Victor Shih

HNA was the last in a row of Chinese conglomerates, losing support from their most important financial backers. In the slipstream details emerged about the hidden ownership structure behind HNA. But most of these ownership relations remain opaque says political analyst Victor Shih to Fortune.


Yet HNA has not chosen previously to open its books on the group’s ownership structure. That left others to discern that high-level political connections have allowed HNA to borrow freely and expand rapidly, at a time when others have faced hurdles doing so.

“A company cannot obtain lines of credit without either being a state-owned enterprise or high-level connections with the political elites,” says Victor Shih, associate professor of political economy at the University of California at San Diego. “There are hundreds of Chinese companies trying to borrow billions overseas, and only a few obtain these large lines of credit.”

Also under increasing scrutiny is HNA’s debt load to state-owned Chinese banks. In December, for example, it bought Ingram Micro for $6 billion—in cash—in a deal partly financed by the Agricultural Bank of China, China Construction Bank, Bank of China, and others, according to information given earlier this month to Fortune. In the minds of some, HNA—a privately held company—is increasingly tied to China’s government, through its heavy debt…

Untangling fine details over HNA’s ownership structure is highly difficult, say analysts, who caution that much of the details are inaccessible, through a web of different companies. “The [Chinese] elites are very practiced at using dozens of shell companies to conceal ownership,” says Shih.

More in Fortune.
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