Xinjiang Guanghui Industry Investment Group Co., Ltd. () is a major automotive sales, energy, mining, and real estate company based in the city of Ürümqi in the Xinjiang Autonomous Region of China. It was founded in 1989 by Sun Guangxin as a privately owned restaurant, nightclub, and recreational sports company, but entered the real estate development business in 1993. This subsidiary, Xinjiang Guanghui Real Estate Development, became the largest private real estate owner in Ürümqi.
Xinjiang Guanghui Industry went public in 2000. It now has numerous subsidiaries. The most prominent of these is Guanghui Energy, which engages in oil and natural gas exploration and development, the importation of natural gas and liquified natural gas, coal mining, and coal gasification. Other subsidiaries include China Grand Automotive, now China's largest automotive dealership, and Guanghui Industrial Co., a construction stone provider.
Overview Xinjiang Guanghui Industry is a conglomerate which, as of 2021, was engaged in five major businesses: The liquefaction of natural gas; the importation of liquified natural gas (LNG), coal gasification, coal mining, and oil and gas exploration and development. Its major products included coal, coal tar, LNG, methanol, and petroleum. Guanghui Energy was the first large-scale land-based LNG production supplier in China.
Xinjiang Guanghui Industry generated more than $29 billion in revenue in 2020, and employed more than 108,000 people.
Company founder Sun Guangxin had an estimated worth of about $2.1 billion in 2021.
Corporate history Foundation, early ventures The company was founded on 2 May 1989, under the name Ürümqi Guanghui Industry and Trade Company by Sun Guangxin, a former captain in the People's Liberation Army who had left military service a year before. Initially, Sun opened a restaurant that served fresh seafood imported daily from the coast. Historian James A. Millward says that sources vary as to where he got the funds for his business. Not only was fresh seafood a novelty in Ürümqi, it was favored by government and business elites. Sun began making extensive connections in government, the Chinese Communist Party (CCP), and oil and banking industry executives. He opened a series of entertainment venues in Ürümqi, including the city's first bowling alley, discothèque, karaoke bar, and swimming pool. As his business interests grew, Sun employed many former army officers in key positions.
During the collapse of the Soviet Union, the company began importing oil drilling equipment from Russia and selling it to state-owned firms in China.
Guanghui's first subsidiary was the Xinjiang Guanghui Real Estate Development Company, established in February 1993. A year later, the Guanghui Industrial Co. subsidiary was founded to process raw stone for the construction industry. It was a joint venture with a Hong Kong firm, which gave Guanghui Industrial significant tax breaks. Sun Guangxin was accused (but not convicted) of paying bribes in 1993. Afterward, he more strongly cultivated his ties with the local and regional Communist Party. He founded a branch of the local Communist Party within Guanghui and convinced the local party secretary to run it. The move shocked many in the party, and national CCP officials almost expelled the secretary. The effort paid off: In 1995, Sun was given an "Outstanding Chinese Young People" award.
In the 1990s, Guanghui rapidly expanded its real estate redevelopment portfolio. Using his close connections with the local CCP and local government officials, Sun began obtaining permission to purchase shuttered factories, many of them on some of the best sites in the city. These included the May First Lumber Factory, October Tractor Factory, Tianshan Shoe Factory, Xinjiang Cooking Utensils Factory, and Xinjiang Specialised Automobile Factory. Financing the purchases with unsecured loans from banks and by mortgaging its own assets, Guanghui razed the properties it acquired and began building apartments and office towers on them. The Xinjiang Specialised Automobile Factory became the "Garden of Shining Stars" 30-building luxury apartment complex, while the October Tractor Factory became the "Red October Garden" luxury apartments. Guanghui constructed Zhong Tian Plaza (at the time of its completion, the tallest building in northwest China) and the Holiday Inn Express Ürümqi Station. The city government allowed the company to tear down its multi-story office building and build a skyscraper on the site; in return, the company built a new 20-story Ürümqi Government Office Building at no cost to the city. By 2021, Guanghui had control of 60 percent of the city's real estate.
Entry into the automotive field In 1999, Guanghui won permission from the Chinese national government to build a factory to manufacture luxury passenger automobiles, and to establish a chain of automobile dealerships. The new subsidiary was named China Grand Automotive Services, and headquartered in Shanghai. China Grand Automotive also leased passenger cars, provided repair and maintenance services, and allowed its automobiles to be sold on a commission basis by others. The American private equity investment firm, TPG Inc., made three investments in China Grand Automotive from 2007 to 2010, building a 40 percent stake in the subsidiary.
The capital infusion allowed China Grand Automotive to establish an automotive insurance brokerage, automobile financing service, car rental service, and online pre-owned vehicle auction site. The firm also purchased automotive dealerships in Anhui, Gansu, Hebei, Ningxia, and Shandong provinces as well as the city of Chongqing, and began selling Buick, Toyota, and Volkswagen automobiles. By 2014, China Grand Automotive was the largest passenger vehicle dealership in China, with 494 outlets. It was also the country's largest vehicle finance provider, and the largest pre-owned vehicle seller. TPG sold its stake in China Grand Automotive in December 2014 for $700 million to a group of Chinese investors.
Xinjiang Guanghui Industry Investment Group went public in 2000, and its stock was listed on the Shanghai Stock Exchange. It made two more stock offerings by the end of 2003.
Entry into the energy field Guanghui had been interested in the energy development field almost since its inception, and in 1994 the parent company adopted the name Guanghui Energy.
About 2002, Guanghui won permission from the Chinese government to market natural gas. Guanghui became the first private Chinese company to enter the energy development and distribution field, as Chinese law had previously prohibited private companies from doing so. The impetus for the company's move came after the Chinese government decided to build a natural gas pipeline from Shanghai to Xinjiang. Sun proposed that his new subsidiary, Guanghui Energy, collect natural gas in Xinjiang Province's northern oil fields and pipe it into the southern part of the province. The powerful national State Development Planning Commission and the state-owned oil company developing the pipeline, PetroChina, were both initially opposed to the idea. Sun convinced them that his marketing scheme would not compete with the pipeline. He also pledged to share his profits with the provinces through which the pipeline ran. Eager to collect taxes from Guanghui Energy, Xinjiang Province delegated deputy governor Airkin Iminbaqee acted as a lobbyist for Sun. The provincial government also waived rent for any public land the project used. The provincial government also informally pledged security for the scheme and helped negotiate natural gas contracts with customers in cities like Tianjin and Wuhan.
Guanghui Energy became the first entity in China to move natural gas in large quantities via truck. The first deliveries occurred in 2003, some trucks shipping gas as much as . The company signed a 15-year contract to collect natural gas from the Turpan-Hami oil fields, where it had previously been flared. With technical assistance from Tractebel Gas Engineering and Linde Engineering, a new subsidiary, Xinjiang Guanghui Liquefied Natural Gas Development Co. Ltd., built a liquefied natural gas (LNG) plant near the city of Turpan in Shanshan County. It went online in 2004, and was capable of making per year. The trucks delivered the LNG to satellite facilities or vehicle refueling stations, where it was revaporized. The satellite facilities then delivered some natural gas via pipeline to consumers or industry. Although ENN Xinao Gas began distributing natural gas by truck as well after 1993 and many roads and highways in China were unable to carry such heavily loaded vehicles, the truck distribution system proved viable. By 2019, Guanghui had scaled back its trucking business, and only delivered LNG to southern provinces during peak season.
Expansion in the energy field On 9 September 2005, Guanghui Energy purchased a 49 percent stake in Turkmengas State Gas Company (TMG), an oil exploration and production company based in Kazakhstan. The $300 million investment allowed TMG to develop the Zaysan block in eastern Kazakhstan.
In anticipation of production, Guanhui Energy in March 2006 accepted an investment worth up to $300 million from Newbridge Capital. The money went to build a second LNG facility, this one in or Jimunai County. capable of producing up to per year. Although PetroChina made a verbal commitment to supply natural gas to the facility, Guanghui Energy failed to secure a supply. Newbridge sold its 24.99 percent stake in the LNG plant to Guanghui for $45.96 million in July 2007.
Guanghui Energy attempted to find this supply in Kazakhstan. In June 2009, the company received permission from the Chinese and Kazakh governments to build a cross-border pipeline to transmit natural gas from Kazakhstan to China. The pipeline, which engineers said would deliver of gas daily, would deliver natural gas from Kazakhstan's Zayan block to Guanghui's idle LNG plant. This was followed in September 2009 by Guanghui's purchase of a 49 percent stake (worth $40.52 million) in Tarbagatay Munay (TBM), a Kazakh company with oil and gas exploration and development rights in the Zaysan block. Guanghui also obtained 50 percent of TBM's management rights. This made Guanghu the first Chinese company to obtain oil and gas resources abroad.
The cross-border pipeline project stalled, however, as it lacked an oil import license.
Anticipating approval, however, Guanghui Energy purchased for $200 million a 51 percent stake in the South Imashevsky block in Kazakhstan.
In July 2012, after the Chinese government enacted new policies to encourage private investment in monopoly industries, Guanghui Energy applied for a crude oil import license. Approval to import natural gas was given in October 2012. The long pipeline was already complete on both sides of the border, and Guanghui said connecting the two sections at the border would take about a month. It became the first privately owned cross-border pipeline into China. The pipeline began delivering natural gas in June 2013, becoming the first export of natural gas to China.
In June 2013, Guanghui signed a nonbinding letter of intent with Royal Dutch Shell to jointly develop an LNG import terminal at the coastal city of Qidong in Jiangsu province. Phase one of the project was the construction of a per year (tpy) storage and transit plant. Phase two included a 1.5 million tpy LNG import facility, and phased three a 3.5 million tpy import terminal. Shell backed out of the project in 2015, agreeing only to provide LNG to the terminal. Guanghui Energy went forward with the terminal anyway, building a berth and two storage tanks by June 2017, and one storage tank by December 2018. The reconfigured phase two added two storage tanks, a second berth, and a transshipment berth. Reconfigured phase three, intended to begin construction in 2022, included two storage tanks.