“Tady jsme doma!” (Here we are home!) was the cry in late May as Slavia Praha announced to the crowds lining the terraces in red-and-white that the Eden Arena, which sits on a busy crossroads in the down-at-heel Vrsovice neighbourhood of the Czech capital, is finally owned by the club.

Illustrating the dubious dealing that almost brought the club to its knees in 2015, no one knows from whom the shiny stadium, opened in 2008, was purchased. However, CEFC – the Chinese owner resurrecting the battered Czech football giant – made sure the whole country knew who it was that bought back the family silver. 

Two weeks later, Slavia was celebrating a first league title since 2009. Since the arrival of CEFC in 2015, when the club sat on the brink of bankruptcy, the revival of this bastion of Czech national independence is a clear signal to the wider public that the Chinese investor is a reliable guardian for the country’s treasures.

“Slavia Prague, together with Skoda car and the animation figure Little Mole, are brand names representing the Czech national spirit,” CEFC said in a statement following the title win.

“Spending tens of millions of euros on saving a sports club was not for profit making,” suggested Chairman Ye Jianming, but an effort to “save a Czech traditional brand, and to show its respect to Czech soccer and culture”.

The mysterious investor, which over the past decade has emerged from obscurity to become the sixth largest private company in China, has shown without doubt that it prefers to let its investments do its talking for it. Encouraged by an effort to attract capital from the east led by President Milos Zeman, CEFC bought a plethora of relatively small assets – including a brewery and several travel sector companies – in a frenzied bout of buying in 2015, with an estimated spend of more than €1bn.

As part of that drive, CEFC bought a 60% stake in Slavia in September 2015 from businessman Ales Rebicek, alongside businessman Jiri Simane, who bought around 40%.  The following November, CEFC raised its holding in the football club to 99.96%. Simane also sold the Chinese a stake in the Travel Service airline.

The energy and banking conglomerate has done little since to discuss the apparent randomness of its purchases with the media. The assumption is that the rescue of Slavia from years of shady owners and dodgy deals is meant to help pave the way to bigger deals.

“It’s a propaganda tool, or a way to establish funding in the Czech Republic,” suggests Jiri Pehe, a well-known political commentator and lapsed Slavia fan. “If CEFC just turned up [to buy major assets] there would be a lot of suspicion. Investing in Slavia to win the league they prove themselves.”

While the terraces at Eden are largely happy with the performances on the pitch and the careful respect for tradition that the Chinese have shown, CEFC is just as shy with Slavia fans, says Ondrej Kreml, an editor at fans’ forum www.slavistickenoviny.cz. “The fans know the Chinese are here to make themselves look good and prove they can build a Czech business, but we never hear from them. Everything comes from Tvrdik.”

Zeman's point man

Former defence minister Jaroslav Tvrdik is viewed as having almost grounded flag carrier CSA during a stint at the controls. However, he is now the point man for the efforts of President Zeman to attract investment as China continues its push into Central and Eastern Europe. A long time Slavia fan, Tvrdik has become chairman of the club, as well as head of CEFC’s local unit, set up as a European HQ.

Such a central role stems from his links to the controversial Zeman. The president is also commonly accompanied on trips to China by oligarchs such as Petr Kellner – the richest Czech, who has a sizeable consumer finance business in China – and closely-held Slovak/Czech group J&T. 

The push from Prague Castle for yuan has caused no little fuss at home. During his campaign, the loose cannon president has found himself at the centre of unsavoury events involving the Dalai Lama or assaults by ethnic Chinese on protesters with Tibetan flags as Chinese President Jinping Xi visited the Czech capital.

A follow up toadying letter signed by several senior Czech political figures provoked a storm of protest, amongst Prague liberals at least. However, the approach is unlikely to change anytime soon; the Chinese plan is at an early stage yet.

CEFC clearly wasn’t drawn to visit the country because it loves beer and football. Banking, and especially energy, have powered the company’s rapid rise, and remain its prime interests. Speculated to be close to the Chinese military or secret services, CEFC is said to be seeking to buy its first refinery at home as part of a drive to to become a second Sinopec.

European service stations and oilfields in Africa and the Middle East have also been snapped up in recent months. In the Central & Eastern European region, the major buy is not in the Czech Republic, but Romania, where CEFC has agreed to buy control of the country’s biggest refinery Petromidia from KazMunaiGas.

In Central Europe, the company continues to try to acquire assets in the financial sector. It could also soon control 24% of the Czech refining sector via J&T Financial Group’s stake in Unipetrol.

Meanwhile, for Beijing the biggest prize is nuclear. Chinese companies are reported to be extremely keen to play a leading role in Czech plans to build €11bn worth of new reactors over the coming decades. CEFC has no nuclear experience, but cynical voices in Czech banking circles claim the name of the company doesn’t matter – if they’re Chinese, then Beijing is the ultimate power in the background.

"We are not here to grab the market and its resources. Instead, we come to make friends and seek mutual benefits and joint development," says Ye Jianming.  The investment in Slavia “not only built credibility for CEFC China, it also gave additional credibility to other Chinese companies operating in the Czech Republic,” the company claims.

“Maybe this will set up a model of market entry,” suggests Pehe. “The Czech Republic is very dependent on foreign investment, and this could be copied.”

Mixed record

However, aside from the title-winning football club – CEFC is very happy with the PR gained, one source inside the club claims – the Chinese are less thrilled with the rest of the investments announced in 2015. Indeed, several are yet to be finalised.

A deal to for CEFC to raise its 9% stake to 50% in J&T Financial Group – one of the biggest investment groups to emerge from the privatisation chaos across the region in the 1990s  –is stuck in the regulatory process. Perhaps most tricky for CEFC is that J&T’s ownership of Slovak banks puts the deal in front of the European Central Bank, which demands full ownership transparency.

However, it’s not just regulators giving the Chinese a headache.

A deal to buy travel portal Invia from a private equity fund featuring Kellner and J&T alumni – including Daniel Kretinsky, owner of closely-held energy holding EPH as well as Slavia’s bitter cross-city rival Sparta Praha – soon unravelled, with CEFC pulling back on the stake it agreed to take.

The Chinese company reportedly performed a similar about turn earlier this year over its purchase of 49% in Empresa media group. Meanwhile, talks on a buyout of at least part of Penta – a group with a very similar profile to J&T – have now lapsed, according to sources involved in the deal, despite having reached the due diligence stage last year.

CEFC is also understood to be struggling with local wheeling and dealing. When the Chinese company handed J&T CZK7.5bn (€286mn) to buy the Florentinum real estate development in Prague earlier this year, a dispute with Tvrdik ended, according to sources, with the Czech unit headed by the Slavia chairman taking control of the asset, rather than the Hong Kong unit the Shanghai-based management had planned.

Tvrdik is not short of ambition. The flamboyant former minister is now using his elevated status at Prague Castle and within the sport to lead a war against Roman Berbr, known as the grey cardinal of Czech football, and his grip on the Czech Football Association, says Michal Petrak, a journalist at isport.cz. Miroslav Pelta, head of the football association, was arrested in May on corruption charges.

Meanwhile, other Chinese investors complain that they are finding deals even harder to come by because Tvrdik has over-ridden the Czech-Chinese Chamber of Commerce, which he also heads.

Murky deals

With the purchase of Slavia and then the Eden stadium, CEFC at least has something in the bag. “It’s understandable that they wanted to get the stadium,” says Jan Machacek, a journalist for broadsheet Lidove Noviny. “That is very valuable real estate.”

“The Chinese had to be very careful to find out who to pay for the stadium,” points out a former press spokesman for Slavia. “It’s never been clear who owns the asset.” Rumours of Caymen Island outfits and mob ties abound. “It was a bit of a miracle that they managed it,” he laughs. “I doubt anyone will ever know who they bought it from.”

However, the lack of transparency and double dealing that has plagued Slavia over recent years remains a bug for the Chinese. Barely had the celebrations over the purchase of Eden finished when it emerged that German construction giant Hochtief, the contractor that built the stadium, launched a lawsuit over an attached plot on which it claims it has held a contract for years. 

Should CEFC tire of the shenanigans, many liberal Czechs would likely welcome its departure. Andrej Babis, the oligarch that appears destined for the PM’s chair at October’s elections, has noted that his ally Zeman’s drive for Chinese investment has largely failed thus far.

There have been no greenfield investments or acquisitions followed by largescale expansion, he has noted. In short, the Chinese are not creating jobs for Czechs. However, that’s a standard model for Chinese investment. When there are jobs to be done, cheaper workers are often imported from home.

But not football players. Slavia is now competing with the big boys of Czech football again for the top players. “The club won the transfer race last season by offering strong – though not crazy – wages,” notes Petrak.

“That’s made the fans happy,” says the former press spokesman, “but we don’t really know who owns us. There’s no plan B. What happens if the Chinese leave?” 

This is part of a series looking at the implications of China's growing interest in Central and Eastern Europe and Eurasia.