Before Jia Yueting boarded a flight to the US in July 2017 the founder of troubled tech firm LeEco wrote on his weibo that he was off for a short business trip. He told his social media followers he would be back “next week”.
That turned out to be somewhat wide of the mark: LeEco’s creditors – as well as China’s regulators – are still waiting for him to come home.
Jia’s extended visit stands out as an extreme example of a tycoon telling the public one thing and doing something else. At a less egregious end of the behavioural scale are the corporate titans who make bold statements about never going into a particular industry before later doing just that.
Plenty of them have done so, including Wanda Group’s boss Wang Jianlin. Back in 1998 Wang even vowed that his company would “forever exit Chinese football” at a post-match press conference in which he blamed questionable refereeing for a defeat for his team (Dalian Wanda had lost to a lower division side in a cup semi-final at a time when match-rigging was rife).
Wanda quit its sponsorship of its hometown club, but it seems that Wang never entirely lost his interest in football. Exhibit one: his conglomerate invested in the Spanish giant Atletico Madrid as part of its overseas buying spree in 2015. (Wanda also bought the naming rights to the soccer stadium in Madrid where Liverpool will play Tottenham Hotspur in the final of the Champions League on June 1.)
That said, for two decades Wanda steered clear of the Chinese Soccer League, or CSL, keeping Wang’s promise .
However, a fuller U-turn was completed last month as the company announced a return not only to the CSL but also to Dalian, the city where Wanda forged its early commercial successes.
Wang’s firm, formerly known as Dalian Wanda, began its nationwide expansion in 1999 – around the same time it sold the football franchise bearing its brand name. The club was renamed Dalian Shide by its new owner Xu Ming, a fellow tycoon from Dalian who was later jailed on graft charges related to the city’s former political boss Bo Xilai.
Xu died in 2015 shortly before serving out his prison time (see WiC307) and the city’s football franchise has since been renamed Dalian Yifang by its latest owner, another Dalian-based property conglomerate (see page 14 for more on this low-key firm).
Chinese sports media reported earlier this year that Wanda was intent on making a soccer comeback – specifically by investing in Dalian Yifang following the club’s return to the CSL in February (see WiC401). And Wanda finally confirmed the worst kept secret in local football last month.
Although it has yet to disclose the details of its investment Wang says Dalian Yifang will revert to its old name of Dalian Wanda, and that he plans to reboot its fortunes by spending Rmb2 billion ($300 million) building the Dalian Youth Football Centre. He is promising a state of the art facility that will feature 23 pitches, accommodating up to 18 teams and 600 players and coaches.
“The number of youth players in Dalian is less than a tenth of what it was at its peak… so what Wanda is doing first upon its return to football after many years is to build a youth training system,” Wanda said in a statement, adding that it is committed to promoting “the revitalisation of football in Dalian”.
Dalian Wanda won China’s top-division five years in a row during the 1990s, pioneering Dalian’s reputation as a “football city” (becoming in that decade the Chinese equivalent of a Manchester or Barcelona). Indeed, footballing success was part of a broader policy formulated by Bo Xilai’s administration to jack up the local economy (a large football-shaped statue can still be found in the city centre).
According to Guandian, a news portal, there are hopes that Wanda’s return will not only revive the city’s football team but also give a boost to a stuttering economy that belongs to part of the “rustbelt of Dongbei”.
For the time being, however, Wanda’s investment in the port city in China’s northeast look modest compared to the company’s projects in even poorer inland provinces. Wanda also announced last month that it is planning to invest in a “mega tourism project” in Gansu province, for instance. Comprising five Wanda Plazas and three five-star hotels, the work is likely to require a total investment of Rmb45 billion.
Fighting poverty in less developed regions – such as Gansu – along with promoting investment in soccer’s grassroots have something in common, of course: they are both policies prioritised by Chinese leader Xi Jinping.
Also in April, Wanda broke ground on a theme park in Yan’an, the revolutionary base of China’s Communist Party in the 1940s and now a “red tourism” destination in northwestern Shaanxi. With a total investment of Rmb12 billion, Wanda said the 128-hectare project will follow the architectural style of the revolutionary period and is expected to welcome 10 million visitors a year after it opens in 2021 (the centenary of the Party’s founding).
Similar “red tourism” projects are likely to follow, becoming one of Wanda’s key business focuses in the future, Time Weekly has reported. Spending like this isn’t just about currying political favour, it seems. “The biggest message Wang want to send out is that Wanda is no longer experiencing financial problems,” Time Weekly adds.
Wanda has negotiated a nasty cash crunch over the past two years with a series of asset sales. But the latest commitments to its new investments, especially those in Gansu and Yan’an, have raised a broader question about Wang’s well publicised strategy that Wanda wouldn’t undertake fresh property development.
After selling a 14% stake in its commercial property arm to the likes of Tencent and JD.com for Rmb34 billion in February last year, Wanda even changed the unit’s name from “Wanda Commercial Properties” to “Wanda Commercial Management” to reflect its new focus as a brand owner and property manager (see WiC396).
Alongside his footballing U-turn it seems also that Wang is going back into real estate development. Sean Connery once famously said “never say never again” and maybe that applies to Wang too.
© 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.