Game developer

Chinese game developer miHoYo, creator of Genshin Impact, sues trust company Minmetals in speculative investment case gone wrong

The dispute between Shanghai-based miHoYo and Minmetals International Trust (Mintrust) – a company that provides capital, real estate, movable assets and securities trusts – is expected to offer the latest insight into the country’s murky world. parallel bankwhich attracted so-called new money from wealthy businesses the Internet services and video games, according to the lawyers.

The “business trust dispute” was filed by miHoYo in the Chengzhong District People’s Court in Xining, a city in northwest Qinghai Province where Mintrust is headquartered, according to a June 22 court notice. The initial hearing in this case is scheduled for July 25.

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Although the court opinion did not provide specifics, the wording of the dispute implies that miHoYo may have stepped on a landmine, referring to a default, in the Chinese wealth management market, according to sources. lawyers. Mintrust defaulted on at least 15 fiduciary investment projects totaling 2.3 billion yuan, Guangzhou report says The weekly time earlier this week.

A large poster of the hit action role-playing game Genshin Impact, created by Shanghai-based developer miHoYo, is seen inside Ginza station in Tokyo, Japan, December 3, 2020. Photo: Shutterstock alt =A large poster of the hit action role-playing game Genshin Impact, created by Shanghai-based developer miHoYo, is seen inside Ginza station in Tokyo, Japan, December 3, 2020. Photo : Shutterstock>

Lilith Games, creator of the hit mobile game Rise of Kingdoms and also Shanghai-based, separately sued Mintrust for a business trust dispute, according to another notice issued by the same court.

Trust investment companies like Mintrust usually raise funds from wealthy investors by promising high returns on their investment, which are used in various industrial and real estate projects. The Chinese real estate marketNevertheless, has deteriorated since May last year after policymakers and monetary authorities took steps to cool the speculative fervor that underpinned it.

Shadow banking activities – including wealth and asset management products, entrusted lending, asset-backed securities and small credit – have been estimated at 84.8 trillion yuan ($12.6 trillion) in 2019, according to Chinese regulators. These help fund various real estate projects on the mainland and local government infrastructure programs that have failed to secure sufficient funding from the banking system.

It remains unclear if miHoYo is directly involved in a specific project that defaulted on debt. The hit game developer declined to comment on its lawsuit against Mintrust.

The booth of Chinese video game company miHoYo, creator of the hit game Genshin Impact, is seen inside an exhibition hall in Bangkok, Thailand, October 26, 2019. Photo: Shutterstock alt=The booth from Chinese video game company miHoYo, creator of the hit game Genshin Impact, is seen inside a showroom in Bangkok, Thailand, October 26, 2019. Photo: Shutterstock>

The lawsuits against Mintrust reflect how even the wealthiest companies in the high-tech sector must exercise caution in speculative investments, especially given the high volatility of real estate assets in China.

miHoYo’s decision to invest in fiduciary projects was an unexpected development, lawyers say, as one of the most profitable video game companies was incentivized to invest in a sector where returns are falling and default risks are rising. .

The dispute between miHoYo and Mintrust could highlight how China’s real estate and video game sectors are like “ice and fire”, said lawyer Zhang Shengli of the Yunting law firm in Beijing.

“Video game companies, which make big bucks from hit titles, need money management,” Zhang said.

However, miHoYo does not suffer from money. The company posted a net profit of 18.5 billion yuan last year on total revenue of 32.9 billion yuan, according to Chinese media.

Last November, miHoYo made an eight-figure US dollar investment in Suplay, an online toy retail platform. The game developer and Nio Capital, the capital risk electric car manufacturer arms Nioin February led a 400 million yuan financing in a start-up focused on nuclear fusion Technology.

This marked the first new game approval received by miHoYo since Genshin Impactwhich was published on Microsoftof Windows and PlayStation 4 as well as AppleiOS and Android mobile platforms in September 2020. It became the the largest ever global launch of a Chinese video game.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice on China and Asia for over a century. For more SCMP stories, please explore the SCMP app or visit the SCMP Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.

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