How the Virus Finally Killed a High Roller

HNA was once a symbol of an ascendant China. Then debt—and coronavirus—did it in

- Matthew Campbell, Daniela Wei

As it bought and borrowed its way to becoming one of the country’s most prominent private companies, travel and finance conglomerate HNA Group Co. sought to embody a new brand of Chinese capitalism: aggressive, unafraid of risk, and above all global, with assets and operations on every inhabited continent. Its co-founder and chairman, a devout Buddhist named Chen Feng, styled himself as a sort of Asian Warren Buffett, advocating a “harmonious” management style based on Confucian principles and boasting that HNA would one day be among the world’s 50 largest corporations.

That dream, it turned out, couldn’t withstand problems close to home. On Feb. 29, the government of Hainan, the island province where HNA is based, began taking control of the company, appointing new leaders and assuming management of its debts. The move, the first step in what could be a slow-motion takeover, will see HNA’s remaining assets sold off, according to people familiar with the matter. It paves the way for a humiliating end to one of China’s most remarkable corporate stories, one that saw a little-known conglomerate become the core of an international financial empire, all run from an out-of-the-way resort island in the South China Sea.

The proximate cause of HNA’s downfall is, of course, the new coronavirus outbreak that brought China’s economy to a virtual dead stop, taking an especially heavy toll on travel and tourism. Globally, about 80% of China flights have been halted, and the International Air Transport Association estimates the virus epidemic could cost the industry almost $30 billion in lost revenue.