Date
23 January 2017
Children's tricycles and computers are among the core products of Guangdong Qunxing Toys, which has just announced plans to buy a nuclear power equipment maker. Photo: Guangdong Qunxing Toys
Children's tricycles and computers are among the core products of Guangdong Qunxing Toys, which has just announced plans to buy a nuclear power equipment maker. Photo: Guangdong Qunxing Toys

Can you trust a nuclear power equipment maker run by a toy firm?

Chinese firms seem to have no fear entering a new field in which they have no experience or expertise whatsoever, as long as it looks like a promising, lucrative sector.

Over the years, we have heard news like a frozen meat company diversifying into property, a textile firm into solar power, and an LED product maker into online advertising.

More recently, a bio-tech firm decided to invest in digital marketing, a very hot sector in the mainland these days.

But the move by Guangdong Qunxing Toys Joint-stock Co. Ltd. (002575.CN) to acquire a nuclear power equipment maker trumps them all.

The toy firm said Tuesday it will purchase Sichuan-based nuclear power equipment maker Sanzhou for 1.6 billion yuan (US$240 million), Reuters reported.

Qunxing will place new shares worth over 810 million yuan to eight investors to fund the transaction, the China Securities Journal reported.

Sanzhou is said to have 15 years of experience and has all the proper manufacturing licenses.

Nevertheless, it is still mind-boggling how on Earth a toy company can manage a nuclear power equipment maker, obviously not a category of product that can be toyed with.

The rash investment style of Chinese companies has led to very mixed results. There are some successes, but there appear to be a lot more resounding failures.

Nuclear power is a key sector China wants to push in the area of advanced technology exports.

We can only hope the government does a proper job monitoring companies in the sector.

In the meantime, foreign buyers may want to triple-check the background of their suppliers before signing any deals.

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FL

EJ Insight writer

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