‘Capitalist tools in socialist hands’? China Mobile in global financial networks

Abstract

The paper analyses the evolution of China Mobile – one of China's pioneer ‘national champions’, and one of the world's largest telecom companies – through the lens of global financial networks, focusing on the role of advanced business services, financial centres and offshore jurisdictions in economic development. It demonstrates that despite being a domestic company, China Mobile is plugged firmly into the global financial networks, with incorporation in Hong Kong, cross‐listing in Hong Kong and New York, and opaque offshore companies registered in the British Virgin Islands. Global advanced business services firms, with Goldman Sachs in the lead, have been instrumental in the very conception of China Mobile in 1997 and its subsequent expansion, thus helping the Chinese government consolidate and modernise the whole telecom sector. The study highlights the position of Hong Kong as an onshore‐offshore financial centre intermediating between global financial markets and mainland China, and underwriting the reputation of China's ‘national champions’. The analysis also points to the advantages of Beijing over Shanghai as a command centre of state‐owned and controlled enterprises, acting as a magnet for advanced business services. The relevance of global financial networks to China, a latecomer on the stage of financial globalisation, highlights the scope for applying the concept to the rest of the world, and its potential contribution to economic geography.

Going Public and Going Global: Chinese Internet Companies and Global Finance Networks

“…Yu Hong (2017) noted in her study how state interests have come to merge with those of private business and the state-business alliance shapes policy-making process: 'private cyber giants … have gained considerable political influence, have parlayed into a cyber-business-friendly legal and regulatory approach' (1499). In the case of these nine Chinese internet companies, the reformed Party state and transnational corporate capital have converging interests, that FABS and offshore jurisdictions have become the strange bedfellows of the Party and ' capitalist tools in socialist hands' (Wójcik & Camilleri, 2015). The analysis in this paper is limited to these nine companies but for future research, big internet businesses and state-business relations will be important in grasping the power dynamics of the Chinese internet.…”

“…Globalisation and the intensification of competition has unleashed changes across different media sectors, the most unique creation being the 'national champions', which are state-owned enterprises operationalising huge economy of scale through conglomeration, merger and acquisition. The financialisation of national champions, such as Xinhuanet (Xin, 2017) and China Mobile (Wójcik & Camilleri, 2015) exemplifies the pragmatic approach that Chinese government takes to media reform, which is to absorb private capital and western know-how whilst maintaining a firm grip on ownership and political control (Huang, 2007). As Michael Curtin writes: 'the media revolution that has swept across Asia since the 1990s is often characterised as a technologically driven phenomenon.…”

“…In 2016, the U.S Securities and Exchange Commission launched an investigation into Alibaba's accounting practices resulting in its shares plummeting nearly 7 per cent (Swisher, 2016). As Wójcik and Camilleri (2015) state: the ultimate point of an initial public offering is financial, with law and accountancy performing necessary but secondary functions. This means that the engagement of a global financial advanced business service team (FABS) is indispensable in underwriting the IPO process.…”

“…An underwriter's role in a IPO includes assessing a company's value, advising on the issue price, drafting the prospectus and promoting the sale of shares to potential investors. These investment banks will also buy any shares unsold to investors at a predetermined price (Wójcik & Camilleri, 2015). In the underwriting process, investment bankers work and foster close relationships with the top executives of the companies.…”

The nexus of professional service practices in Chinese financial centres

“…The latter is because professional service practices 'related to the worlds of finance and production' have 'become increasingly interdependent' in a way that means they are hard to contain or reduce to practices occurring exclusively within IFCs. This latter argument is in many respects echoed in the extensive economic geographical literature on clusters in its application to IFCs and professional service firms (Keeble & Nachum 2002;Isaksen 2004;Faulconbridge 2007;Wójcik & James 2015). A considerable literature has examined the nature of financial and business service clusters within IFCs but more recently has also sought to problematize the balance between local spillover effects and the translocal connections of finance and business services (e.g.…”