Placeholder Image

Subtitles section Play video

  • On this episode of China Uncensored,

  • When a giant Chinese corporation

  • goes bankrupt,

  • should the Chinese government bail it out,

  • or let it fail?

  • In the case of Anbang Insurance Group,

  • the decision was neither.

  • No, the government has their own

  • unique solution.

  • Welcome back to China Uncensored.

  • I'm Chris Chappell.

  • The Chinese Communist Party loves

  • to have its influence felt around the world.

  • That's one reason why over the last few years,

  • it's been encouraging Chinese companies

  • to buy up assets overseas.

  • It's even supported them with policies

  • like low interest rate loans

  • from Chinese state-owned banks.

  • For example,

  • the Chinese company Dalian Wanda

  • bought up AMC Theaters

  • which owns about one third

  • of American movie screens.

  • Shuanghui International bought Smithfield Foods

  • so they can literally bring home the bacon.

  • And Anbang Insurance Group

  • has spent 10 billion dollars

  • buying up hotels and resorts

  • including the Waldorf Astoria.

  • From which I have been banned for life.

  • But now Anbang Insurance Group

  • is facing a bit of a problem.

  • China Uncensored producer Matt Gnaizda reports.

  • Thanks, Chris.

  • For more than a century,

  • the Waldorf Astoria was one of

  • America's great hotels

  • a host to US presidents,

  • world leaders...

  • and weird tea parties.

  • But now,

  • this proud testament

  • to American history,

  • hospitality, and sophistication...

  • is run by the Chinese government.

  • Here's what happened:

  • In 2014, privately owned Chinese conglomerate

  • Anbang Insurance Group bought the Waldorf

  • for almost 2 billion dollars.

  • Anbang also bought billions more

  • in other American companies and hotel chains.

  • US investors were happy to work with Anbang.

  • Anbang was willing to pay big money

  • and who doesn't love getting big money?

  • In fact,

  • investors loved Anbang's big money so much,

  • they were willing to overlook Anbang's

  • other shady business operations.

  • But it turns out,

  • Anbang had pulled a Lehman Brothers of sorts.

  • That is,

  • they're a hundred-billion-dollar company

  • that made risky, highly leveraged investments.

  • And they went into quite a bit of debt

  • as part of their spending spree.

  • What could go wrong?

  • Apparently, a lot.

  • In late February,

  • Chinese authorities prosecuted Anbang's CEO

  • for economic crimes.

  • And Chinese regulators took control of the company.

  • It's only for a year.

  • But it could be more than a year,

  • if they feel like it.

  • This government takeover is

  • a very different approach

  • than the US took with Lehman Brothers in 2008.

  • The US just let Lehman Brothers fail,

  • its poor employees turned out into the streets

  • with nothing but their $5,000 suits.

  • According to Bloomberg,

  • Anbang was doing something similar

  • to what went on during the 2008

  • subprime mortgage crisis in the US.

  • For example, thanks to some financial alchemy,

  • Anbang had been posting pretty good growth

  • in its life insurance business.

  • And when I say pretty good,

  • I mean that from 2010 to 2016,

  • Anbang's annual life-insurance premium revenue

  • increased by 11 million percent.

  • If I had a nickel

  • and grew it at 11 million percent

  • I'd have enough to buy

  • one of those $5,000 suits.

  • Anyway, Anbang was taking

  • life insurance products,

  • repackaging them,

  • and selling them to investors

  • with the promise of high interest rates.

  • And who doesn't love earning high interest rates?

  • Pretty soon,

  • life insurance made up

  • 96 percent of Anbang's revenue.

  • And it was using all that extra revenue

  • to buy up cool playthings

  • like the Waldorf Astoria hotel.

  • But maybe that was a bad idea.

  • Because they almost collapsed

  • and now the Chinese government has taken over.

  • Now as much as this sucks for Anbang

  • and its CEO who's going jail

  • for a long time

  • there's a bigger issue.

  • It shows that China's government

  • is willing to use heavy-handed tactics

  • to take control of private companies.

  • An analyst from the Economist Intelligence Unit

  • says it's a warning shot to other companies

  • that are leveraging investor money

  • and complex financial products

  • to buy assets overseas.

  • Who will Chinese regulators go after next?

  • It could be conglomerates like HNA Group.

  • They own everything from real estate

  • to airline catering to luxury hotels.

  • It could be Dalian Wanda,

  • which owns movie theaters,

  • film studios, and luxury hotels.

  • Or it could be Fosun Group,

  • which owns Canada's Cirque du Soleil,

  • a British soccer club,

  • and you guessed it,

  • luxury hotels.

  • So what do they all have in common?

  • Besides a weird fetish for luxury hotels?

  • Their CEOs are all being investigated

  • by Chinese authorities.

  • So the Anbang takeover

  • could be a message to Chinese companies

  • to clean up their financial transactions

  • that have gotten a little too,

  • shall we say, “creative”—

  • in the Lehman Brothers sense.

  • Or else we'll arrest your CEO

  • and take over your company.

  • But this should also serve as a warning

  • to American investors:

  • When you do business with China,

  • things can get really complicated really fast.

  • One reason that Anbang made such a splash

  • when it first started investing overseas,

  • besides its seemingly endless billions of dollars,

  • was its high-level political connections.

  • Back in 2016,

  • the Financial Times called Anbang

  • one of China's most politically connected companies.

  • Turns out,

  • that might have been part of the problem.

  • After the CEO was first taken into custody last June,

  • the Epoch Times reported that he was

  • close to former leader Jiang Zemin's faction,

  • and helped his cronies launder money.

  • And the New York Times found that

  • Anbang's assets were mostly controlled

  • by a series of shell companies

  • owned by relatives of the CEO.

  • By the way,

  • that is not normal.

  • So to recap:

  • If you sell your company

  • to an opaque Chinese conglomerate

  • with deep pockets,

  • you might find that someday,

  • your company will be partly controlled

  • by the Chinese government.

  • Good thing Jared Kushner scrapped that deal

  • to sell his Fifth Avenue building to Anbang.

  • Back to you, Chris.

  • Thanks Matt.

  • Well, now that the Waldorf

  • is directly controlled by the Chinese government

  • I doubt I'm going to get my

  • lifetime ban lifted anytime soon.

  • So what do you think of the Chinese

  • government takeover of Anbang?

  • Leave your comments below.

  • Once again I'm Chris Chappell.

  • See you next time.

  • Stay ahead of the curve

  • and avoid getting caught unaware.

  • Visit ChinaUncensored.tv.

  • We upload full half hour episodes

  • you won't see on YouTube.

  • Learn about the shady practices

  • of the Chinese regime,

  • before even world leaders do!

  • ChinaUncensored.tv.

On this episode of China Uncensored,

Subtitles and vocabulary

Operation of videos Adjust the video here to display the subtitles

B1 US chinese insurance chinese government waldorf government life insurance

Chinese Government Takes Over $100B Company Anbang

  • 3 0
    zijun su posted on 2021/07/10
Video vocabulary