Hundreds of billions are flying through the air, which are to flow from Chinese investors to the Czech Republic. One agreement after another is signed. This is what the Chinese-Czech economic courtship promoted by the Castle looked like four years ago. President Miloš Zeman announced at the time that by the end of 2016, China would invest 95 billion crowns in our country and a total of 230 billion crowns within five years. The result is sad and lags behind the bombastic statements, as evidenced by the fate of the Citic Group’s investments.
According to data from the government agency CzechInvest, foreign direct investment from China from 1993 to 2019 reached CZK 11.1 billion. In the years 2016 to 2019, it was the amount of 8.4 billion crowns.
The largest transaction was carried out by the Chinese investment group CEFC, which went bankrupt and its investment was taken over by the state investment colossus Citic. He can hardly be thrilled. However, the group did not comment on the E15’s questions about investments and their evaluation.
The Chinese investor made transactions that just failed. He owns investments, especially in companies operating in the tourism industry, which is getting taken over this year.
On Wednesday, August 26, the Smartwings group, in which Citic has almost a half stake, filed a lawsuit with the court to declare an extraordinary moratorium over coronavirus. The pandemic also adversely affects the Mandarin Oriental and Le Palais Art hotel, which are located in the Citic buildings. However, the problems of the operators will also be felt by the Chinese investor.
At the same time, he disadvantagedly bought a number of companies whose condition was problematic. Citic therefore wants to get rid of one of its overdue investments. The buyer is looking for Pivovary Lobkowicz Group (PLG) according to several sources from the Central European mergers and acquisitions market and the brewing industry.
“The sale of breweries was solved on the market. There was no interest in it, “says one of the sources in the field of mergers and acquisitions, who did not want to be named. According to him, the group’s product portfolio is inappropriately set up and cannot be done on a larger scale. Citic representative Jaroslav Tvrdík stated that breweries are not sold. However, similar statements are common in similar transactions.
However, the Chinese investor has a number of reasons to get rid of the breweries. After the purchase, it turned out that Lobkowicz Breweries are definitely not in ideal condition. “The company contracted a lot of pubs in unfavorable conditions to have volumes,” points out another source, adding that even at a time when other brewing groups were doing well, PLG was still suffering. Due to secrecy of liabilities, falsification of economic results or falsification of signatures of other executives, the Citic group filed, according to the magazine Forbes criminal complaint against former LPG boss Zdeněk Radil.
The engineering company Žďas, which is controlled by the Chinese owner, is also failing. “The company is heavily underinvested. No investments were made there, “says a source from the financial community. According to the latest published results, the company lost over 77 million crowns in 2018.
On the other hand, the Floricinum administrative center, which does not have a problem with space occupancy even during a pandemic, makes the Citic group happy with real estate investments. In Prague, Citic also owns the former seat of Živnostenská banka in the center of Prague.