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Chinese Billionaire’s Company Faces Investigation

FILE - Wang Jianlin, chairman of Wanda Group, speaks during a signing ceremony for a strategic partnership between FIBA and Wanda Group in Beijing, June 16, 2016. Wanda Group has purchased Dick Clark Productions for $1 billion.
Chinese Billionaire’s Company Faces Investigation
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Wang Jianlin is one of Asia’s richest men. He is chairman of Dalian Wanda Group, a large property business which owns many foreign companies.

However, Wang is now facing a number of actions from Chinese authorities.

The latest actions include Chinese authorities asking banks to stop financing Wanda Group’s purchases of foreign companies.

Wanda Group currently owns a studio in Hollywood and AMC Theaters, among other foreign businesses. AMC Theaters has the most movie theaters in the United States.

Earlier this year, Wanda Group faced an investigation into its finances. Soon after, Wanda Group sold part of its business for $9.3 billion to a real estate developer based in Tianjin.

Wang Jianlin, the founder of Wanda Group, is known for his strong connections with the Communist Party. The Chinese government’s actions have surprised some experts.

Christopher Balding is an associate professor of economics at Peking University. He said, "That is a surprising development in a lot of different ways. Wang Jianlin has many friends all through the political establishment in China."

While some people believe the government targeted Wang, other people believe the government was taking action against many companies.

Peng Liu is a professor of real estate and hotel management at Cornell University. He said the government actions were consistent with the desire to control financial risks.

In the past few years, Wanda Group has bought Nordic Cinema Group, a theater operator in northern Europe, for $930 million, and Carmike Cinemas for $1.1 billion. Carmike Cinemas is the fourth-largest theater operator in the United States.

However, earlier this year, Wanda Group was unable to buy Dick Clark Productions, a company that develops television shows. The deal was valued at $1 billion.

The government is asking companies to cut their financial risks. But it is unclear if there are other reasons it wants companies to limit the buying of foreign companies.

Balding said, “It is not far-fetched to say that there is definitely a political message being sent, and they are using Wanda as an example to other companies, (to say) 'don't do this'."

He added that the actions involving Wanda could be a sign of hidden political disputes.

Yue Su is an economist with The Economist Intelligence Unit. She said the government is also investigating Fosun and Anbang. Those two companies have bought overseas businesses.

She said, “The government is also worried that these companies are trying to move assets abroad and keep their debt within the country, which is worsening domestic economic conditions.”

Christopher Balding said that in the past few years, regulators were encouraging Chinese companies to buy foreign companies.

He said, “So while Wanda may have pushed the limits, they were doing nothing more than what they were being encouraged to do by Chinese regulators.”

Currently, the Chinese government appears to not want companies to buy foreign businesses. However, Liu said that he believes they will allow overseas investments under the Belt and Road program. That program is a development project that supports trade across countries in Asia and Europe.

“The Belt and Road program is the government's strategy. I think that is different.” he said.

I’m Olivia Liu.

And I’m Mario Ritter.

VOA's Saibal Dasgupta reported this story from Beijing. Olivia Liu adapted this story for Learning English. Mario Ritter was the editor.

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Words in This Story

authorities n. people with power to give orders or make decisions

far-fetched adj. unlikely

regulators adj. officials who enforce rules for a public activity or industry

encouraging adj. to cause something to be more likely to happen

strategy adj. a plan for reaching a larger or long term goal