Chinese Home Appliance Retailer 'Suning' Faces Liquidity Crisis Rumors

Request for Investigation into Suning over Internet Rumors of Difficulty in Corporate Bond Repayment
Significant Drop in Suning Corporate Bond Prices Last Month Indicates Abnormal Signs

[Asia Economy Beijing=Special Correspondent Jo Young-shin] Rumors are circulating that Suning, a major online and offline retail company in China, is facing a liquidity crisis.

According to Chinese media such as Caijing on the 9th, Suning stated in a Weibo (China's version of Twitter) announcement the day before, "We are paying attention to rumors spreading on the internet that are not true," and "Our company has reported to the relevant authorities and requested an investigation into the source of the rumors."

On the Chinese internet, rumors have rapidly spread that Suning is having great difficulty repaying maturing corporate bonds and has already failed to repay loans from Bohai Bank on time, which the company has directly denied.

However, with recent chain defaults even among large state-owned enterprises directly owned by local governments, the market is focusing on Suning's management difficulties. Reflecting market concerns, Suning's corporate bond prices have sharply declined since last November.

Due to the COVID-19 pandemic, Chinese consumers rapidly shifted to online-centered consumption, and unlike Alibaba or JD.com, Suning's financial condition has reportedly worsened because of its relatively high dependence on offline stores.

In fact, its sales in the third quarter of this year were 62.438 billion yuan, a 4.58% decrease compared to the same period last year. Net profit plunged 92.69% to 714 million yuan.

Recently, Bloomberg reported that Suning is considering selling its e-commerce business for $6 billion amid management difficulties.

Suning started as an electronics retailer with many dealerships across China and achieved great success. It has now grown into a representative comprehensive retail company in China, covering both online and offline channels.

In China, concerns are growing that the crisis of marginal companies, which had been deferred, will intensify as the Chinese government's economic stimulus measures to overcome COVID-19 gradually weaken.

In fact, large state-owned enterprises that had received AAA credit ratings until recently, such as Huachen Group, BMW's joint venture partner in China, Yongcheng Coal and Electricity, a mining company in Henan Province, and Tsinghua Unigroup, a promising semiconductor company, have declared defaults after failing to repay maturing corporate bonds.

According to market information provider Wind, the scale of corporate bond defaults in China is expected to exceed last year's level (184 cases, 149.4 billion yuan) by the end of this year.

This content was produced with the assistance of AI translation services.