Forget royal babies: Chinese firms have been busy choosing new names for themselves in the hope of a brighter future.
Nearly 100 listed companies in mainland China changed their official names last year, mostly along with radical shifts in strategy, and 40 more have done so this year, the Financial Times reported.
The firms are abandoning core businesses and reinventing themselves as tech companies.
Their share prices have rocketed as they substitute gaming for the likes of coal and wood flooring.
Slower economic growth has made industries such as manufacturing and property development less attractive.
Newly minted tech companies have helped propel the Shanghai Composite index up 115 per cent in the last year — even as economy growth decelerated and industrial profits, a gauge of health in the manufacturing sector, fell 2.7 per cent in the first quarter, the report said.
“Companies want to let investors know that they are moving away from their original business and into emerging industries,” it quoted Yao Weiwei, an equity strategist at Huatai Securities in Shanghai, as saying.
“It’s like in the US in the 1990s, when every company started calling itself dotcom.”
Yao acknowledged, however, that most of the name changes are more than merely cosmetic.
Investors expect tech firms to benefit from government policies aimed at reducing the economy’s reliance on smokestack industries and promoting the services sector.
Lossmaking coal miner Shanghai Ace Co. bought an online gaming company in February and changed its name to Shanghai U9 Game Co.
Its stock price has since soared 140 per cent, even though its mining assets still weigh on its balance sheet.
“On the foundation of coal mining and sales, the company’s core business is expanding to include internet gaming,” the firm said in a filing.
Lossmaking Panda Fireworks changed its name to Panda Financial Holding in April as it announced plans to launch a peer-to-peer lending platform.
Word of Panda’s pending transformation appeared to leak out early, however, as its shares suddenly leapt by the maximum 10 per cent for two straight days before trading was suspended on March 9.
Environmental regulations and shrinking demand had led to losses in its fireworks business.
But name changes and strategy overhauls are far from a cure-all for corporate China’s woes.
Cloud Live Technology Group changed its name from Beijing Xiangeqing Group after it decided to shift out of luxury restaurants and into cloud computing.
But last month, Cloud Live became the first Chinese company to default on a bond principal after it failed to repay 402 million yuan (US$64.7 million) in debt, the newspaper said.
The high-end restaurant business has suffered amid the central government’s clampdown on lavish spending by government officials.
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