In debt as in silks
This week it was announced that the new owner of Italian football club Internazionale (inter), one of the oldest and most popular in the country, will be the Chinese company Suning billionaire Zhang Jindong. According to the Wall Street Journal, the Chinese company will receive slightly less than 70% of inter and will pay $307 million
The legendary club “inter”, which for 108 years of existence, has won many prestigious awards and has never dropped out of the top division of the Italian championship, the last ten years is in dire financial Straits. For the 2014/15 financial year (ended on June 30, 2015) the club has reported a net loss of €74 million ($83 million) in the 2013/14 financial year, the net loss was even higher, almost €83 million ($113 million).
In the fall of 2013, amid growing difficulties, the owner of “inter” and the President of the club since 1995 Massimo Moratti has sold 70% stake to a consortium of investors International Sports Capital, led by Indonesian Eric Tohira, who became the new President of the club. A few years year, the media reported about the huge debts of the club and its possible sale. According to the information portal Football Italia, in March 2016 debt amounted to €140 million ($155 million). Edition of La Gazzetta dello Sport in mid-2015 was estimated at €417 million ($468 million) consolidated debt of the club to creditors, other clubs and the shareholder (official data inter did not disclose). Tokhir categorically denied the rumors about the resale: according to him, the club only asked for Bank Goldman Sachs, his longtime partner and creditor — to commence a search for possible business partners in Asia. “This is the normal position, given the growing interest of investors from Asia, particularly from China, to world football,” said the businessman.
On 6 June, the consortium tohira and Suning signed a “strategic partnership”: the ex-club President Moratti and Internazionale Holding him completely out of “inter”, the remaining shares are divided between the companies tohira and Zhang Jindong. According to The Wall Street Journal, Suning will receive slightly less than 70%, “inter”, tohira will remain around 30%.
The purchase of a controlling stake of “inter” Zhang Jindong became the last and the most notable deal for the penetration of Chinese investors in European football. A month ago, when it became clear that the club flies out Aston Villa of the English Premier League, his long-term owner Randy Lerner has sold the football club to a private Chinese investor Tony Xia for $109 million Influx of buyers from the East reflects, according to Reuters, the desire of the Chinese leader and avid supporter of XI Jinping to create by 2025 a football industry size of $850 billion.
The Vikings from business
Condition Zhang Jindong, according to Forbes magazine, at the beginning of March 2016 was $3.8 billion In “real time” Forbes estimates his wealth even higher — $4 billion richest it occupies 30-e a place, on China and 403-e a place in the world.
The assets of the businessman are dispersed in several interrelated companies, each of which bears the brand Suning. Company Suning Real Estate is engaged in construction and management of commercial real estate, while Suning Commerce, the largest asset of the Zhang — operates a network of shops of home appliances. Most Zhang Jindong Suning Commerce belongs to 24.3 percent, making it the largest shareholder of the company.
With a net profit of $135 million (growth of only 0.6%) Suning Commerce revenue in 2015 soared by 24% to 136 billion yuan (about us $21 billion). Despite the fact that the company has historically engaged in offline retail, operating shops of home appliances, Zhang Jindong pays great attention to the growing role of the Internet. Suning Commerce revenue from online trading in the past year has doubled, exceeding 50 billion yuan (nearly $8 billion).
The era of change
Zhang Jindong was born in March 1963 in the city district Tianchang East China’s Anhui province. The entrepreneur prefers not to discuss his family, so his family (except his brother, who was a business partner Zhang) for certain not known.
In the birthplace of the future billionaire largest city in the County was Nanjing, the former capital of the Republic of China in the early twentieth century. In 1981, Zhang entered the Pedagogical University of Nanking, where he studied the teaching of Chinese literature. In his book about the innovative corporations of the American psychologists George and johnny Gren noted that, being the specialty of the school teacher, the businessman is different “favor” and a desire to share with others. In business, he has surrounded himself with highly skilled professionals for top management positions who have made a significant contribution to the overall success of the enterprise. In return, Zhang is on the stage of Suning practiced the transfer of small shareholdings the Manager in the head office and in the regions, they noted.
According to Chinese media, in 1984, Zhang graduated from the University. By the time it coincided with the end of the first phase of the economic reforms of Deng Xiaoping. After completing the reformatting of farms, the authorities began to gradually reduce its presence in the management of enterprises, to support private initiative and to remove trade barriers. Changes in the market inspired Zhang, who chose not to work as a teacher with a degree and to start their own business. This required start-up capital, which neither he nor his family was not. In the end, Zhang enlisted one of the local textile enterprises in Gulou, a residential area of Nanjing.
The President of football club “inter” Eric Tokhir and billionaire Zhang Jindong (left to right)
After five years of work at the plant and a new personal savings of the entrepreneur has accumulated the amount of 100 thousand yuan (about $12 thousand according to the then exchange rate), sufficient to open small businesses. Along with his brother Zhang Guiping in December 1990 he founded a company selling air conditioners. The main part of the seed capital was spent on the purchase of premises with total area of 200 sq. m on one of the Central streets of Gulou district. Shortly worked in the shop for ten employees.
In the early 2000-ies of Zhang and his elder brother started to consider investments in growing real estate sector, in the end, Zhang Guiping chose to focus on this market. He now heads the Suning Universal Corporation, which manages hotels, other real estate, but also investing in the film industry. With a fortune of $3.3 billion, according to Forbes, Zhang Guiping now slightly poorer than his younger brother.
Zhang Jindong in numbers
$4 billion — a fortune at the beginning of June 2016
$12 thousand — seed capital Zhang in 1990
$21 billion revenues totaled Suning Commerce in 2015
10% Suning get top managers on the programme of allocation of shares
1.6 thousand operates Suning stores in China
$600 billion — gross sales of online retail in China in 2015
Sources: Forbes, iResearch, Reuters, The Telegraph, details of the companies
The three pillars
In 2009, reporters for the British newspaper the Telegraph took a small interview of Zhang Jindong and his closest associates of the top management of Suning. Admitted as a billionaire, he’s exceptionally lucky with place and time: in any other era, he couldn’t repeat his success. “The same products that we now sell on a large scale, in the 1990-ies was considered a luxury item,” said Zhang, noting a sharp increase in the welfare of the Chinese people as a result of economic reforms.
Nanjing is a subtropical zone with warm and dry winters and hot summers. Despite this, air conditioning in the city by the beginning of 1990-ies were a fairly exclusive phenomenon. The fact that Zhang opened his own shop at the end of December, in the interest of customers affected — the demand for products has allowed Suning to recoup all the costs of running a business.
The second component of success — the dedication of the managers. Vice President of Suning and head of the Shanghai branch of the company Lin Guosheng told The Telegraph that he met Zhang, when his store was able to set a new record: 2 thousand sold of air conditioning during the day. After that Lina was placed in charge of Shanghai, and he vowed “to jump off a bridge if he fails to cover the stores Suning whole region”. After that, for ten years, Lin has never taken a single vacation. In General, according to him, Suning managers sometimes work 20 hours a day.
Finally, the success of Zhang Jindong and contributed to the purposeful actions of the authorities to increase the purchasing power of the Chinese. One of the last of such programs, which began operating in February 2009, was the provision to rural residents in government subsidies for the purchase of major appliances in the amount of 13% of its value. Before that, the government unveiled a plan to stimulate domestic consumption worth $600 billion.
As a result, for the first year of the subsidy programs Suning revenue grew 17%, to 58.3 billion yuan (nearly us $9 billion), and net income increased by a third, to 2.9 billion yuan ($450 million). Over the past six years the revenue of the Corporation increased three-fold.
In July 2004 Zhang Suning Commerce brought to the stock exchange. As reported the English-language China Daily Chinese, Suning rescued from the IPO more than 400 million yuan (or about $50 million at the then exchange rate). In that time, the company operated 80 stores, with proceeds of about $1.5 billion a year. Now the office Suning is more than 1.6 thousand points, the revenue is more than $21 billion annually.
Weaving between trends
During the 1990-ies, using a favorable atmosphere in the consumer market and the enthusiasm of the managers, Zhang Jindong successfully develop their business. Suning opened the first small retail outlets in the neighboring cities of Nanjing, then decided to try a format of hypermarkets of household appliances: goods are sold at low, wholesale prices that attract not only end users, but dealers. Zhang started with a store that implements only conditioned by the time of the IPO, the company engaged in household appliances in General, and now — the whole range of household and consumer goods, from washing powder and canned food to refrigerators and mopeds.
In 2008 severely weakened the main competitor Suning is a chain of supermarkets GOME home appliance. In November 2008, the media reported about the beginning of criminal proceedings against the owner of the company of Juan Guanya, after which the Hong Kong stock exchange suspended trading in shares of GOME (until the end of June 2009). Juan was suspected of stock manipulation, in the end, in may 2010, was found guilty on that charge and was sentenced to 14 years in prison.
The arrest and imprisonment of GuanYu had a negative impact on the position of GOME. At the end of 2009, the company slightly behind Suning revenue: 42.7 billion yuan ($6.5 billion). In 2015 GOME’s revenue was 64.6 billion yuan (about us $10 billion), which is twice below last year’s result, Suning.
Political activity Zhang Jindong is limited to participation in the work of the Committee people’s political consultative Council — a public Advisory body to the Chinese leadership.
Now Zhang faces the objective obstacle is the increasing popularity of online trading in Chinese. In the summer of 2015 he negotiated a deal with one of the leading online retailers — a Chinese Corporation Alibaba billionaire Jack MA. Under the terms, both of the group arrange to issue additional shares, which they sell to each other. Alibaba gets 20% of Suning Commerce for $4.6 billion, and Zhang repurchases of 1.1% stake in Alibaba for $2.3 billion. the Deal was mutually beneficial: the company Zhang will receive serious presence online, and the group Jack MA — well-developed trade infrastructure and logistics.
In January 2016, Chinese antitrust regulators approved the deal, paving the way for its completion. Last week, Suning announced that it has already produced nearly 2 billion of securities designed for sale to Alibaba group.
“Inter” is not the first acquisition for Zhang Jindong of sports clubs. One of his two holding companies — Suning Appliance — with the end of 2015 owns Chinese football team Jiangsu. The club was founded in 1958 and is considered a leading in the same region, getting on the end of the last season of the Chinese super League ninth place.
In the summer of last year to lead “Jiangsu” has been suggested, the former coach of the Moscow “Dynamo” Dan Petrescu. In November, under his leadership, the club managed to win the Cup the Chinese football Confederation and get a ticket to the Asian Champions League. In late December, Suning Appliance entirely bought the club for the 523 million yuan ($81 million), renaming it “Jiangsu Sunen”. mt.sohu.com/20151222/n432148838.shtml
Since January, the new owner began to undertake an active transfer policy. For example, the club bought from Chelsea for £25 million midfielder Ramires, while Shakhtar Donetsk midfielder Alex Teixeira. In early June, three days before the purchase by the concern of Suning Italian “inter” club “Jiangsu Sunen” announced the dismissal of head coach Petrescu. His place was temporarily occupied by the former defender of the team in the 1990-ies tan Jing.