Tag Archives: Wanxiang Group

Details Emerge Of China’s New Privately-Owned Banks

DETAILS ARE SEEPING out about the pilot programme announced in January to establish a handful of new private banks this year. These are intended as a first step towards providing competition to China’s giant state-owned banks and an alternative to the shadow banking system for small businesses in need of mainstream banking services.

Earlier this week, Caixin quoted a China Banking Regulatory Commission official outlining arrangements that paired some deep-pocketed investors, including internet company Alibaba, which operates China’s largest e-payment service, Alipay, with autoparts maker Wanxiang Group, and Tianjin Shanghui Investment with copper producer Huabei Group. Each of the five pairs, it seems, will focus on a specific customer segment and test a different banking business model. Initially, at least, the new banks being kept from going in direct competition with the big state banks’ existing businesses.

The Alibaba-Wanxiang partnership is intended to serve small and family businesses, which are likely to already by Alibaba customers, whereas the Shanghui-Huabei pairing would take only corporate clients. The Alibaba-Wanxiang bank will have caps on the size of the loans it can make and deposits it can take. Another pairing, social networking and online gaming company Tencent and Shenzhen-based Baiyeyuan Investment, will also have a cap on its loan size but will have a deposit minimum, not maximum.

What is not clear is the niche being carved out for the other two pairings, Shanghai investment companies JuneYao Group and Fosun Group, and Zhejiang’s electrical equipment maker Chint Group and industrial chemicals producer Huafon Group. Something in wealth management or personal finance seems likely for JuneYao-Fosun.

The five new private banks will be set up in Shanghai, Tianjin, Zhejiang and Guangdong. The banking regulator says they will start operating once they meet required standards, including forming a “living will” that will outline how the bank will shut down in an orderly manner in the event of a failure.

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China’s Green Carmakers Look To Buy America’s Fisker

Chinese industry’s pursuit of all things green and technological looks set to continue with an investment in the cash-strapped U.S. hybrid electric carmaker Fisker. Dongfeng Motor, Geely Auto and Beijing Auto have all reportedly been in conversations with the California-based company that is looking to raise $200 million-300 million to develop its new sedan, the Atlantic, on which its future rides.

The car company has also been talking to Wanxiang, the car parts group that had recently bought Fisker’s main battery supplier, A123 Systems. We understand that there is also a European car maker in the mix. Discussions are expected to be concluded this quarter. A key point is whether majority control would pass to one partner–Dongfeng is reportedly seeking an 85% stake–or whether to have multiple minority partners.

We recall that another U.S. electric carmaker, Tesla, partnered with Toyota and Daimler before becoming a public company in 2010. Fisker looks to be traveling the same road, which would make it a doubly attractive destination to a Chinese partner.

However, a Chinese investment could be controversial in the U.S. Fisker got a $529 million line of credit from the U.S. energy department in 2009, though this was frozen last year with $200 million outstanding. The Obama administration’s support for green technology companies has become a touchstone for the president’s opponents of industrial policy following the collapse of Solyndra, a solar cells maker prominently backed by the administration before going bankrupt.

Americans’ attitudes to Chinese investment in the U.S. are changing, as the U.S.’s approval of CNOOC’s acquisition of Canada’s Nexen, and Wanxiang’s takeover over bankrupt A123 show. But scratch the surface and raw nerves are still to be found. To mitigate the political opposition, any deal with a Chinese company would probably have to ensure that production of the Atlanta would move from Finland to Delaware, as planned, and not move directly to China.

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