ChinaHuarong Asset Management CompanyIt is one of the central enterprises controlled by the Ministry of Finance of China, which was established in the late 90s of the last century. At that time, China's industry, agriculture, construction, and mediumState-owned banksAccumulated a large amountNon-performing assetsNon-performing loan ratioUp to 41%. In response to this problem, the state has established four asset management companies, namely ChinaHuarongAssets, China Great Wall Assets, ChinaOriental Assetsand China Cinda Assets. These companies undertakeState-owned banksofNon-performing assetsin order to lay the groundwork in the WTO negotiations.
However, it was originally planned to be processed within 10 yearsNon-performing loansAnd the withdrawal of ChinaHuarongand other central enterprises did not withdraw as scheduled. On the contrary, in 2009,Lai XiaominAppointed to ChinaHuarongAfter the president, the company embarked on a frenzied expansion. Through acquisitions and restructurings, ChinaHuarongAlmost all were obtainedFinancelicense, became a giantFinanceEnterprise. China, 2015HuarongListed on the Hong Kong Stock Exchange, it has a market value of 110 billion yuan, making it the largest large state-owned enterprise in China by total market capitalizationFinanceAsset management companies.
However, in 2018Lai XiaominAfter being investigated, ChinaHuarongThe true colors are gradually revealed. Revenue, net profit and total assets have declined one after another, and in 2020, it suffered a staggering loss of 102.9 billion yuan, becoming the Chinese enterprise with the largest loss that year. In 2022, withCITIC Groupand other strategiesInvestmentsThe entry of the people,CITIC GroupBecome ChinaHuarongof the holding company.
1.Problems with Operational Strategy:Lai XiaominAfter taking office, ChinaHuarongRapid expansion through acquisitions and restructuringsFinanceLicense plate. However, the over-pursuit of scale and expansion led to serious challenges for management, unable to properly integrate various business units, and resulting in idle funds and wasted resources.
Operational riskAccumulation: ChinaHuarongIn the process of expansion, a large amount has been accumulatedCredit risk, especially loans to state-owned enterprises. Due to the dismal operation of state-owned enterprises, some borrowing enterprises are unable to repay loans, making ChinaHuarongExposure to the risk of bad debts.
3.Internal Management Vulnerability: InLai Xiaominunder the management of ChinaHuarongofInternal Controlsand the audit mechanism. The management abused its power, operated on a large scale, and was suspected of illegal acts such as bribery and bribery, which further exacerbated the decline of the company.
EconomyChanging Situation: In recent years, ChinaEconomyFacing downward pressure,FinanceChanges in the market environment have exacerbated ChinaHuarongThe dilemma. At the same time, the epidemic is rightEconomycaused a severe impact, making the company's losses even more serious.
1.CleanupNon-performing assetsChinaHuarongMore needs to be doneNon-performing assets, by strippingNon-performing assetsto reduce debt pressure and improve the company's overall financial position.
2.Optimize business model: Companies need to re-examine their business strategies and avoid chasing scale expansion and neglecting itRisk control。AttentionRisk managementand compliant operations to improve profitability and long-termSustainabilityAbility.
3.Improving the internal governance structure: strengthenedInternal Controlsand audit mechanisms to establish effectiveRisk managementsystem, to improve the standardization and transparency of the company's management.
4.Seeking Partners: By introducing a strategyInvestmentssuch asCITIC GroupChinaHuarongWith the help of its superior resources and financial strength, it can restart development and achieve business diversification andSustainability
ChinaHuarongThe lessons of the decline highlight the risks and challenges in the development of central enterprises. Although it had achieved remarkable results at one time, problems such as the pursuit of scale expansion and management abuse of power eventually led to the company's difficulties. For central enterprises, it needs to be strengthenedInternal Controlsand compliance management to avoid over-expansion and risk concentration. At the same time, we should be good at learning from the experience and resources of external partners to achieve mutual benefit and win-win results, and better develop and grow.
in the presentEconomyIn the environment, central enterprises should focus on R&D and innovation, strengthen the cultivation of core competitiveness, and serve the countryEconomydevelopment to make a greater contribution. Only through effective management and compliance can we ensure the sustainable and stable development of central enterprises and achieve better social benefitsEconomyBenefit.