Central banking is not enough. While monetary policy did much to recover from the global financial crisis, its instruments have been largely exhausted and rendered ineffective. Low interest rates and quantitative easing may have kept the engine spinning, but are not pillars of sustainable economic policy. In China, there might still be scope for more monetary easing, but Mohamed El-Erian, chief economic advisor at financial services group Allianz and formerly at the helm of investment firm PIMCO, warns that, ‘‘China needs to avoid the trap that the advanced countries have fallen into, namely that of excessive prolonged reliance on central banks.’’
Wang Jianlin, Wanda’s CEO, the richest man in Asia once said, “Our goal is to make Wanda a brand like Walmart or IBM or Google, a brand known by everyone in the world, a brand from China.” Dalian Wanda, with assets of over $96 billion, has grown from a property company to a large conglomerate, and has its fingers in many pies: from real estate and retail to sports and entertainment. It is also leading a world-wide buying spree, acquiring top assets such as AMC Theatres, Legendary Pictures, World Triathlon Corporation, and Infront Sports & Media. While trying hard to diversify its business, real estate still takes the largest portion in its revenue structure. But how stable is Wanda empire’s future?
China’s corporate debt is rising fast, and is estimated to be between 145% and 170% of GDP, which is “very high by any measure,” according to the IMF. In most countries this would herald a wave of bankruptcies and be considered a lead indicator for an imminent correction. But in China, analysts are not so sure because the government has a high level of control and a low tolerance for slow growth. People also believe there will not be an imminent financial crisis because the government is the ultimate underwriter.
Chinese companies are buying football clubs and investing in sports companies all over the world, despite the fact that many of them had zero experience in sports before. Some investors think it’s a good opportunity to invest in the world-class sports assets when many of them are undervalued and cash-thirsty amid sluggish economic growth in Europe. But for Chinese buyers, there are both political and economic factors at play. The Chinese authority supports the buying, hoping that these overseas sports resources will help boost the domestic industry. But will they bring real changes and improve the performance of China’s national football team?
Traffic in major cities around the world is deteriorating. Jerry Sanders, CEO of SkyTran, believes that the solution lies above the road, not on it. SkyTran, a NASA-backed company, has been developing a personal rapid transportation system with small, computer-controlled Maglev capsules running on elevated rails. The capsule-shaped car looks futuristic, but the company has already built a demonstration system in Tel Aviv and is currently building a commercial system in Abu Dhabi. Is elevated transit a practical solution for traffic jams? How will it fit into our cities and existing infrastructure? Will it replace traditional means of transportation?
Fosun Group, the largest private conglomerate in China, has been on what looks like a no holds-barred acquisition spree for a few years now. It controls the largest number of listed companies in China. It has invested in sectors as diverse as fashion, films and tourism outside China, whereas within China, the company relies heavily on its industrial operations. It is known for having a good relationship with the government, yet last year, Fosun’s founder suddenly disappeared to supposedly assist a graft investigation. How has Fosun scaled up? How do the acquisitions tie in with its business model? And will it realize its ambitions of becoming China’s Berkshire Hathaway?
With humble beginnings in Hangzhou, Jack Ma went on to create an e-commerce titan that has grabbed the attention of China and the world. Today Jack Ma and Alibaba’s story has become the stuff that legends are made of. Duncan Clark has witnessed firsthand Jack Ma’s dizzying rise in China’s e-commerce firmament. A former investment banker at Morgan Stanley, Clark first got to know Jack Ma in 1999 when he met him in the small Hangzhou apartment where Ma and his friends famously founded Alibaba. In this interview, Clark, also the author of Alibaba, the House that Jack Ma Built, talks about Alibaba’s incredible story and its impact on China.
Xiaomi, once the most popular smartphone vendor in China, is showing signs of decline. Back in the day, Xiaomi broke the mold by offering a feature-rich phone at an impossibly low price point. Its unique marketing strategy and business model helped it to break online sales records. But soon others started copying Xiaomi’s strategy and the novelty wore off. The company has been slow to innovate. For phone buyers, Xiaomi ended up being a low-end phone: once they had enough money, they would upgrade to an Apple or Samsung. Today Xiaomi is quickly diversifying from phones to rice cookers and drones. But is that enough to come back to relevance?
Currently the most valuable fintech company in China, Alibaba’s Ant Financial owns a myriad of businesses: China’s largest payment tool AliPay and a variety of financial services in areas like banking, funds, insurance, credit scoring systems, etc. With over 400 million active users, it has ambitions to expand further into the Chinese hinterland as well as into global markets—something never done by Chinese financial companies before. How will Ant realize its elephantine goals? What is the logic behind its diverse businesses and which one is the focus? Can Ant become the Taobao of the financial industry? We offer some answers.