Gadfly

Wanda's Home From Hollywood

Wang Jianlin is back where he started, looking for growth in China.
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Frazer Harrison/Getty Images

Months after a failed bid for Dick Clark Productions Inc. and facing scrutiny from Beijing on the financing behind his global buying binge, billionaire Wang Jianlin's Hollywood dreams had an unhappy ending. The sequel back in China might not be too uplifting, either.

The Dick Clark setback in March surprised investors. Wang's Dalian Wanda Group Co. snapped up global theater chains and acquired the smallish studio Legendary Entertainment LLC, even as U.S. legislators complained about the growing Hollywood influence of China's second-richest man. With Beijing now investigating bank borrowings by Wanda and acquisitive compatriots like Fosun International Ltd., the era of cheap domestic money for the tycoons' foreign acquisitions is over. 

For all its overseas assets, Dalian Wanda remains largely a domestic story, albeit a much bigger one than the real estate firm founded in 1988. The group has around $12 billion of overseas investments, according to data compiled by Bloomberg. On Thursday, it reported assets of 882.6 billion yuan ($129.8 billion) as of June 30.

And it's at home that the challenges will mount. Wanda has diversified from real estate: Businesses other than property accounted for 58 percent of revenue in the first six months. But bricks and mortar, the source of its fastest growth, are still key to Wanda's future.

First-half revenue rose 12 percent to 134.9 billion yuan, helped by the surge in Chinese property values. Wang's real estate unit, Dalian Wanda Commercial Properties Co., which delisted from Hong Kong and is planning to go public in Shanghai, was responsible for much of that, with revenue up 14 percent to 73.5 billion yuan.

The entertainment forays, both at home and abroad, grew more slowly. Wanda's "cultural industry" group, which houses AMC Entertainment Holdings Inc. and Legendary, posted a 5.9 percent gain in revenue to 30.8 billion yuan. (Dalian Wanda, which isn't publicly traded, doesn't disclose profits or leverage.)

That outperformance in property shows why Wang's fortunes are tied to keeping Beijing sweet. Housing still forms the bulk of the real-estate operations, even though revenue from shopping malls is growing.  Dalian Wanda remains vulnerable to real-estate cooling measures by the government, which is keen to deflate China's housing bubble.

Beyond real estate, Wang's bets include plans to spend $10 billion on a hospital complex in Chengdu, southwestern China, as well as a sprawling complex in the port city of Qingdao that's billed as the world's largest movie studio.

Boosting domestic operations is smart as China curbs the billionaires' outward urge, but it also means Wang is back where he started: Dependent on Beijing's good graces.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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