China Plans to Bail Out Private D'Long Group
BEIJING -- China, already committed to bailing out four state banks, is intervening to help reorganize one of the country's sprawling private conglomerates -- underscoring the government's worries about the dangers of a financial crisis.
A Chinese central banker said yesterday that China Huarong Asset Management Corp., a state-run company set up to dispose of bad loans at banks, will oversee the reorganization of D'Long International Strategic Investment, one of the country's largest private conglomerates. D'Long Executive Chairman Xiang Hong couldn't be reached yesterday for comment on the central banker's statements.
D'Long, founded in 1986 by four siblings surnamed Tang, at its height had stakes in more than 100 companies. Overseas, it invested in an aircraft maker in Germany and in Murray Inc., a Tennessee maker of lawn-mowing equipment. This spring, D'Long encountered financial difficulties in the wake of Beijing's credit-tightening policy and negative Chinese media reports about the company.
The government's decision to get involved in the private-sector company partly is because of the broad sweep of D'Long's holdings, which include numerous state-run enterprises and banks. It also highlights Beijing's concern over the case's potential impact on financial -- and possibly social -- stability.
Nonperforming loans riddle China's financial sector and are estimated by economists to account for between 20% and 40% of total bank loans. Other financial institutions, as well as conglomerates that like D'Long have ballooned in recent years, also have problematic debt burdens.
"It's not one D'Long; it's a batch of D'Longs," said Li Shuguang, a vice dean at the China University of Politics and Law in Beijing. "It's a systemic problem. The challenge for the government will be to set up a system to resolve existing problems and prevent similar problems in the future."
Added a professor of the Central Party School, which provides midcareer training for Communist Party officials: "The biggest potential threat to the regime would be a financial crisis."
Under the plan, expected to be announced next week, China Huarong will bring in outside auditors to help sort out D'Long's web of investments and debt, the central banker said. He said authorities haven't decided how to reorganize the company and haven't earmarked any specific amount of loans to bail out the group.
"No one has a clear idea about how many assets D'Long still possesses and how much money is needed to restructure the company," the central banker said. The auditing work is "far from done."
D'Long financed many of its investments with loans, using company stocks that it owned as collateral. When the prices of those stocks started to sink this spring, it set off a chain reaction that has threatened to bring down the Tangs' business empire and has undermined already-weak investor confidence in China's stock market.
The D'Long group companies' interlocking financial ties stem in part from the difficulty private companies long have had in securing bank loans in China. "Our demand for capital was beyond what the capital market could offer" to private companies, group chairman Mr. Xiang said in an earlier interview.
D'Long bought controlling stakes in three domestic banks, which then funneled funds to its affiliates. It also used its shareholdings in companies that belonged to the group as collateral for more loans -- collateral that proved insufficient when prices of those shares started to sink early this year.
As Chinese companies increasingly invest overseas, the problems of conglomerates such as D'Long are becoming problems for their business partners abroad.
This month, lawn-equipment maker Murray was put up for sale, a move that "sent shock waves through the whole company," said Blake Lay, vice president of public relations. "It's a learning experience. Just like any emerging country, you have to learn who the players are and what the rule-of-law situation is."
D'Long's 2003 purchase of the drawings, prototypes and tooling for the Fairchild Dornier 728 jet caused the German investment-promotion agency, Invest in Germany, to say: "D'Long intends to pour a billion euros into the troubled aircraft maker in the coming years." But in June, the project was taken over by a court-appointed receiver. "The aircraft was almost developed, and we had planned to have the first flight this year, but unfortunately when the cash flow from the mother company stopped, we couldn't continue," said Peter Platsch, a manager at Fairchild Dornier Aeroindustries in Munich.
Until recently, the woes of corporate China didn't matter much to companies that weren't investing in the country. But as China's outward investing grows rapidly, that picture is changing. "The problems of doing business in China could be exported into those markets along with the arrival of Chinese companies," said Patrick Horgan, Beijing-based managing director of APCO China, a consultancy that advises foreign companies on investment in China.
Chinese outbound investment more than doubled last year, and though China is far behind Japan in investing overseas, a United Nations agency that monitors international investment flows predicts China will displace Japan as the world's fifth-leading source of foreign investment by 2007. In the past couple of years, the inward-investment arms of many countries that do sizable trade with China have boosted efforts to tap into this growing source of funds.
中国计划对新疆德隆施以援手
已承诺要对四大国有银行施以援手的中国政府目前也正在插手国内一家民营企业集团的重组事宜，这无疑凸现了政府对于爆发金融危机的风险的忧虑。
中国央行一位官员周三表示，国有的中国华融资产管理公司(China Huarong Asset Management Corp.)将负责监督德隆国际战略投资有限公司(D'Long International Strategic Investment)的重组工作，后者是中国最大的民营企业集团之一。记者周三未能与德隆国际董事局执行主席向宏取得联系以获取其置评。
德隆是由唐氏四兄弟在1986年创建的，持有全球最大的番茄酱制造商之一的股份，还拥有美国割草设备制造商Murray Inc.的股份。在今年春季，由于政府信贷紧缩政策的推出和国内媒体对公司的负面报导，德隆遭遇了财务方面的困难。
中国政府之所以决定插手一家私人企业的事情，部分原因在于德隆旗下资产的覆盖面广泛，其中包括为数众多的国有企业和银行。不过，这同时也显示了北京方面对于德隆案对金融稳定（也许还包括社会稳定）潜在影响的担忧。
中国的金融领域中充斥著大量的不良贷款，据经济学家估算，其比例相当于银行全部贷款的20%-40%。其他金融机构以及像德隆这样在近年来利用大量比较容易得到的资金而迅速崛起的企业集团均存在债务负担。
中国政法大学(China University of Politics and Law)副院长李曙光表示，不仅是一个德隆的问题，目前有一批类似德隆的公司，这是一个系统性的问题。他表示，政府所面临的挑战是如何建立一个体系来解决目前存在的问题，同时避免类似问题再次发生。
一位中央党校(Central Party School)的教授补充称，目前政府面临的最大的潜在威胁就是金融危机。中央党校是为中国共产党官员提供在职培训的机构。
上述央行官员称，根据预计将于下周正式宣布的计划，中国华融资产管理公司将引入外部审计人员，帮助对德隆错综复杂的投资及债务网络进行清理。他表示，有关部门尚未决定如何对该公司进行重组，也没有拨出具体数目的贷款用于救助该公司。
他表示，没有人确切地知道德隆仍拥有多少资产以及重组德隆将需要多少资金。审计工作还远未完成。
参与协助中国《破产法》起草工作的李曙光表示，重组方案之一就是在德隆出售部分资产以偿还债务并退出某些行业之后，保留一个规模收缩的德隆集团。
德隆在其鼎盛时期曾号称至少在100家公司中持有股份。其中许多投资都是利用银行贷款进行的，具体做法是利用其拥有的股票进行质押。德隆系股票于今年春季开始暴跌，由此引发了一连串连锁反应，有可能危及唐氏家族业务的生死存亡，同时也打击了国内投资者对于中国股市本已疲弱的信心。
中国华融资产管理公司是国内四大资产管理公司之一，成立这些资产管理公司的目的是购买和处理中国四大国有商业银行的不良贷款。
