Wang Jianlin became China’s richest man by riding the country’s property boom. But his decision to try and replicate that success across any number of other sectors came progressively unstuck in 2017 after the government asked banks to investigate its financials and began clamping down on its dealmaking.
First there was the scaling back of Wang’s entertainment empire. The man who once vowed to beat Disney failed to wish upon that particular star and ended up having to sell most of his ‘cultural property projects’ to Sunac (see WiC375).
And now, his ‘dreams of electric sheep’ have proved to be just that in the tech space too. But even by Wang’s recent standards, his tech ambitions have imploded unusually fast.
The group’s tech businesses were only spun out of Wanda Financial in 2016. Wang said he intended to revolutionise the sector, turning the newly formed Wanda Tech into one of China’s largest internet players alongside the BAT troika.
Two years later and those ambitions appear to have bitten the dust. ThePaper.cn says Wanda Tech laid off 95% of its staff at the end of December. As a result, employee numbers have been cut from 6,000 to 300, with all the remaining staff transferred to Guiyang in Guizhou province. The South China Morning Post says their relocation to one of China’s poorer provinces will allow Wanda to cut their a salary to an average Rmb2,800 ($431) per month.
It is all a very far cry from a couple of years ago when Wang confidently predicted that Wanda Tech would earn Rmb10 billion in profits by 2018 and go public by 2020. The company’s mission was to improve the workings of the real economy by linking it with the digital one.
Digital communities, smart living, financial technology and public cloud services: Wang had all the right buzzwords for the four business divisions he created.
He also hired a roster of talent from leading tech firms. Google Global’s Liu Yun became COO: Microsoft Search Technology Centre’s Yang Xiaosong became CTO; and Wanda Financial Group’s Qu Dejun became CEO. Wang also hired Visa China’s VP, and PayPal China’s CFO.
But as Sina.com reports, the heavy hitters appear to have been left stumbling around in the dark, or to paraphrase a quote beloved by technologists: ended up wandering out onto the web like a deer on the freeway. One insider tells the website that Wanda never really came up with a business plan to join the dots.
During his 2016 annual results, Wang said Wanda Tech planned to raise $1.5 billion from private investors during 2017. But timing was against him. Investors were hardly going to take a punt on one Wanda start-up at a time when more established parts of the empire appeared to be facing liquidity trouble.
They would also have been conscious of Wanda’s failed tie-up with Baidu and Tencent. In 2014, the three set up an e-commerce platform in which Wanda held a 70% stake. Within a few years, the two tech giants had pulled out.
Wanda Tech also inked an agreement with IBM for cloud computing. Last July, CTO Yang told the SCMP that the company would become one of China’s largest cloud server operators within five years after formally launching in the first quarter of 2018. The SCMP contacted Yang again at the beginning of this month, only to find out that he no longer works for the company.
In one of its Gadfly columns, Bloomberg reminds readers of the proverb about hares and tortoises. It says Wang should have “heeded the ancient wisdom and stuck to real-estate” instead.
Netizens have been more forgiving. As one says, “Wanda Tech was just burning money. Wang made the right decision to cut the staff before it was too late. Good for him.”
And while the wannabe tech giant is down, he is far from out. Bloomberg notes that Wang has fallen down the wealth rankings – he’s now positioned below two tech tycoons and sandwiched between a pair of rival property developers he once completely overshadowed. However, according to the Bloomberg Billionaires index he was this week worth a not insignificant $28.9 billion.
According to Wanda Tech CEO, Qu, the company also lives to fight another day: from its new Guizhou base it will regroup with a “better and healthier” growth profile than before, he claims.
© ChinTell Ltd. All rights reserved.
Exclusively sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.