Share on facebook
Share on twitter
Share on telegram
Share on whatsapp
Share on linkedin
Share on print
Share on email

Risk Watch: China Merchant Bank in Trouble for Selling $154 Million Asset Management Product

◎ China Merchant Bank is a commercial bank headquartered in Shenzhen.

In the first week of 2018, a 1 billion yuan (about $154 million) asset management product that China Merchant Bank was selling was revealed to have failed to make a September 2017 payment deadline to investors.

China Merchant Bank is a commercial bank headquartered in Shenzhen.

The backdrop:
1. The asset management product, “hongyiyiqi,” was launched on May 17, 2013. Total pooled funds at the time were about 1.04 billion yuan, and the funds were deposited in the product holder’s personal China Merchant Bank account. The product holder’s investments totaled 840 million, or about 80.71 percent of the fund.

2. Of the six projects “Hongyiyiqi” invested in, three failed to issue returns. The unsuccessful projects are Rongzhong Small Loans (Erqi), Zhonglian Heavy Machine Co. Ltd., and Shanghai Yufeng.

Shanghai Yufeng, a flooring company, was included in the court’s list of dishonest persons subject to enforcement. Market watchers say that funds invested in Shanghai Yufeng have no prospects of being recovered.

The “Hongyiyiqi” fund issued a statement to the media which notes that the asset management product is in the process of recovering its investments in the three companies that failed to issue returns. The fund added that it is not breaching its conduct by not meeting its September 2017 payment deadline to investors due to a one-year liquidation period.

3. When selling the “Hongyiyiqi” fund to potential investors, the sales manager of China Merchant Bank’s Beijing branch claimed that the fund had invested in three projects guaranteed by Lenovo and would deliver 11-13 percent return on investment. The sales manager even showed potential investors a Lenovo guarantee document but told them that they couldn’t make copies of it. When questioned, China Merchant Bank’s headquarters denied having Lenovo’s guarantee for the “Hongyiyiqi” fund.

Why it matters: Several cases of financial malpractice have been exposed while the Xi Jinping administration is in the process of cleaning up China’s financial sector, an indication that the sector is facing dire risks.

“Your publication insights tremendously help us complete our regular analysis on in-depth issues of major importance. ”
Ms. Nicoleta Buracinschi, Embassy of Romania to the People’s Republic of China
"I’m a very happy, satisfied subscriber to your service and all the deep information it provides to increase our understanding. SinoInsider is profoundly helping to alter the public landscape when it comes to the PRC."
James Newman, Former U.S. Navy cryptologist
“Prof. Ming’s information about the Sino-U.S. trade war is invaluable for us in Taiwan’s technology industry. Our company basically acted on Prof. Ming’s predictions and enlarged our scale and enriched our product lines. That allowed us to deal capably with larger orders from China in 2019. ”
Mr. Chiu, Realtek R&D Center
“I am following China’s growing involvement in the Middle East, seeking to gain a better understanding of China itself and the impact of domestic constraints on its foreign policy. I have found SinoInsider quite helpful in expanding my knowledge and enriching my understanding of the issues at stake.”
Ehud Yaari, Lafer International Fellow, The Washington Institute
“SinoInsider’s research on the CCP examines every detail in great depth and is a very valuable reference. Foreign researchers will find SinoInsider’s research helpful in understanding what is really going on with the CCP and China. ”
Baterdene, Researcher, The National Institute for Security Studies (Mongolian)
“The forecasts of Prof. Chu-cheng Ming and the SinoInsider team are an invaluable resource in guiding our news reporting direction and anticipating the next moves of the Chinese and Hong Kong governments.”
Chan Miu-ling, Radio Television Hong Kong China Team Deputy Leader
“SinoInsider always publishes interesting and provocative work on Chinese elite politics. It is very worthwhile to follow the work of SinoInsider to get their take on factional struggles in particular.”
Lee Jones, Reader in International Politics, Queen Mary University of London
“[SinoInsider has] been very useful in my class on American foreign policy because it contradicts the widely accepted argument that the U.S. should work cooperatively with China. And the whole point of the course is to expose students to conflicting approaches to contemporary major problems.”
Roy Licklider, Adjunct Professor of Political Science, Columbia University
“As a China-based journalist, SinoInsider is to me a very reliable source of information to understand deeply how the CCP works and learn more about the factional struggle and challenges that Xi Jinping may face. ”
Sebastien Ricci, AFP correspondent for China & Mongolia
“SinoInsider offers an interesting perspective on the Sino-U.S. trade war and North Korea. Their predictions are often accurate, which is definitely very helpful.”
Sebastien Ricci, AFP correspondent for China & Mongolia
“I have found SinoInsider to provide much greater depth and breadth of coverage with regard to developments in China. The subtlety of the descriptions of China's policy/political processes is absent from traditional media channels.”
John Lipsky, Peter G. Peterson Distinguished Scholar, Kissinger Center for Global Affairs
“My teaching at Cambridge and policy analysis for the UK audience have been informed by insights from your analyzes. ”
Dr Kun-Chin Lin, University Lecturer in Politics,
Deputy Director of the Centre for Geopolitics, Cambridge University
" SinoInsider's in-depth and nuanced analysis of Party dynamics is an excellent template to train future Sinologists with a clear understanding that what happens in the Party matters."
Stephen Nagy, Senior Associate Professor, International Christian University
“ I find Sinoinsider particularly helpful in instructing students about the complexities of Chinese politics and what elite competition means for the future of the US-China relationship.”
Howard Sanborn, Professor, Virginia Military Institute
“SinoInsider has been one of my most useful (and enjoyable) resources”
James Newman, Former U.S. Navy cryptologist
“Professor Ming and his team’s analyses of current affairs are very far-sighted and directionally accurate. In the present media environment where it is harder to distinguish between real and fake information, SinoInsider’s professional perspectives are much needed to make sense of a perilous and unpredictable world. ”
Liu Cheng-chuan, Professor Emeritus, National Chiayi University