Questions raised over ‘China fever’ development on Mersey

The faded red banners welcoming the “Wirral council leaders” were propped against locked glass

doors just inside the office of Sam Wa Resources Holdings on Tuesday in Jiangyin, a city on the banks

of China’s Yangtze River.

This is the home of the company whose chairman, Stella Shiu, is supposed to be the driving force

behind a large Chinese investment in Britain.

However, there was no indication of a thriving business in the small dusty office, let alone a large

mining and trading conglomerate ready to invest millions of pounds to regenerate the Mersey

riverside.

The Peel Group, a British developer that is proposing a ￡10bn project along the Mersey, signed a

joint venture with Ms Shiu last year to attract tenants to the International Trade Centre, a ￡175m

business development planned as part of the waterfront scheme.

This project is among a series of Chinese investments presented as proof that the British government’

s business-oriented approach to diplomacy is paying off as David Cameron prepares to fly to Beijing this

weekend.

However, a close look at Sam Wa suggests that not all of the deals are equal.

At one end of the spectrum are Chinese state-owned investors such as China General Nuclear Power

Group, which will take a one-third stake in the French utility EDF’s project to build a ￡16bn atomic

power station in Somerset.

These companies are effectively arms of the Chinese state which enjoy access to cheap credit from

state banks and the full backing of the ruling Communist party.

At the other end of the scale are investors such as Ms Shiu, whose partners in other ventures include

an Iranian pomegranate juice exporter and an investment adviser in New Jersey who recently settled

US Securities and Exchange Commission allegations of fraud and violation of securities regulations.

Corporate filings in Hong Kong show that Ms Shiu changed her Chinese name after a 2008 ruling by a

Hong Kong court that declared her bankrupt for failure to pay a loan.

Several companies registered under her former name have been dissolved on the Chinese mainland,

including one in Jiangyin, and the address of Sam Wa’s headquarters in Beijing turns out to be a

closely guarded military hotel that does not allow outsiders to enter.

“There are a lot of governments and companies in the west that are starved of capital, and so when

the promise of Chinese billions comes along they tend to get ‘China fever’. Unfortunately it can

sometimes be fatal,” says James McGregor, chairman for greater China at Apco Worldwide and author

of the book No Ancient Wisdom, No Followers.

“In China you need to do due diligence on investors.”

Peel executives have made frequent trips to China, often with British local government officials in tow,

and Ms Shiu has visited Liverpool many times.

On a visit in October, she helped Lindsey Ashworth, Peel Group development director, to open Peel’s

latest office project. He joked that he picked Ms Shiu as a partner because of her ability to drink him

under the table.

On May 28 2012, Peel signed a joint venture with Ms Shiu at a ceremony in a Beijing hotel, attended

by Lord Green, UK minister of state for trade and investment, and Phil Davies, Wirral council leader.

Peel’s proposed International Trade Centre would be built on desolate former docks on the Wirral

peninsula, near Liverpool, one of the most deprived cities in the UK. Once the second biggest port in

the world, many of the wharves along the Mersey are crumbling.

Demolition of existing buildings on the site has not yet begun. Ms Shiu is supposed to help attract up

to 1,000 companies from across Asia to move into 2.5m?sq?ft of self-contained units where they can

exhibit, sell and distribute goods into the European market.

During his forthcoming China visit, Mr Cameron plans to highlight the Merseyside scheme as an example

of regeneration projects in the UK that are ready to be marketed to Chinese investors.

Council-owned investment agencies in Liverpool and the Wirral have maintained that Ms Shiu is a

“high-ranking member of the Chinese government” who has put ￡25m into the project, echoing

claims made in the local press. Their publicity talks of Chinese government approval and the multibillion

-dollar size of Ms Shiu’s group.

Liverpool Vision said it made the claims in “good faith” while Invest in Wirral declined to comment.

Richard Kemp, leader of the opposition Liberal Democrats on Liverpool city council, said local authorities

should “remove their rose-tinted spectacles. There has been lots of talk and little result.”

The Financial Times was unable to find any evidence that Ms Shiu works for the Chinese government.

Ms Shiu and Peel Group both declined interview requests and did not respond to a list of emailed questions.