The Chinese government this week issued a code of practice for how private sector companies should conduct overseas acquisitions. The move is designed to curb companies such as entertainment-to-property giant Dalian Wanda, which simultaneously announced plans to focus more on Chinese retail.
The code was announced by China’s National Development and Reform Commission. It includes broad guidelines on company borrowings, how companies should stay within core competencies, and respect local laws. The NDRC described the code, which follows the announcement of Cabinet-level guidelines issued in August, as a “major policy tool.” The organization also said that it would compile a blacklist of companies that violate the code.
State-owned enterprises are already subject to greater controls than private sector firms. But state media reported that a similar code is being drawn up for government-backed companies.
Companies including Wanda and HNA grew rapidly through an overseas expansion run that hit the skids at the end of 2016. Others, like Studio 8 backer Fosun, appear to have escaped the harsh regulatory controls that Wanda has incurred. Fosun this week announced that it was selling off one of its property developments in Sydney, Australia, but dropped a heavy hint that it was interested in buying Italian lingerie manufacturer La Perla.
Wanda chairman Wang Jianlin said that he is doubling down on shopping malls within China. He announced plans to operate 1,000 Wanda Plazas in 90% of major Chinese cities by 2028. Wanda opened 50 in each of the last two years.
Wang shrugged off the idea that retail in China is being crimped by the growth of online shopping, and instead suggested that the two are complementary. “Wanda Plazas are being launched at the city level, regional level and community level, but we position all the Wanda Plazas as social centers,” he said in a speech this week. He also announced greater competition with retail giant Suning.