There is a Chinese proverb: “A single wrong move loses the entire game.”
This saying aptly describes the situation of Zhang Jindong and his son Zhang Kangyang from Suning.
Recently, Zhang Kangyang, the younger Zhang from Suning, has drawn widespread attention. However, this is not good news. The Inter Milan Football Club, which he worked hard to build, is bidding him farewell. Due to the failure to timely pay a debt of nearly 400 million euros to Oaktree Capital, Inter Milan has changed ownership, causing a great uproar.
This blow came unexpectedly, and Zhang Jindong never thought that the one to bring him down would be his own son. In 2020, Suning celebrated its 30th anniversary with a revenue of 252.296 billion yuan. Despite a net loss of 4.274 billion yuan, Zhang Jindong’s wealth still stood at 102 billion yuan, ranking him 102nd on the “2020 Hurun Global Rich List.” However, in the following years, Suning fell into difficulties, evaporating over 90 billion yuan in wealth and being pursued by creditors worldwide. Now, Inter Milan is also lost.
Zhang Jindong and Zhang Kangyang have replaced Wang Jianlin and Wang Sicong as the “most unfortunate father and son in China’s business world in 2024.”
Facing immense financial pressure, increasing competition, and market volatility, what does the future hold for Suning?
In the business world, strategy and planning often determine the rise and fall of enterprises. Jia Yueting, founder of Faraday Future (FF), showcased his influence and maneuvering in the capital market through a series of financial operations. By leveraging Zhou Hongyi’s “flow diversion” operations and the concept of a “China-US automotive bridge,” he successfully captured investor attention, causing FF’s stock price to skyrocket briefly, temporarily averting the crisis of delisting.
However, this rapid increase in stock price did not last long. As the stock price continued to decline, investors found themselves trapped once again. Jia Yueting’s strategy of “repeatedly drawing big pictures” achieved some short-term effects, but whether it can bring substantial change and success to FF in the long run remains to be seen.
Compared to Jia Yueting’s capital games, the situation of Zhang Jindong and Zhang Kangyang of Suning appears more severe. Through a series of maneuvers, they ultimately became ensnared, leading to a continuous loss of family wealth. The connection between Zhang Jindong and Jia Yueting was revealed through Xu Jiayin, the founder of Evergrande, as the middleman. In 2018, influenced by Jia Yueting, Xu Jiayin invested heavily in FF through Evergrande Health, not only providing financial support to Jia Yueting but also becoming a creditor of FF.
Jia Yueting, despite his company not producing a single car, has around 3 billion dollars in debt. Facing this predicament, Jia Yueting came up with a clever solution: he first got divorced, transferred his valuable assets, and then applied for personal bankruptcy reorganization. This strategy utilized loopholes in American law, transforming his original creditors into shareholders, thereby resolving his debt issues while continuing to raise funds in the U.S. stock market.
As for Xu Jiayin, was he really fooled by Jia Yueting? It’s hard to say. The money Xu Jiayin gave to Jia Yueting might not even have been his own. In 2017, Evergrande Real Estate conducted a significant capital increase and attracted a large amount of investment, including 20 billion yuan from Zhang Jindong of Suning.
Soon after, photos of Xu Jiayin and Zhang Jindong drinking together appeared online, with both appearing very happy. Media analysts suggested that their cooperation was beneficial for Suning, as it could reduce costs and utilize Suning’s various capabilities to assist Evergrande.
But the problem arose: the 20 billion yuan Zhang Jindong invested in Xu Jiayin was then invested in Jia Yueting. In this way, Zhang Jindong seemed to become the “sucker” in this capital game.
It was like a meticulously arranged game of chess, with everyone playing for their own interests.
This so-called “divine layout” actually refers to a series of strategic adjustments and capital operations by Zhang Jindong in the internet e-commerce era. These moves showcased his foresight and determination but also exposed some risks and challenges in Suning’s transformation process.
First, Zhang Jindong recognized the limitations of the offline market and began to actively embrace the internet, hoping to expand Suning’s business through online channels. This decision helped Suning capture some of the internet boom but also plunged it into fierce competition with e-commerce giants like JD.com.
In 2012, while Jack Ma of Alibaba was busy preparing for the company’s IPO, a price war between JD.com and Suning intensified. Both sides desperately lowered prices to attract more consumers. This price war lasted three years, eventually ending with the intervention of regulatory authorities.
The price war increased Liu Qiangdong’s visibility and brought more attention and support to JD.com in the capital market, but for Suning, it was a severe test. Zhang Jindong realized that to break through in the e-commerce field, new partners were needed—like Jack Ma.
In 2015, Jack Ma decided to invest 28.3 billion yuan in Suning, undoubtedly giving Zhang Jindong more confidence. With Alibaba’s support, Zhang Jindong began a series of strategic adjustments dubbed by the outside world as the “divine layout.”
These included:
– Increasing investment in internet technology to enhance Suning’s online operations.
– Integrating online and offline resources to create an omnichannel retail model.
– Expanding into new business areas such as logistics and finance to enhance the company’s competitiveness.
– Strengthening cooperation with internet giants like Alibaba to jointly explore new market opportunities.
However, these strategies were not without risks. During the transformation, Suning faced many challenges, such as balancing online and offline business, effectively controlling costs, and maintaining a leading position in the fierce market competition.
Moreover, some of Zhang Jindong’s investment decisions, like investing in Evergrande Real Estate, also posed potential risks for Suning. These risk factors hung over Suning like the Sword of Damocles, ready to unleash a storm at any moment.
His business empire was not limited to this. He continuously expanded into sectors like department stores, insurance, funds, cultural tourism, maternity and baby care, sports, e-sports, and hotels.
Compared to Suning’s traditional appliance business, these diversified business areas seemed somewhat unrelated. This diversification, although it broadened Suning’s business scope to some extent, also increased Suning’s debt burden and strained its cash flow. Some viewed this strategy as threading the needle for Suning’s future financial crisis.
Among these, the sports sector was particularly noteworthy. In 2015, Zhang Jindong brought his son Zhang Kangyang back to China to join Suning, starting his learning journey in the president’s office. After getting acquainted with Suning’s various businesses, Zhang Kangyang developed a keen interest in the sports sector. As a supportive father, Zhang Jindong handed over the sports business to Zhang Kangyang, hoping he could lead Suning’s venture into the sports field.
In 2016, Suning Sports made a significant breakthrough in the overseas market by acquiring a 68.55% stake in Inter Milan for 270 million euros, becoming its major shareholder. This move drew significant global media attention, earning Zhang Kangyang the title of “China’s most handsome second-generation rich,” enhancing Suning’s brand image and international influence.
At that time, Inter Milan’s financial situation was not optimistic, but Zhang Kangyang was confident in the club’s future. Instead of selling players to balance the finances, he used his funds to fill the financial gap. Reporting to his father, Zhang Kangyang claimed to have improved Inter Milan’s situation and believed the club could achieve profitability in the future.
The extent of Zhang Jindong’s trust in his son Zhang Kangyang is unknown, but his relationship with his old friend Xu Jiayin has been tested by Evergrande’s financial crisis.
Meanwhile, Zhang Jindong invested heavily in Suning’s diversification, involving sectors like department stores, insurance, funds, cultural tourism, maternity and baby care, sports, e-sports, and hotels. These businesses demanded substantial funds, increasing Suning’s financial burden and affecting its cash flow. By 2021, facing a severe financial crisis, Zhang Jindong had to resign as chairman, with Suning recording a staggering loss of 43.3 billion yuan for the year, and its stock being marked as “ST,” indicating a delisting risk.
Amid this financial turmoil, Zhang Kangyang’s position was also precarious. While his father grappled with Suning’s various business challenges, Zhang Kangyang was reported to have borrowed 250 million dollars from China Construction Bank through his wholly-owned subsidiary Great Matrix Limited in Hong Kong, with the specific use of these funds still a mystery.
When the loan was due, Zhang Kangyang denied acknowledging this debt, claiming that the loan agreement might be invalid and the signature forged. This statement shocked China Construction Bank, which immediately took action, inviting experts to verify the authenticity of the signature. The verification confirmed the signature’s authenticity, prompting China Construction Bank to sue Zhang Kangyang in Hong Kong court.
On the stage of business and law, dramatic events unfolded one after another.
Zhang Kangyang, son of Suning’s founder Zhang Jindong, found himself in the spotlight. Facing the debt collection from China Construction Bank, he chose to head to the U.S., with the bank following suit by filing a lawsuit there.
In the U.S., Jia Yueting was busy attracting investment for his electric vehicle company FF (Faraday Future), claiming the FF 91 Futurist was a car integrated with cutting-edge technology. Although there might be no direct link between Jia Yueting and young Zhang, in this intricate capital game, Zhang Jindong might have some indirect connection with FF.
In the U.S., Zhang Kangyang encountered Oaktree Capital, a company specializing in distressed asset investments. He borrowed 275 million dollars from Oaktree Capital, which he used for global travel expenses. As an investor, Oaktree Capital imposed stringent requirements on this transaction, with Inter Milan Football Club used as collateral and Zhang Kangyang required to pay 12% annual interest on the loan. If Inter Milan were sold during the loan period for over 800 million dollars, 20% of the excess would go to Oaktree Capital. Faced with these conditions, Zhang Kangyang seemed to hesitate little and swiftly took the funds.
As time went by, Zhang Kangyang seemed to forget about the debt to Oaktree Capital, focusing more on two things: rapidly acquiring funds and improving Inter Milan’s operating structure to generate revenue. In the 2022-2023 season, Inter Milan’s revenue reached 425 million euros, indicating improving financial conditions for the club.
Zhang Kangyang, despite achieving some results in Inter Milan’s management, saw the club incur an 80 million euro loss. His investments and management strategies for the club did not bring the anticipated profits. Instead, his financial maneuvers led to the loss of control over Inter Milan to Oaktree Capital.
Zhang Kangyang’s actions not only failed to help his father but also accelerated the depletion of the family’s wealth. In 2024, the title of “China’s most unfortunate father and son in business,” previously held by Wang Jianlin and Wang Sicong, was now taken by Zhang Jindong and Zhang Kangyang. Despite facing financial crises, Wang Jianlin, with good connections and Wanda Group’s financing capability, managed to overcome difficulties.
Zhang Jindong’s Suning empire was once glorious, but over time, a series of complex investments and business decisions led to significant financial pressure. Even so, Zhang Jindong’s wealth surged before Suning’s collapse; the “2020 Hurun Global Rich List” showed his wealth at 102 billion yuan, ranking him 102nd. However, as Suning’s financial problems erupted, his wealth plummeted, evaporating over 90 billion yuan.
In comparison, Zhang Jindong and Zhang Kangyang’s situation appeared more dire. By the end of 2023, Zhang Jindong still had nearly 9 billion yuan in wealth. If Zhang Kangyang’s investments in Inter Milan were included, their assets should suffice to repay the loan from China Construction Bank.
Given this financial status, outsiders naturally wonder: Will young Zhang repay the debt? The answer to this question might be known only to Zhang Kangyang himself.