Are the Czechs alarmed by China's buying power?
From media companies to hotels and football clubs, the Chinese have gone on a shopping spree in the Czech Republic over the past few years. Hong Kong commentator Chip Tsao notes that the Czech Republic was the first European country to fall in love with China, allowing the latter to acquire large stakes in Czech entities. But now, it seems that the love affair is not so rosy any more. The recent visit of Senate Speaker Miloš Vystrčil to Taiwan is just one chink in the relationship's armour.
The recent visit by a Czech delegation led by Senate Speaker Miloš Vystrčil to Taiwan is the first signal of a rebuilding of ties between Europe and Taiwan.
Chinese Foreign Minister Wang Yi warned that the Czech Republic had "crossed the line", and that it would "pay a heavy price". This lofty tone is like a referee warning players on a pitch, or a teacher warning students in class, and has sparked ire in Europe, including Germany.
Why is the Czech Republic the first to dare to clash with China? This did not happen overnight. It is because China's longtime political acquisition in the Czech Republic is making Czech politicians uncomfortable.
Following the dissolution of the Eastern Europe bloc, the Czech Republic's first president Václav Havel was strongly anti-Communist. He was friendly with the Dalai Lama, and was not on good terms with China. The next president Václav Klaus was pragmatic, and took a business-first approach to China. Current president Miloš Zeman is the most pro-China - business profits come first.
Current Czech President amenable to Chinese investments
And the problem lies with Zeman.
In April this year, China's CITIC Group became the majority shareholder in the Czech Republic's largest broadcasting company Medea, making it a major base for China's "publicity" in Europe.
Currently, 19 European clubs are owned by Chinese companies or China-funded individual shareholders, including six in England and one in the Czech Republic.
Czech tycoon Petr Kellner has also spoken up for China, building up a network of politicians, journalists, and academics for China's positive publicity.
Over the past five years, China capital has flowed into the world's football clubs. Currently, 19 European clubs are owned by Chinese companies or China-funded individual shareholders, including six in England and one in the Czech Republic.
China has acquired Slavia Prague, a Czech football powerhouse. In 2010, the team was running at a loss, and owed about 112 million Czech koruna (approx. US$5 million) in debt to its former owner ENIC Sports Limited. To pay off the debt, it had to sell players. Even after former Minister of Transport Aleš Řebíček bought up 98% of the club's shares, operations were still not smooth.
At the start of 2013, Řebíček sought new buyers, and was in discussions with the chairman of Russian football club CSKA Moscow, but the talks fell through.
In September 2015, CEFC China Energy bought 60% of the shares in the club for about 10 million koruna, then 99.9% of the shares in November 2016.
But with Chinese funds going towards purchasing football clubs throughout Europe, why is CEFC so enamoured with the Czech Republic in particular?
Because of a news report on 4 September 2015 on CCTV of Xi Jinping's meeting with Zeman and his delegation, during which Zeman announced his hope that both countries would ramp up cooperation in areas such as finance and technology.
In 2015 alone, Tvrdík visited China 23 times - twice a month on average - as an "economic adviser". Under Tvrdík's introduction, 39-year-old CEFC chairman Ye Jianming also became an honorary economic adviser to Zeman.
History of close ties between Chinese companies and Czech government
Within that same month, former Czech Defence Minister Jaroslav Tvrdík was leading the effort to help CEFC to buy a football club. Apart from being president of the Czech China Chamber of Cooperation, Tvrdík was also the adviser to the Prime Minister on China affairs and held an unofficial title as special representative of the president of the Czech Republic.
One can imagine that the capable 48-year-old Tvrdík had become the Kissinger of Europe.
In 2015 alone, Tvrdík visited China 23 times - twice a month on average - as an "economic adviser". Under Tvrdík's introduction, 39-year-old CEFC chairman Ye Jianming also became an honorary economic adviser to Zeman. From then on, Ye and Tvrdík were close partners, seeking investment projects for CEFC all over Europe.
Prague media reported that CEFC's investments in the Czech Republic totalled about 6.1 billion RMB, with jobs created for about 4,000 Czechs.
Through the efforts of these two heavyweights, President Zeman led the Czech Republic in active participation in China's Belt and Road Initiative (BRI), while CEFC acquired first 10%, then 49% of the shares in the Czech Republic's second-largest airline company Travel Service.
In 2016, CEFC bought shares in Czech television channel TV Barrandov, then acquired 30% of the shares in Medea Group, as well as 49% of the shares in Empresa Media, the Czech Republic's third-largest media group. That same year, CEFC bought over 50% of the shares in the Czech Republic's biggest travel website, and acquired two five-star hotels in Prague - the Mandarin Oriental and Le Palais Art Hotel - as well as steel company ZDAS. And at the end of that year, Prague media reported that CEFC's investments in the Czech Republic totalled about 6.1 billion RMB, with jobs created for about 4,000 Czechs. But one wonders: when it comes to online services, such as airline companies, travel websites, and hotels, would there be data privacy for customers?
From buying a football club and leveraging on football, CEFC has indeed gained a lot in five short years.
After Patrick Ho (head of an NGO funded by CEFC) was jailed for 36 months for bribing top officials of Chad and Uganda in exchange for business advantages for CEFC, Ye Jianming, chairman of CEFC, disappeared in mainland China and the company went low-key. But the Czech government's "un-fussiness" is making Europe uneasy.
Not such a rosy partnership after all
In any case, the situation backfired. After joy came misery for the Czech Republic, as the pandemic hit Europe. In March this year, the Czech police raided the warehouse of Czech-Chinese businessman Zhou Lingjian and confiscated 680,000 face masks and 28,000 ventilators. These medical supplies included some boxes bearing the flags of China and Italy; investigations showed they were supplies from the Red Cross in Qingtian county, Zhejiang province, to be sent to Italy.
Reports said that Zhou imported these medical supplies, and did not sell them at regular prices to the Czech government, but released them to a Czech company, which tried to sell them to the Czech health ministry at several times the normal price.
As for the boxes with the flags, Zhou's spokesperson said they were aid supplies meant for Italy from Qingtian, and were probably stolen. Italian media la Repubblica accused the Czech authorities of detaining these masks and other supplies through methods used against illegal vendors.
Zhou is a prominent and influential member of the Chinese community in the Czech Republic, being the president of an European association for Chinese youths, and president of a Qingtian hometown association in the Czech Republic; he also runs the Prague Chinese Times. And when Zeman visited China, Zhou was part of the group.
Good Czech-China relations can make Chinese intermediaries rich, and is a template for unlimited opportunities for the BRI in Europe. But the Czech Senate has objected to the President's actions, and requested a visit to Taiwan, only to get a warning from China, the Czech Republic's hidden "big boss". The previous Senate speaker did not take notice, and died of a heart attack the next day. His successor led a delegation, resulting in today's rupture.
The Czech Republic was China's first and most ardent "lover", but the falling out has also been the most intense. Now that both countries know each other better, is money the root of all the discord?
This article was first published in Chinese on CUP media as "捷中恩怨，細說十年".
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