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Beijing-funded investment of about $ 900bn is struggling to make ends meet, according to officials who say their headquarters is based in companies that cannot provide initial public offerings and are not attractive to investors.
“Traditional methods of withdrawing secret money do not work for us,” a senior official at Zhongyuan Science Innovation Venture Capital, a state-funded fund in central Henan, told the Financial Times.
“Our decision on marketing is more about business principles than marketing,” added the official, who asked not to be named.
Since its inception in 2015, ZSI, which has invested more than a dozen dollars in one of China’s poorest governments, has failed to lower its two-thirds share in its financial sector.
This ranges from the production of agricultural machinery to the hotspots, many of which do not make money. As a result, ZSI does not have to complete its translation date for six years in December.
ZSI is just one of thousands of Chinese governments, or GGFs, that will not run out of money in a timely manner. The GGFs, which operate in conjunction with private equity funds, represent one of Beijing’s most important assets in developing the art of fighting as a rivalry between US-China. mucus the amount of western technology that could be the second largest economy in the world.
This work has been highlighted, however, because the funding strategies of GGFs and their market activities are controversial.
“There will be a significant accounting of government spending,” said Andrew Collier, chief executive officer at Orient Capital Research in Hong Kong.
When China’s GGFs emerged in the early 2000s, they did not depart until 2014, when the city council announced plans to expand corporate power to eliminate them. funding for technical start-ups missing.
The aim was to fund government subsidies, which Beijing began to shrink in mid-2010 when the practice was forced out due to poor performance and undermined fair competition.
This has led to an increase in the number of GGFs, whose headquarters are from local and local budgets. Chinese and urban areas are hoping that financial vehicles can make them experts in the market.
By the end of March, China had 1,877 GGFs in control of Rmb5.7tn ($ 892bn), according to Zero2IPO, a Beijing-based consultant. Ten years ago, there were 71 cents with Rmb83bn managed.
“GGFs are one of the biggest and most active games for Chinese financial companies,” said Li Lei, a senior GGF member from Beijing. No one can compare to what governments are doing. ”
This financial reform has greatly benefited other local businesses. Nio, who was once in the business of making electric cars, changed the economy later receiving Rmb7bn cash Apple has run out of three GGFs. Shares of listed companies in New York have been more than 10 times higher than the company said they were on the rise.
The winners bet on Nio, however, several failures followed. Public records show that China’s GGFs have invested less than a quarter of the companies that have earned more than six years. This has put a lot of money, which is nearing the end of their lives, under pressure as they struggle to meet their production plans in time.
As is the case with PE funds, many GGFs are created over a period of time so that their headquarters can be dedicated to new products.
“I can’t think of a quick solution to our problems because of our business acumen,” said Li, who is expected by the end of December in seven companies.
Bad planting choices are probably the cause of the delay. Many GGFs, especially those funded by local governments, face international and industrial restrictions on their funding. These requirements are more driven by priorities than business ideas, and have resulted in a lot of money that is not going well.
Li said his fund, backed by the Beijing Federal Government, is responsible for securing at least 70% of its investment in private companies and high-tech factories in the capital, where such industries are not formed.
“We had to buy in limited companies to achieve that amount,” Li said. “This damaged the economic impact.
In an effort to improve performance, many GGFs have changed financial management practices to focus on companies seeking IPOs, a way to generate private funding.
Pivot was disrupted, however, by the Beijing concept Encourage approval on the stock list this year to protect investors. Reports indicate that about half of the IPO programs in Shanghai and Shenzhen institutions failed to exceed the first four months of this year.
“We have given up hope of jumping through the IPO for the sake of law enforcement,” said Wang Zhi, treasurer at GGF in Zhejiang province.
With fewer alternatives and deadlines for the upcoming withdrawal, some GGFs have chosen to spend their money on smaller gains – more than they expected – or even lose. In April, Wang’s bag sold the price in a local commodity factory it bought five years ago for a profit of 20%, a return below the corporate standard.
“Our main goal is to achieve goals and prevent the loss of public resources,” Wang said. “We are not the only market that thinks only of reimbursement.”
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