Huarong deals with China’s loss makers
Restructuring China’s state owned enterprises is an enormous, daunting task, with the disposal of assets of loss-making companies entrusted to four asset management companies of which China Huarong Asset Corporation is the biggest and the first to begin disposals. Huarong’s executive vice-president, Li Xiaopeng, discussed the process with Euromoney’s Chris Cockerill
What is Huarong's mandate?
We basically have three main tasks that were granted to us by the government. First, to help the state owned enterprises work out the difficult situation they are in. Second, to reduce the losses of the non-performing loans and lessen the loss suffered by the government. Finally to help eradicate the risk in the financial sector. Moreover, although the asset management corporation is very much policy oriented, we do have to follow the principles of the international market and international standards.
How successful have you been in your asset disposal and recovery?
We have disposed of Rmb31.1 billion ($3.8 billion) of our assets, and we have collected Rmb19 billion on those. Rmb9.5 billion of that is cash. We haven't published our annual report yet, but we have roughly a 50% recovery rate and 30% cash recovery rate.