July 25, 2021

“Riddled with debts, the Suning empire receives a lifeline from Beijing”

Chronic. Xi Jinping does not like disorder. Harmony is even the leitmotif of the Chinese leader’s philosophy and political action. This is how he brings the very exuberant capitalism of the Middle Kingdom back into line. In the discipline. He curtly sent the mythical, but too talkative and far too pretentious Jack Ma, the founder of Alibaba, to the countryside. And today, as the Chinese Communist Party celebrates its 100th anniversary, the state is organizing the orderly rescue of one of its greatest business empires. Riddled with debt, Suning.com receives a lifeline made in Beijing. A fund led by the government of the Jiangsu region, where the company is headquartered, is bringing it $ 1.4 billion (1.2 billion euros) to solve its liquidity problems.

Read Philippe Escande’s column: Alibaba: “The Chinese state has decided to nationalize the Internet”

And, for this, he mobilized a good range of large industrialists, such as the manufacturer of smartphones Xiaomi, the leaders of household appliances Haier and Midea, the electronics technician TCL, not to mention Alibaba, already present in the capital. Thus, it is the group’s main suppliers who are rushing to its aid. With nearly 9,000 stores in 700 cities, Suning became known as the “Chinese Darty”, specialist in household appliances and electronics, before diversifying into general retail. In 2019, he had recovered the 210 Carrefour hypermarkets by paying, in cash, more than 600 million euros. The French must congratulate themselves today on the good timing of its sale, a few months before the surge of cases of Covid-19.

Read also Carrefour is withdrawing from China

The era of the great tycoons, those billionaire barons, is coming to an end

If the crisis gave the final blow to this star of the new Chinese economy, present both online and in physical stores, it was above all his insatiable appetite that got the better of his ambition. Zhang Jindong, founder of the group in 1990, has invested in commerce, finance, real estate, sport… He set up a research center in Silicon Valley, bought the Inter Milan football club. But it was above all his investment in Evergrande, the largest Chinese real estate developer, and the most indebted too, that was fatal to him.

Like his counterparts Wanda, Anbang or HNA, he found himself at the head of a debt that was less and less controllable, more than 6 billion euros to be repaid in the year according to the Financial Times. Mr. Zhang will now have to cut it off. He loses control of his group in which Alibaba holds more than 20% of the capital, but under close state supervision. A now classic setting in step. The era of the great tycoons, those billionaire barons who built an unbridled Chinese private capitalism, is coming to an end. Place in the order of Emperor Xi.