The Conglomerate That Troubles China

Issue 08-07-17   |   Reviewer:   Thomas Coe
Disciplines:


Abstract

From its humble origins, HNA Group Co. has grown into a Chinese company that has investments and operations in several industries and companies around the world. Most of its early expansion was in transportation and logistics, but more recently, the company has expanded its reach into other industries. Most of the expansion has been outside of China, although much of the financing for the expansion has been made available by Chinese banks.

The Chinese government, as well as that of other nations, has started looking at the growth of companies, especially those with growth made possible through debt financing. The Chinese are concerned with using debt to finance non-Chinese assets, which, at a multi-billion dollar scale, would sell China’s yuan and buy assets denominated in other currencies, lowering the value of the yuan. Other governments often look at the acquisitions of companies in sensitive industries, such as financial services, communications, and logistics by foreign firms. Governments seek to retain domestic control over these industries and not have them overly influenced by non-domestic entities. Despite its apparent path of strategic growth and profitability, HNA Group may be headed toward curbing its appetite for expansion.





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