In light of the anti-extravagance campaign, restaurants catering to officials have taken major losses. To cope, one spicy fish head restaurant chain in Beijing has decided to swap bites for bytes and invest in the tech industry. WSJ reports:
Beijing Xiangeqing Group Co.002306.SZ -2.21% runs a chain of 18 restaurants in mainland China serving high-end food from the Chinese provinces of Hunan and Hebei, which use liberal amounts of chili peppers and garlic. It has long prospered by serving lavish dinners to Chinese government officials on fat expense accounts. But the chain lost 564 million yuan ($90.5 million) last year amid a government push to curb lavish spending by officials.
Now Xiangeqing wants to get into big data and new media. The company said in statement on the Shenzhen stock exchange Sunday night that it will issue up to 3.6 billion yuan ($578 million) worth of new shares in a private placement to pay back bank loans as well as to expand its Internet business.
Earlier this month, the company signed an agreement with the China’s National Academy of Sciences that allowed it to make use of new media, big data and other high tech research resources under the academy’s computing technology arm. The two groups plan to launch a research lab to “carry out technology research and promote the industry,” according to another Xiangeqing statement. The company plans to invest at least one billion yuan over the next three years in its lab venture.
In March, Xiangeqing said it would buy a 51% stake in Beijing CCTV Splendid Film and TV Corp. Ltd. The company already has a controlling stake in Zhongyu Environmental Technology Co. in Jiangsu province.
And they couldn’t have gotten in at a better time with Ali Baba potentially going public in the US and Tencent and Baidu ‘Pacmanning’ up small internet companies to compete.
Still, the move is not an automatic gold mine. Says the company “The understanding of big data, as well as research and usage of it, is still at a nascent stage. A certain amount of investment into research and development is needed. There won’t be benefits in the short term, so investors, please take note of the risk.”
We wonder if purse makers, shark fishermen, and other victims of the anti-graft crackdown will follow suit.
[Image via wired.com]