Why China is Shooting its Gray Rhinos

“It is like an awful car crash. You know you shouldn’t look. But at the same time you can’t turn away,” said one senior China film executive of the financial woes that have wrecked the summer of Wanda, Fosun, LeEco, and other previously high flying Chinese conglomerates. Yet, for those who continue to look on at the aftermath of the summer smash-up, two trends emerge.

First, that political risk should be moved far higher up the agenda in any Sino-international dealing. Second, that China is now a major player that has momentum and scale to affect global industry. However alien its rules and methods are to Wall Street and Burbank, or how tricky its is to read the political tea leaves, China counts for too much to be ignored — as a current smash of the other kind demonstrates.

Global box office in the first two weeks of August was dominated by “Wolf Warriors II,” a “Rambo”-style war actioner that has triggered wide acclaim and repeat viewings in China. It has also gone some way to restoring Chinese theatrical fortunes and a degree of pride in an industry which over the past year has suffered a bitter box office reality check. Half a billion dollars grossed in 11 days can do that.

In a similarly brief matter of days in July, property to entertainment behemoth Dalian Wanda was rudely bumped from a position of denying that state investment funds were selling its shares and corporate debt, to one where it was announcing a hastily-arranged $9 billion asset sale.

Selling the theme park and leisure businesses that were last year portrayed as a “wolf pack” capable of ravaging Shanghai Disneyland, as well as a package of hotels, was not simple corporate probity. It was a necessity. That’s because China’s commercial banks have explicit instruction to halt lending to Wanda and three other acquisitive private sector giants, often described as “gray rhinos.”

The Chinese government is now in safari mode, hunting down companies…

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