If you want to know what the Chinese state is thinking on an issue, forget about pouring through dense analysis of the plenary sessions of the Communist Party of China or the annual meeting of the National People’s Congress – what you really need to do is check out the 3.15 Gala.
The gala is a spectacularly glitzy TV show flighted on China’s state broadcaster every year on March 15. In case you didn’t know, March 15 is World Consumer Rights Day. Although not observed that much in many other countries, it’s a big day in China.
Amid much glittery fanfare the ‘3.15 Gala’ names and shames companies that have (or so the producers/state reckon) violated consumers’ interests.
This year technology companies were the main target.
Companies that made surveillance cameras that enabled retailers to collect and store customers’ facial information and identify their age and gender – as well as the retailers that used them, such as BMW and Max Mara – were tagged.
Web browsers, including one of Alibaba’s, that allegedly displayed ads for dubious or unauthorised healthcare products and hospitals, were also called out.
So too was Tencent’s Mobile Phone Manager Pro, for allegedly illegally collecting user information and pushing scam advertisements.
This should leave us in no doubt that an extremely profitable symbiotic relationship of 20-plus years is currently being overhauled.
To date the Chinese government has not only tolerated the rapid and unwieldy growth of its large tech companies, it has nurtured it – and for good reason.
National champions such as Tencent and Alibaba have helped provide services that would otherwise not have been available to citizens of this rapidly developing country. The most obvious of these are in the financial sector, where the government-controlled mainstream banks provide shockingly poor service. But as the mainly rural economy became a rapidly growing industrial economy, the reach of these tech companies extended into almost all spheres of life.
WeChat is so ubiquitous it’s probably a more pertinent symbol of China than the Great Wall today.
For 20 long years citizens were happy, and fabulously profitable and powerful national champions were created. No doubt it helped that these large players enabled the state to monitor the activities of its citizens. But now, for whatever reason – perhaps President Xi Jinping’s growing confidence in his authority and fears of potential challenges, or just prudence – their unwieldy growth is being reined in.
Of course being reined in doesn’t necessarily mean there won’t still be good growth.
‘Cocooning’ moves by global powers
Onto other world leaders, for those who reckon the rapid spread of Covid-19 was assisted by the extremely highly integrated nature of our global economy, the latest moves by major global trading powers will seem ironic.
First up was the US, which has imposed a ban on the export of vaccines, then a seemingly rudderless European Union announced it was also going to block the export of vaccines and, in the last few days, India has said it is suspending vaccine exports while it prioritises its own citizens.
Evidently globalisation is only good some of the time.
Regulators may be called to rule on Bell
Meanwhile back at the local stock exchange IA Bell, the controlling shareholder of Bell Equipment, looks determined to prove that there are hefty private profits to be made by seemingly chronically mismanaging a listed company.
The earth-moving equipment group, which was founded in the 1950s in the Eastern Cape, is offering shareholders a mere R10 a share as it prepares to delist. That is a fraction of the group’s net asset value (NAV) of R38.
The offer to minority shareholders has been on the cards for several months and follows IA Bell’s purchase of a 31.4% block of shares from US group John Deere. This deal bumped IA Bell’s stake to 70.1% and made it almost inevitable that it would want to get rid of minority shareholders and delist.
Read: Battle at Bell
Some of these shareholders, who years ago were enticed by the group’s assets and profitable tie-up with Deere, have been making IA Bell’s life uncomfortable in recent years with complaints that the group is being poorly managed.
That poor management has seen a steady decline in the Bell share price, and a growing discount to NAV.
The current trading level of around R10 is being supported by the “price payable” to Deere.
It is now down to some minority shareholders to persuade the regulators – the JSE, the Financial Sector Conduct Authority and the Takeover Regulation Panel – that forcing them to choose between accepting R10 a share or staying on in an unlisted company would represent an abuse of minorities.
There’s also the issue of whether or not a mandatory offer should have been made to minorities when the Deere deal was done, given that it confirmed control in IA Bell’s hands.
It would be a travesty if, having enabled poor management for years, the controlling shareholders were now allowed to bank the difference between the share price and underlying net asset value.
When retiring CEOs want to stay on
Is it desirable or even necessary for a long-serving CEO to assume a consultancy role on their eventual retirement?
Last week two companies – Trencor and CSG Holdings – announced that their CEOs were retiring, sort of.
Trencor’s very long-serving CEO Hennie van der Merwe will retire from the board after the company’s AGM in early May, which may or may not be a repeat of the remarkably heated affair it has been in recent years.
Trencor shareholders have been exceptionally strident in their criticism of the management of this former dominant container group. They might not be too excited about the prospect of Van der Merwe now offering his services to the company on a consultancy basis.
Meanwhile over at CSG Holdings, CEO Pieter Dry will be resigning from the board this week, which is the end of the current financial year. Current chief operating officer Kobus Nieuwoudt, who has been with the group since 2007 and COO since 2013, will succeed Dry.
It appears Dry has “agreed to stay on as a consultant to CSG Holdings for a period after his resignation in order to ensure that the last portion of roles and responsibilities are handed over smoothly.…”
So is he leaving or not?
Surely Nieuwoudt has been with the group long enough not to need someone peering over his shoulder?