it also shows the gravity of the situation. It is rumored that the company still has tens of billions of bonds that need to be redeemed, according to Chinese media reports.
Zhang is a member of the Standing Committee of the Jiangsu Provincial Party Committee and Secretary of the Nanjing Municipal Party Committee.
However, it is not the first time that Zhang endorsed a troubled Nanjing-based enterprise. In June 2018, Zhang did an inspection tour of Sanpower Group when it was struggling and expressed strong support for the company. At that time, most of the equity of the two core listed companies held by Sanpower Group—Hongtu Hi-Tech and Nanjing Xinbai—had been pledged to various banks and Sanpower’s debts have been overloaded, according to Chinese news portal Sina. Sanpower’s 40 billion debt crisis was officially made public less than a month after Zhang’s visit.
Zhang’s official visits to Suning Holdings and Sanpower Group show that he tried to cover up the debt crisis of local enterprises. According to various Chinese media reports, since 2018, Nanjing’s top five private enterprises suffered from financial crisis, but their founders are among the wealthiest people in the city: Wang Hua, head of Jeshing Group; Yuan Yafei, head of Sanpower Group; Ji Changqun, head of Fullshare Holdings; Yang Zongyi, head of Fuzhong Group; and Zhang Jindong, head of Suning Holdings.
Nanjing’s wealthy entrepreneurs who have ties with government officials have been in the spotlight due to Chinese leader Xi Jinping’s anti-corruption campaign. Since the 18th National Congress, a Chinese Communist Party (CCP) conclave held in 2012, many officials have been purged in Jiangsu Province. Nanjing was caught in the eye of the storm when its Party secretary, Yang Weize, and mayor, Ji Jianye, were both removed from their posts in 2015. Soon after, Zhu Yicai, chairman of Nanjing Yurun Group, one of the top 500 Chinese companies, was detained and placed under investigation for corruption. Zhu allegedly had ties with the purged officials, Yang and Ji.
Nanjing tycoons were able to build their conglomerates because they colluded with CCP officials, who are often shareholders. For instance, Ji Changqun, the founder of Fullshare Holdings, saw his company’s market share skyrocket in just over three years. The main shareholder of Fullshare was the former head of state-owned enterprise China Huarong Asset Management, Lai Xiaomin, who was charged with graft in February 2019. Lai was also the director of the General Office at banking regulator, the China Banking Regulatory Commission, and head of the Chinese Communist Party committee at Huarong Xiangjiang Bank Co.
As for the Suning Holding’s financial crisis, the company originally planned to use Ant Group’s IPO stocks to pay its debts, but that’s no longer possible after Ant’s IPO listing was called off by Chinese regulators, Chinese media reported.
On Dec. 11, Xi Jinping chaired a Politburo meeting to set the tone for economic work in 2021. He emphasized one of the three main points, “the prevention of disorderly expansion of capital,” which suggests that the government should try to save big companies that are in financial trouble.
Nanjing official Zhang Jinghua visited Suning Holding for that purpose. What if Suning bonds default? Perhaps the local government and banks could bail out the company, similar to what they did for Sanpower Group two years ago. However, it is actually the people of Jiangsu who paid for the debts of the enterprise, which prevented Zhang from falling out of political favor with the CCP.
Chen Simin is a freelance writer who often analyzes China’s current affairs. She has contributed to The Epoch Times since 2011.
Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.