equity interests within the Macau operators, ahead of the refreshment process for gaming rights in the city.
Targeting foreign businesses will prove hard, as many such businesses operate in joint ventures with Chinese partners. However, as strategic decisions are not made in Macau, but rather in Beijing; the huge scale of the gaming operations in Macau and the political sensitivities of US businesses being allowed to repatriate very significant amounts of Chinese capital back to the US is a significant geopolitical weapon for the Chinese government to bring to bear.
IS THERE A PRECEDENT? Apple, the 10th largest company in the world by
revenue is permanently involved in lawsuits in China regarding the infringement of intellectual property rights, something that President Trump has reiterated only recently. Every case Apple has brought in a Chinese court has been lost in relation to major copyright claims. Beijing courts rarely judge in favour of foreign firms; Tesla being another company that recently found itself on the wrong side of court judgements. Often, it is small and obscure Chinese firms that argue their products have been infringed upon, in often preposterous
P88 NEWSWIRE / INTERACTIVE / MARKET DATA
circumstances. Market protectionism is rife, with foreign firms being squeezed out of markets in China, reducing the amount of money Chinese citizens can spend on foreign imports.
As junket operators continue to be ‘firmly encouraged’ to reveal their clients’ expenditure to regulators, it is clear that China wants to curtail capital outflows, especially if that money is being transferred into western hands. Gaming analysts talk about ‘Rising economic nationalism,’ as yet another reason why China may eject its western gaming business partners from Macau.
Whether foreign operators will be able to continue in Macau is entirely dependant on the Chinese government, which mean that the cost of a concession becomes prohibitively high, or gaming taxation could be exponentially increased, it is even possible that a deal for Chinese oligarchs to obtain the concessions held by foreign firms has already been decided.
While many anticipate concessionaires will agree to pay a one-time lump sum for a five- year extension by the end of the year, relationships between the US, Macau and
China’s policies and political environments have proven fluid, creating a significant acquisition risk for a potential buyer.
Wynn Macau’s gaming concession is due to expire in 2022 and the Macau government has yet to spell out what the renewal process will look like. And it’s not just Wynn Resorts that’s anxious right now. In March, Wilfred Wong Ying Wai, President and COO of Sands China, said the government’s timetable was not as yet being shared with the operators. Sands China is the Macau unit of US-based casino operator Las Vegas Sands Corp. “I think every one of us [operators] is eagerly waiting for the [Macau] government to announce the details,” said Mr Wong.
Sands has already invested over $13bn in the region since it was the first US company to open a casino in 2002. Sands China’s current rights are due to expire in 2022, as are those of three other operators, while SJM Holdings Ltd and MGM China Holdings Ltd are set to expire in 2020. Mr. Wong noted regarding the gaming rights question: “I believe the government is now working on it. We have been told that the government itself has its own timetable, but they are not telling us exactly when.”
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