Nihon Keizai Shimbun (Chinese version: Nikkei Chinese website) learned that Bosideng, a large Chinese clothing company listed in Hong Kong, rejected the proposal to implement a third-party share allotment and capital increase to Japan’s Itochu Corporation and CITIC Group (CITIC) at the shareholders’ meeting. Dissatisfied with the reduction in earnings per share, more than half of the existing shareholders opposed the proposal. It is rare for a Chinese company’s capital increase plan to be frustrated by shareholder opposition. Although Bosideng and Itochu said they would continue to explore business cooperation, the rejection of the investment plan also reflects the difficulty of foreign companies investing in Chinese companies.
Nihon Keizai Shimbun (Chinese version: Nikkei Chinese Network) learned that Bosideng’s management held an extraordinary shareholders’ meeting in mid-June to call for the adoption of a capital cooperation proposal, but 69% of “independent shareholders” other than the management expressed opposition, making the proposal final. was rejected. In order to protect the interests of minority shareholders, the listing rules of the Hong Kong Stock Exchange require that when implementing new listings such as third-party allotments and capital increases, the support of independent shareholders other than major shareholders and management must be obtained.
Itochu and CITIC Securities, a subsidiary of CITIC, announced in April 2015 a plan to invest approximately HK$1.55 billion to acquire approximately 14% of Bosideng’s shares. In January 2015, Itochu and Thailand’s largest conglomerate CP Group decided to invest 1.2 trillion yen in CITIC’s subsidiaries in the form of a half investment. The investment in Bosideng was considered to be a specific cooperation plan between Itochu and CITIC Group. the first step in.
Bosideng holds 40% market share in China’s down jacket market. Itochu plans to use Bosideng’s more than 10,000 stores in China to strengthen its overseas brand clothing sales with trademark rights. However, affected by the slowdown in China’s economic development and weather factors, Bosideng’s sales in fiscal year 2014 (as of March 2015) decreased by 24% year-on-year to 6.293 billion yuan, and its net profit decreased by 81% year-on-year to 132 million yuan, which is a sluggish state. .
There is a view that Bosideng’s minority shareholders have a negative attitude toward improving performance through cooperation with Itochu, and therefore vetoed Itochu’s investment plan. Some Japanese securities analysts also believe: “Bosideng’s shareholders do not want to pay stable dividends to foreign companies.”
Itochu is increasing investment in non-resource fields and looks forward to expanding its business in China where purchasing power is increasing. However, the rejection of this investment plan may prompt Itochu to readjust its strategy. This situation will also be considered a new risk for foreign companies when investing in Chinese companies.
In June 2014, New World Development Company, a large Hong Kong chaebol, planned to cancel the listing rights of its listed subsidiary, but was rejected by the opposition of 66% of the company’s independent shareholders.
