Chinese offshore investment

China’s state-owned Jianyin Investment asserts pursuit of overseas culture assets amid crackdown

The firm is targeting culture-related assets – even though Beijing classified some of them like football clubs and cinemas as restricted – to meet growing domestic demand for cultural products and services

PUBLISHED : Sunday, 24 June, 2018, 8:01am
UPDATED : Sunday, 24 June, 2018, 10:35pm

China Jianyin Investment, the equity investment group spun off from China Construction Bank, remains adamant in pursuing foreign assets to proliferate China’s “soft power” even as Beijing tightened its oversight on overseas acquisitions of film, sports and entertainment businesses.

Determined to capitalise on the vast potential of the mainland’s culture sector which encompasses entertainment, leisure, arts and publishing, the state-owned investment conglomerate (JIC) said it envisioned creating a complete chain of businesses by taking advantage of its financial strength.

“In terms of overseas investment related to cultural businesses, we aim to bring advanced technologies, quality content and mature brands in foreign markets to China through acquisitions,” said Wayne Wang, a vice general manager of JIC Huawen Investment, a JIC subsidiary. “Eventually, we hope to help upgrade China’s cultural businesses and bolster the exports of Chinese cultural heritage through the global distribution network bought and deployed by us.”

JIC Huawen has been on the lookout for global acquisitions of culture-related assets although some of these overseas assets such as football clubs, cinemas and hotels are classified as restricted categories according to Beijing’s book in its crackdown on some non-state-owned freewheeling asset buyers.

“As a state-owned company, JIC Huawen will firmly adhere to the national policies and follow its [the state’s] directions,” Wang said.

In terms of overseas investment ... we aim to bring advanced technologies, quality content and mature brands in foreign markets to China through acquisitions
Wang Heng, JIC Huawen Investment

The State Council criticised last year that some of the overseas acquisitions made were focused on properties and entertainment assets that did little to benefit China’s real economy, but instead triggered capital outflows and increased financial risks.

Beijing has been clamping down on active global asset buyers such as HNA Group, Anbang Insurance Group and CEFC China Energy to reduce their leverage ratios as a way of warding off financial risks.

“China’s goal of exporting more cultural heritage to match its increasing role in the global economy remains unchanged,” said Wang Feng, chairman of Shanghai-based financial service firm Ye Lang Capital. “State-owned institutions like Jianyin will surely continue to play a role in making proper acquisitions abroad.”

JIC Huawen would not disclose the names of its acquisition targets.

Mounting demand by Chinese people for cultural products and services amid the country’s fast-expanding digitalised businesses are likely to create a number of profit stars in future, according to Zhang Lulu, JIC Huawen’s chief researcher.

In the first quarter of this year, large-sized companies dealing with culture-related businesses reported total sales of 2 trillion yuan (US$307.7 billion), up 10.5 per cent from the same period in 2017.

Jianyin Investment was established in 2004 after it was spun out of China Construction Bank, one of the mainland’s big four state-owned lenders.

Its portfolio of equity investments include finance, manufacturing, information technology, consumer products and cultural businesses.

By the end of 2017, the investment conglomerate had a total US$85 billion of assets under management.