Chinese firms seek $11.4b in loans to counter virus' impact

Workers at an electronic components factory in Sihong county, Jiangsu province, on Monday. The coronavirus outbreak in China could lead to extended factory closures that will slow manufacturing and weigh on global supply chains.
Workers at an electronic components factory in Sihong county, Jiangsu province, on Monday. The coronavirus outbreak in China could lead to extended factory closures that will slow manufacturing and weigh on global supply chains.PHOTO: EPA-EFE

BEIJING • More than 300 Chinese companies are seeking bank loans totalling at least 57.4 billion yuan (S$11.4 billion) to help to soften the impact of the coronavirus outbreak, two banking sources said.

The Chinese authorities have cordoned off cities, suspended transport links and shuttered facilities where crowds gather. One senior economist said economic growth could slow to 5 per cent or less in the first quarter.

Extended factory closures, meanwhile, will slow manufacturing and weigh on global supply chains.

Among the prospective borrowers are food delivery giant Meituan Dianping, smartphone maker Xiaomi, ride-hailing provider Didi Chuxing Technology, facial recognition start-up Megvii Technology and Internet security business Qihoo 360 Technology, the sources said, adding that the companies seeking loans were either involved in the control of the epidemic or have been hardest hit.

China is fighting to contain the epidemic, which has killed more than 1,000 people and infected more than 43,000 worldwide.

The companies seeking loans in the Chinese capital are likely to get fast-track approvals and preferential interest rates, said the sources, who received copies of two lists of company names sent to Beijing banks by the city government's finance bureau.

The two lists also contained the size of loans sought.

There is no official data showing the total loans Chinese companies are seeking nationwide to weather the outbreak.

"Banks will have the final say on lending decisions," one of the sources said. "The interest rates are likely to be on a par with those offered to banks' top clients."

Xiaomi, the world's fourth-biggest smartphone maker, is seeking 5 billion yuan in loans to produce and sell medical equipment, including masks and thermometers, according to the lists.

Meituan Dianping is seeking 4 billion yuan, partly to help finance free food and deliveries to medical staff in Wuhan, the epicentre of the outbreak in central Hubei province. Privately held Didi Chuxing, which is "severely impacted by the virus outbreak", is seeking 50 million yuan.

Exchange disclosures showed that Xiaomi's third-quarter revenue growth slowed, but gross profit surged 25.2 per cent year on year to 8.2 billion yuan.

Meituan Dianping has been profitable for the past two quarters.

Beijing-based Qihoo 360 is seeking 1 billion yuan to buy medical-related products as well as finance work on apps to track and contain the virus.

Facial recognition start-up Megvii applied for 100 million yuan to develop technology, including means to improve the accuracy of identifying masked individuals in crowds, according to one of the lists.

Megvii declined to confirm the loan or the loan application.

Megvii said it is working to optimise the artificial intelligence-enabled body temperature screening product it launched last week to help fight the virus, by spotting and locating people in a crowd who have elevated temperatures, even if they are wearing masks. Megvii does not verify the personal identities of people wearing masks.

Megvii has sought to raise funds through an initial public offering in Hong Kong, but its efforts were delayed after its inclusion on a United States trade blacklist over alleged involvement in human rights violations linked to Beijing's clampdown on Uighurs in the Xinjiang region. The company has said it "strongly objected" to the US move.

Meituan Dianping, Didi and Xiaomi declined to comment. Qihoo 360 did not comment.

The finance bureau previously said that businesses seeking financial support could ask for its help.

Companies on the bureau's lists also include vegetable market operators, ambulance manufacturers, environmental protection firms and other businesses key to maintaining food supplies and supporting efforts to contain the outbreak. But it was not immediately clear if all of them are credit-worthy.

REUTERS

A version of this article appeared in the print edition of The Straits Times on February 12, 2020, with the headline 'Chinese firms seek $11.4b in loans to counter virus' impact'. Print Edition | Subscribe