Business

Chinese private enterprise; communist party seeks greater control

Published

5 years ago

2020/11/22

At a summit with China’s richest entrepreneurs in late 2018 Xi Jinping sought to allay concerns that the state had declared war on the country’s private sector. Although officials in Beijing had spent the previous year bringing to heel unruly tycoons, China’s president insisted that rumours of a forceful push for party influence in the private sector were untrue. He exhorted the business leaders to “take a pill of reassurance”.

The medicine has been hard to swallow. Since then the Communist Party has sought a more active hand in recruitment and business decisions. And after subduing a band of headstrong bosses at overextended financial conglomerates, the state is now taking aim at China’s tech billionaires, making it clear that outspoken critics will not be tolerated.

Mr Xi’s preoccupation has always been maintaining China’s social and financial stability. Keeping big business in check is part of that plan. It should come as no surprise that the state is now homing in on tech, which has expanded rapidly. Six of China’s 20 most valuable listed companies are tech firms and with billions of users they touch the lives and wallets of almost all citizens.

A reckoning for the sector began with what looked like a shot across the bows of China’s largest financial-technology group. The suspension by regulators on November 5th of Ant Financial’s $37bn initial public offering with less than 48 hours’ notice was at first interpreted merely as a warning to its founder, Jack Ma, who had previously criticised China’s state-owned banks. But on November 10th the publication of an extensive draft of new rules for technology groups laid bare the state’s ambitions to bring to heel not just Ant, but the whole of China’s tech industry.

Mr Xi’s relationship with China’s tycoons has always been troubled. When he became president in 2013, he inherited a corporate system replete with fraud, patchy regulation and surging debt. After the success of an anti-corruption campaign that mostly targeted officials, Mr Xi took aim at a group of businessmen who were ploughing huge sums into risky overseas investments. Purchases included SeaWorld, an American amusement-park group, and the Waldorf Astoria, a swish hotel in New York. Officials argued that many of these acquisitions were thinly disguised means to divert capital out of China.

Many of the businessmen who once fancied themselves as a Chinese Warren Buffett are in prison or worse. Wu Xiaohui, the chairman of Anbang, which bought the Waldorf among other assets, was handed an 18-year prison sentence in 2018 for financial crimes. Ye Jianming, who attempted to buy a $9bn stake in Rosneft, a Russian oil producer, was detained in early 2018. His whereabouts is still unknown. Xiao Jianhua, a broker for China’s political elite who once controlled Baoshang Bank, was kidnapped by Chinese agents from his flat at the Four Seasons Hotel in Hong Kong in 2017 and is thought to be co-operating with authorities in the unwinding of his financial conglomerate.

The crackdown has put an abrupt end to a boom in global spending by Chinese firms: in 2016 there were $200bn-worth of overseas mergers and acquisitions, the figure in 2019 was less than a fifth of that. And under government pressure private groups have divested assets worth billions of dollars. hna, an airlines and logistics group that bought a large stake in Deutsche Bank and Hilton Worldwide, a hotel group, has sold assets worth over $20bn in recent years. Anbang Insurance was nationalised, putting the Waldorf under the ownership of China’s Ministry of Finance. Baoshang was taken over by the state and allowed to file for bankruptcy in August. Acquisitions of European football clubs by Chinese groups have all but ended.

Analysts have praised the way in which systemic risks posed by companies such as Anbang and hna appear to have been reduced on Mr Xi’s watch. Within China few dare to criticise him for his failings. Those who have done so have been dealt with severely. Ren Zhiqiang, a senior member of the Communist Party who once ran a state-owned property firm, penned a missive to friends earlier this year in which he referred to Mr Xi as a “naked clown”. He was sentenced to 18 years in prison in September for bribery and embezzlement.

The party has also been increasing its influence over private firms in more subtle ways. Under a strategy referred to as “party building”, firms have been asked to launch party committees, which can opine on whether a corporate decision is in line with government policy. The number of committees in publicly traded but privately controlled companies is still low. According to a survey of 1,378 Chinese listed firms by Plenum, a consultancy, of the 61% that were privately controlled only 11.5% had party-building clauses in their charters compared with 90% of state-owned firms.

Party invitation

Yet the prevalence of such committees looks likely to grow. In September Mr Xi asked for the private sector to “unite around the party”. A day later Ye Qing, vice-chairman of the All-China Federation of Industry and Commerce, a powerful organisation controlled by the Communist Party, issued a more detailed list of demands. He called for private groups to establish human-resources departments led by the party and monitoring units that would allow the party to audit company managers.

This might not affect all firms equally. “For big companies, there’s no negotiation. The party approaches you and you say yes,” says Joe Zhang, a business consultant who has sat on the boards of Chinese private and state corporations. However, he also argues that for most smaller firms, less visible and not as economically important, party cells are little more than a rubber stamp as profits will trump state influence on decision-making. Their influence may not necessarily be unwelcome either. One executive, whose company has a party committee, argues that by growing closer to the thinking of the party leadership, “we can steer the company accordingly”. This heads off potential clashes with the state.

So far there is little evidence to suggest that party committees have hurt profitability, says Huang Tianlei of the Peterson Institute for International Economics, a think-tank. But increased party influence could inhibit some operations. “Innovation may be suppressed. More red tape can emerge. A firm can turn from profit-driven to goal-driven, sacrificing profitability,” says Mr Huang.

It is possible that party committees may soon play a larger role in tech firms. A raft of new regulations presents a more immediate threat. Ant is connected to hundreds of millions of people through its payments and lending platforms. Like other Chinese tech giants it holds precious data on customers as well as controlling a pipeline through which hundreds of billions of dollars are lent and spent. That such power lies in private hands is a source of tension between the party and entrepreneurs.

“These resources need to be tightly controlled and the political loyalty of the firms and entrepreneurs, not only to the regime but also to individual political leaders, needs to be strictly maintained,” says Sun Xin, an academic at King’s College London. “The case of Ant is just one manifestation of this underlying logic.”

The halting of Ant’s ipo was triggered by new draft regulations aimed at online micro lending. For Ant, the rules can only be interpreted as an attack on the firm’s lending platform, its biggest source of revenue. Mr Ma may regret comparing China’s banks to pawnshops in a speech in October. The comments infuriated senior officials and played a part in the hasty suspension of Ant’s ipo. But Mr Ma is not to blame for the latest onslaught of antitrust rules, although he may have sped up their arrival.

vie-ing for influence

The new rules, under consideration for some while, will for the first time explicitly apply monopoly controls on internet and e-commerce firms. For many years China’s antitrust laws have not exempted the groups but they have also not been targeted in monopoly cases. This has allowed a few companies to control large swathes of the digital economy. They also take aim at the structures that have allowed Chinese tech firms to raise capital overseas. Barred from allowing foreign investors to take direct stakes, for two decades virtually all capital-hungry tech groups have skirted the rules by using a “variable-interest entity” (vie) to link foreign cash to the Chinese market. The structure creates an offshore holding company into which foreigners invest. That company has a contractual agreement with an onshore firm to receive the economic benefits of the underlying assets.

The vie structure has long been tolerated by Chinese authorities, but without full legal recognition. Foreigners have virtually no recourse in China to claim rights to the assets they have invested in. Foreign funds have long been wary of the framework but most Chinese tech companies still use it to structure their overseas listings. The new antitrust rules could require companies to seek approval for such arrangements, calling into question whether vies will be permitted in the future and so the way that foreign capital will reach Chinese tech firms. The threat of withdrawing tacit approval for a vie is another way the state can intimidate firms and their owners.

Perhaps the new rules will humble the outspoken Mr Ma. He has not spoken publicly on the matter, but Ant has bent the knee and agreed to embrace the new regulations. Mr Xi has made clear that no company is too big, and no ipo too valuable, to be allowed to challenge the state. (Economist)

All News Advertisement

Business

Flagship Colombo terminal held back by equipment tender failures

Published

11 hours ago

2026/01/25

Thilina Walpola

The Colombo East Container Terminal (CECT), Sri Lanka’s flagship port project under the Sri Lanka Ports Authority (SLPA), remains unable to reach full operational capacity, more than four years after construction began, industry insiders say. Despite near-complete infrastructure and a strategic vision to bolster Sri Lanka’s position as a regional maritime hub, the terminal is paralyzed by a single missing component: straddle carriers, essential machines for moving containers between ships and yard storage.

“The terminal is essentially ready. Quay cranes, yard cranes, automation systems, and supporting infrastructure are all in place. Only straddle carriers are missing, and without them, full-scale operations are impossible,” Tharanga Jayasinghe, President of the Port Finance Divisional Independent Employee Association, told journalists.

Addressing a press conference held in Colombo Jayasinghe said that the delay is not due to employee performance. “SLPA staff have delivered outstanding results at the Jaya Container Terminal and partial operations at CECT. The responsibility to bring CECT fully on track now lies squarely with SLPA management and the authorized decision-makers overseeing this strategic national investment.”

Since 2021, the procurement of straddle carriers has gone through five tender attempts, each canceled or revised, resulting in significant lost time. Early tenders focused on leasing the machines, then on diesel-powered carriers, before SLPA made a strategic shift to hybrid straddle carriers, in line with CECT’s green terminal vision and international shipping standards.

Despite this shift, delays have persisted due to what employees describe as “questionable technical decisions and favoritism toward predetermined bidders.” The third tender round, which allowed both diesel and hybrid options, drew particular criticism. A compliant hybrid bid offering superior lifecycle efficiency was overlooked in favor of a diesel-only supplier, prompting legal action. While the case was pending, SLPA revoked the award and canceled the fourth tender, further prolonging the project.

CECT, a nearly USD 1 billion investment entirely financed by SLPA, represents one of the largest infrastructure projects ever undertaken by a Sri Lankan company. Funded during the economic recession that began in 2021, it is considered a source of national pride. Yet, Jayasinghe warned that this pride is overshadowed by concerns over repeated procedural missteps and apparent favoritism.

The current, fifth tender has raised new alarm. Qualification criteria appear to have been significantly diluted, allowing a previously favored company—reportedly with limited experience—to re-enter the process. For approximately USD 50 million worth of 30 hybrid straddle carriers, bidder experience requirements have been reduced to manufacturing just 15 units over five years, a stark contrast to the standard benchmark of 500 units for equipment of this scale.

According to Jayasinghe, these relaxed criteria risk awarding the contract to an under-experienced supplier, potentially undermining CECT’s operational credibility and discouraging shipping lines from engaging with the terminal. Observers note that one internationally recognized supplier withdrew from the process, citing lack of transparency and perceived bias.

Industry insiders warn that delays at CECT are not merely operational concerns—they also create openings for competing regional ports to capture Sri Lanka’s container traffic. “The demand is ready, but the terminal’s readiness is being held back by indecision and procedural mismanagement,” Jayasinghe said.

SLPA employees, he added, have long safeguarded national port assets from corrupt practices. Their vigilance secured the East Container Terminal (ECT) in 2021, and today they are raising alarms over the CECT tender process. Commercially, SLPA continues to perform well, including a recent Rs. 5 billion transfer to the Government Consolidated Fund. Shipping lines remain eager to engage with CECT, underscoring that the challenge is not demand but readiness.

The unanswered questions are stark: why has a strategic national procurement repeatedly failed, who is promoting inexperienced suppliers, and who will be held accountable? Until these issues are addressed, CECT remains not merely delayed, but denied—its potential, strategic importance, and the trust of the nation hanging in the balance, Jayasinghe added.

by Chaminda Silva ✍️

Business

SOLA Festival Returns: Building a Long-Term Model for Conscious Festival Culture

Published

11 hours ago

2026/01/25

Thilina Walpola

SOLA Festival returns to Sri Lanka’s south coast as an evolving cultural movement, continuing its mission to redefine festivals through community collaboration, sustainability, and conscious design. The festival will take place on the 30th and 31st of January at The Doctor’s House, Madiha.

Developed in close partnership with the local community in Madiha, near The Doctor’s House, where the festival has established its home, the SOLA Festival was conceived as a response to the increasingly extractive nature of tourism, which too often takes more from local communities than it gives back. The festival is guided by the core values of Respect, Inclusion, Sustainability, Creativity, and Collaboration, bringing people together through music, workshops, immersive experiences, and community-led initiatives.

Founded by a collective of designers and event makers from Copenhagen, SOLA aims to become one of the first fully waste-free and circular festivals in Asia and a global role model for sustainable events. Chief festival organisers, designers Susanna and Miranda, whose portfolio includes installations and designs for Copenhagen Fashion Week as well as projects with Collective Fashion Justice, explained that the idea for the festival was inspired by how incredibly warmly they were welcomed into the local community in Sri Lanka and their desire to give back and support that community “We started SOLA to show that festivals can bring joy, creativity, and music while also giving back to the communities and environments that host them,” says Susanna. “SOLA was conceptualized and created with a strong focus on working in harmony with nature and fostering meaningful community connections. Together with ouramazing partners, we want to prove that conscious, community-led events are not only possible, but inspiring, joyful, and sustainable.”

Following its inaugural edition in 2025, SOLA Festival has positioned itself as an annual event in Sri Lanka, growing thoughtfully each year with a long-term vision rather than as a one-off project. The 2025 edition welcomed 800 guests, featured international and local DJs, and hosted five activities and workshops, laying a strong foundation for the festival’s future direction.

This year, the festival is looking to nearly double the number of attendants, and will feature over a dozen DJs from more than five countries including internationally renowned Yung Singh, and local legend DJ Shiyam.

More than a music festival, SOLA is a multidimensional platform for art, learning, sustainability, and connection, and in keeping with this vision, the programme also includes traditional, community centric, creative activities including communal weaving sessions, natural dye workshops, drum circles, beaded fabric jewellery workshops, make-your-own merch sessions and more.

SOLA is being developed within the principles of a circular economy, and the organisers view SOLA as a project to be built and refined over many years, with each edition deepening its impact. As the festival grows, SOLA aims to involve more local and international collaborators, with the goal of becoming an international role model for sustainable events.

Sri Lanka’s long-standing values around craftsmanship, resourcefulness, and care for the earth are central to this vision. The team believes the country has the potential to become a global leader in sustainable tourism.

Community collaboration remains at the heart of the festival’s programming. For the upcoming dition, SOLA is working with a growing network of partners, including ApiHappi, Selyn Fairtrade, Sarana Sri Lanka and Sambol Foundation. The official banking partner for the event is Hatton Nation Bank.

The SOLA team, together with a local school and WeCare will conduct a beach clean-up ahead of the festival. Post the clean-up, the children will participate in a crafting session focusing on recycling and upcycling everyday waste, while learning about plastic and street dogs. Sambol Foundation will host a natural dye workshop before the festival and the fabrics will be used for festival installations. Selyn Fairtrade, House of Lonali and ApiHappi, will contribute fabric that local women will use to make reusable decorations for the event, ensuring the festival avoids purchasing all new materials in the future. Selyn has also taken on producing festival merchandise and running a fabric bead workshop. The festival will open with a traditional Sri Lankan fire ceremony, organised in collaboration with Sarana Sri Lanka. SOLA will also organize a fundraiser in collaboration with WeCare, an organisation dedicated to the wellbeing of local street dogs.

Business

HNB Assurance PLC Recognized Among Sri Lanka’s Best 20 Workplaces for Women 2025

Published

11 hours ago

2026/01/25

Thilina Walpola

HNB Assurance PLC was recognized among Sri Lanka’s Best 20 Workplaces for Women 2025 by Great Place to Work Sri Lanka, for the Company’s long-standing commitment to fostering an empowering workplace for women.

Over the years, HNB Assurance has introduced several progressive initiatives to support women at different life and career stages, including flexible work arrangements, caregiver and maternity support, leadership development programs, and platforms such as in.she, which champions women’s growth both professionally and personally. These efforts have contributed to a workplace where women are not only represented but are actively enabled to succeed.

Commenting on the recognition, the Executive Director / Chief Executive Officer of HNB Assurance PLC, Lasitha Wimalaratne stated, “Being recognized among Sri Lanka’s Best 20 Workplaces for Women is a powerful affirmation of who we are as an organization. At HNB Assurance, inclusion is not an initiative, it is a mindset embedded into how we make decisions and how we care for our people. We firmly believe that when women are empowered, organizations become stronger. This recognition belongs to every woman contributes to our culture every day.”

Navin Rupasinghe, Head of Human Resources / DGM of HNB Assurance PLC stated “This recognition reflects years of intentional effort to build a workplace where women feel heard and inspired to reach their full potential. From flexible policies to leadership pathways and a deeply people-centric culture, we have focused on creating an environment where women can grow without compromise. We are proud of how far we have come and remain committed to continuously raising the bar. Lastly, I’d like to thank Great Place to Work for this recognition as it motivates us to keep evolving our people practices and building a workplace where women can grow.