Tomorrow Holding Group, China’s largest private company, issued a statement on Saturday, July 18, publicly slamming regulators’ takeover of its nine financial companies. However, this rare public challenge was quickly silenced in the social media.
The China Banking and Insurance Regulatory Commission and the China Securities Regulatory Commission announced on Friday July 17 that they will take over the nine companies that Tomorrow Holding Group owned: Tian An Property Insurance, Huaxia Life Insurance, Tian An Life Insurance, Yi An Property Insurance, New Times Trust, New China Trust, New Era Securities, Guosheng Securities, and Guosheng Futures. At the end of 2019, the total assets of these companies exceeded 1.2 trillion yuan (US$0.17 trillion). Among them, Huaxia Life Insurance’s assets accounted for nearly half of all assets, about 587.3 billion yuan (US$83.99 billion).
Tomorrow Holding was accused of putting multiple financial assets at risk, that its founder owned them secretly and that the founder illegally owned or controlled a large number of financial licenses through countless shell companies and has sat on a large amount of financial institution funds for a long time. They were said to have caused the major shareholders to be trapped in a debt crisis. The action by the regulatory commissions marked the final collapse of this comprehensive financial enterprise that the once popular character Xiao Jianhua controlled. Chinese industry insiders commented, “Tomorrow has become yesterday.”
The statement that the Tomorrow Holding Group issued said that the company has been actively working on asset disposition, but the regulatory body’s sudden takeover has disrupted their work. The statement said that the companies have no liquidity risk have had no protests from the investors, and that the regulator exaggerated the risks.
In China, it is rare for listed companies, especially private companies, to challenge the authorities’ decisions openly after being investigated and punished by regulatory authorities. The statement Tomorrow Group issued was immediately deleted from all social accounts. The official message from Wechat stated that the contents violated the regulations.
Xiao Jianhua founded the Tomorrow Holding Group in 1999. Over the past 20 years, Xiao has developed the company in many fields including finance, industry, real estate, communication services, energy, and the Internet. At the end of January 2017, Xiao Jianhua was secretly arrested in Hong Kong and then returned to the mainland.
Source: Voice of America, July 18, 2020