Dalian Wanda, the Chinese conglomerate that owns the AMC movie theater chain and nurtures Hollywood ambitions, has sometimes turned to the secretive business network of a politically connected Chinese billionaire in times of need.
Now both Wanda and that billionaire, Xiao Jianhua, are under official pressure in China — and one Wanda insider says that may not be a coincidence.
Mr. Xiao was escorted out of a Hong Kong hotel in January in the middle of the night in a wheelchair by unidentified men. He is now believed to be across the border in mainland China helping the authorities with investigations into the financial industry. His legal status is unclear: China’s government has not made any announcement about whether he is in custody.
Half a year after Mr. Xiao’s disappearance, Wanda is selling off large portions of its empire of malls, hotels and amusement parks, as big Chinese companies are under increasing pressure from regulators to shed debt.
Chinese authorities have not discussed Mr. Xiao’s situation publicly. But Tony Saich, a professor at the Kennedy School of Government at Harvard University and a director of Wanda’s AMC Entertainment arm, said Mr. Xiao’s work with the authorities and Wanda’s problems might be connected.
“I think virtually all these things that are unfolding now are possibly related to Xiao’s trip across the border,” Mr. Saich said.
Mr. Saich has played host to Wanda’s chairman, Wang Jianlin, at Harvard and knows Mr. Xiao because of his donations to the university.
Mr. Saich said that Mr. Xiao might be laying out for government regulators the complex and interlocking web of debts and shareholding ties among many companies that could pose a danger to China’s financial stability. In the months ahead of an important Communist Party meeting this autumn, the Chinese leadership — led by Xi Jinping, China’s president — has placed an even bigger emphasis on stability, leaving an impression that the government is tightening its grip.
“My sense is this has gone up the system to Xi and they are just staggered by what is going on,” Mr. Saich added.
Neither Wanda nor Mr. Xiao has ever publicly discussed whether they have a relationship. But a review of documents indicates that business associates of Mr. Xiao were involved both in the process leading up to Wanda’s 2014 initial public offering in Hong Kong and its privatization less than two years later, according to numerous corporate filings in China and Hong Kong.
It is not clear whether Wanda actively sought his help or whether Mr. Xiao’s connections in the Chinese business world are so extensive that they could be difficult to avoid. Mr. Xiao, 45, did not respond to a request for comment. A spokesman for Wanda would not comment when asked about ties between Mr. Xiao and the company.
Wanda is one of a number of companies in China that have come to be known as gray rhinos: politically connected private companies that have invested billions of dollars abroad and borrowed heavily from Chinese banks. Wanda, with its substantial debts and extensive financial ties to the families of China’s Communist Party elite, is the prototypical gray rhino.
Wanda involvement with companies connected with Mr. Xiao goes back more than eight years.
A business partner of Mr. Xiao, Yang Hongwei, held a senior position at an investment firm that helped oversee a Wanda private share sale in 2009. That deal brought in politically powerful investors, including the older sister of Mr. Xi, Qi Qiaoqiao, and her husband, Deng Jiagui, as shareholders in Dalian Wanda Commercial Properties, Chinese corporate records show. That Wanda unit, the company’s flagship, owns shopping malls across China.
Mr. Yang at the time ran the China operations of the investment banking arm of China Construction Bank, a huge state-run lender, and that investment bank was itself once one of Wanda’s biggest shareholders.
Mr. Yang also had extensive ties with Mr. Xiao. The two founded an internet company in 2000, then Mr. Yang went on to run another technology company that counted one of the companies in Mr. Xiao’s fleet as a top investor.
Mr. Yang, Mr. Xiao and Mr. Xi’s family had other business connections, corporate records show. While Mr. Yang was at China Construction Bank’s investment bank, it formed a joint venture with Ms. Qi and Mr. Deng to make China investments. In 2013, after a Bloomberg News report showed the wealth accumulated by Mr. Xi’s family, the company co-founded by Mr. Xiao and Mr. Yang bought the joint venture stake owned by Mr. Xi’s relatives.
In a statement to The New York Times in June 2014, a spokeswoman for Mr. Xiao said the purchase was done to help the couple exit their investments following Mr. Xi’s elevation to the top leadership post. The sale was done “for the family,” the spokeswoman said. Mr. Yang, 54, didn’t respond to a request for comment.
Wanda later took the commercial properties business public, in 2014. Then, when Wanda took it private again less than two years later in a $4.4 billion deal, a business connected to Mr. Xiao played a crucial role.
One firm that helped Wanda finance the buyout was an investment vehicle controlled by a partnership called Pohua JT Capital Partners, according to corporate records in Hong Kong. Those records show the partnership shared management with a similarly named firm called JT Capital Management. JT Capital Management has recently been the source of fundsfor a scholarship program at the Harvard Kennedy School of Government sponsored by the Tomorrow Foundation, the charitable arm of Mr. Xiao’s main holding company, the Tomorrow Group.
Patrick McKiernan, a spokesman for Harvard, said in an email that JT Capital’s donation in 2014 went to support programs at the Kennedy School, including the Tomorrow Foundation Fellows. The Wall Street Journal previously reported on the connection between JT Capital Management and Pohua JT Capital Partners. Li Haifeng, a director at Pohua JT Capital in Hong Kong, didn’t respond to an email and fax seeking comment.
Until recently, the office next door to the one used by JT Capital Management in New York was occupied by the United States office of another Chinese company.