Why do Chinese companies love Brazil? - Shaun Rein

Shaun Rein

Chinese insurance and investment conglomerate Fosun International snapped up Brazilian asset manager Guide Investimentos for US$52 million on Tuesday, reversing a trend of disinvestment after the central government came after conglomerates with excessive outbound investments. Shaun Rein, author of The War for China's Wallet: Profiting from the New World Order, explains in the South China Morning Post why Brazil is such a popular destination.

The South China Morning Post:

“Fosun is regaining pace – it seems like a signal that political pressure is easing for the company,” said Shaun Rein, the managing director of Shanghai-based market intelligence company China Market Research and author of The War for China’s Wallet: Profiting from the New World Order. 

“Brazil is attractive given its market size and population. The asset prices are also attractive there, compared with those in Southeast Asia, which gained a lot of investment from China last year,” he said. 

Tuesday’s deal is the second acquisition of a Brazilian financial institution by Fosun. In July 2016, the group bought Brazilian fund manager Rio Bravo Investimentos, its first acquisition in Latin America.

More at the South China Morning Post.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Fosun's Tsingtao purchase might go down well - Ben Cavender

Ben Cavender

China's financial authorities have scrutinized in 2017 many investments by Chinese companies, but the purchase by Fosun of the Asahi 19.9% stake in China's key brewer Tsingtao might go down well with them because the capital goes into a domestic company, explains business analyst Ben Cavender to Reuters. 

Reuters:

“Fosun has been able to pick up the shares at a fairly significant discount,” said Ben Cavender, Shanghai-based principal at China Market Research Group, adding there was room to grow both at home and overseas if Fosun could help Tsingtao move up-market. 

“China’s beer market is going through a reinvention right now as younger consumers shift towards more niche brands. Tsingdao is kind of an outlier because it has mass scale and volume but is also looked upon as being more premium than other domestic beer brands.”... 

It comes as a handful of Chinese conglomerates including Fosun have turned their sights back on the domestic market amid a crackdown by Beijing on eye-catching overseas ventures. 

Cavender said the deal would likely go down well with Chinese regulators because it was “an example of Fosun coming home and investing in a Chinese asset” rather than overseas. “Tsingtao is both a leading brewery in China, and a leading Chinese brand that has successfully penetrated the international markets,” Fosun Chairman Guo Guangchang said in the company’s statement. 

Fosun’s business model and global reach would help grow Tsingtao’s brand and tap into Chinese demand for more premium beers, he added.

More in Reuters.

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The economic fallout of Xi's powerplay - Arthur Kroeber

Arthur Kroeber

Chinese companies are running for cover as president Xi Jinping's powerplay is also hitting the economy. China regularly pulls the reins, when too much financial power is flowing outside the state economy, says renowned economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know® in the Financial Times.

The Financial Times:

Mr Guo Guangchang, the Fosun chairman who presided over its purchases of Club Med, Cirque du Soleil and a struggling state-owned Portuguese insurer, said in an open letter late last month: “The recent scrutiny on overseas investments and financial irregularities is necessary, timely and can eradicate a lot of irrational investment.” He added: “If we do not take measures, foreigners will see us as ‘silly money.’” 

Smaller players are running for cover. Some private companies have volunteered to take over some of China’s most disastrous state-owned firms in order to gain political protection. “The party gets nervous when too much activity flows outside the SOE (state-owned enterprise) channels,” said Mr Arthur Kroeber, managing director at research firm Gavekal Dragonomics. 

“Every so often, they need to rein things in, and the people who get hit are the politically incautious ones with a lot of leverage.”

More in the Financial Times.

Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Private companies are coming under scrutiny - Rupert Hoogewerf

Rupert Hoogewerf

China campaign against corruption is no longer limited to state-owned companies and organizations, but increasingly turns against private companies too. A logical development, tells China rich list founder Rupert Hoogewerf in the Financial Times in an article about Fosun founder Guo Guangchang.

The Financial Times:

Though Guo has now reappeared and no charges have been made against him, the worry for China’s entrepreneurial billionaires remains the same: that the once sweet relationship between them and the party is starting to sour. 

“Everyone is aware that you are subservient to the government,” said Rupert Hoogewerf, chief researcher at Hurun. 

According to Hoogewerf, Guo’s disappearance has yet to scare all private businessmen into looking over their shoulders for Wang Qishan’s inspection teams. He notes, however, that business success and political exposure are closely linked. “There comes a point when you become part of the establishment,” he says.

More in the Financial Times.

Rupert Hoogewerf or Hurun is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´request form.

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Arrest Fosun chair shocks private sector - Rupert Hoogewerf

Rupert Hoogewerf

The surprise arrest of China´s Warren Buffet, Guo Guangchang, the chairman of Fosun international, has shocked the private sector, tells Rupert Hoogewerf, founder of the Hurun China Rich List at the International Business Times.

The International Business Times:

Guo’s disappearance comes as the Chinese government continues a stringent anti-corruption campaign, which has brought down thousands of officials over the past three years, including Zhou Yongkang, China’s former security chief and a former member of the Communist Party’s ruling standing committee. As the scope of the investigation has broadened, officials from several leading universities and some of China’s top stock brokerages have recently been detained. 

“The news about Guo Guangchang is a Force 9 earthquake for China’s private sector,” Rupert Hoogewerf, head of Shanghai-based research group Hurun Report, which tracks China’s wealthy, told International Business Times. 

“If confirmed it would be the first time such an influential entrepreneur has been investigated,” he said. “Guo is a widely respected businessman in China, and is seen as a scholarly figure, and something of a thought leader. And Fosun has had a major international impact.” 

Hoogewerf noted that Guo is a member of the advisory body to China’s legislature, and a former delegate to the legislature itself, and is deputy head of the influential businessmen’s association of Zhejiang province, of which Alibaba founder Jack Ma is the current chairman. Private entrepreneurs have become increasingly influential in China in recent years -- but some experts say many remain anxious about their position in society, about the Communist Party's attitude toward them, and the security of investments. This is seen as one factor in the large overseas investments by wealthy Chinese individuals in recent years. 

Fosun is certainly increasingly well-connected internationally. Patrick Zhong, Fosun Group's senior managing director and head of global investment, spoke at a recent conference in Shanghai about arranging a dinner for "my friend George Osborne," the U.K. chancellor of the Exchequer, during his recent visit to China. Zhong described Fosun as a “trailblazer” in China’s attempt to build global brands.

More at the International Business Times.

Rupert Hoogewerf is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´ request form.

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China´s entrepreneurs become investors - Rupert Hoogewerf

Rupert Hoogewerf or Hurun

Rupert Hoogewerf´s Hurun China Rich list published on Monday its inaugural ranking of the country´s wealthiest investors, topping Fosun´s Guo Guangchang. Part of a trend, says Rupert Hoogewerf in the Financial Times. "I see a clear trend of entrepreneurs in China actively moving towards becoming investors."

The Financial Times:

Another Fosun executive, Liang Xinjun, who is CEO, also made it into the Top 10 of the Hurun Midas Rich List, a ranking announced on Monday by the Hurun Report, a Shanghai-based magazine run by Rupert Hoogewerf, who also compiles the “China Rich List”. 

Guo is known as the “Warren Buffett of China”, after the CEO of US investment firm Berkshire Hathaway. But he himself demurs at the title, casting himself as Buffett’s student. “We’re learning from his investment methods,” Guo was quoted as saying... 

While some companies are increasingly searching overseas for growth and returns, the majority – such as Capital Today run by the top ranking woman investor, Kathy Xu Xin (below) – have been fully engaged by opportunities in the domestic market. 

Since 2005, Xu’s fund has invested in Tudou, a video sharing website, Z-Kungfu, a fast-food chain, Ganji, a classified ads website, Inoherb, a green cosmetics company, Zbird, an online diamond retailer and JD.com, an electronic e-commerce company. When JD.com went public, Xu made more than 100 times her initial investment, according to the Hurun Report. 

“The stories of these people tell the story of the investment sector in China and many of them are the unsung heroes behind China’s most successful companies,” Hoogewerf, chairman and chief researcher at the Hurun Report, said. 

“I see a clear trend of entrepreneurs in China actively moving towards becoming investors,” he added. “You can see this through more and more studying EMBAs, and significantly all of them wanting to send their children to the world’s top universities to study finance.”

. More in the Financial Times.

Rupert Hoogewerf is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´ request form.

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