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| A Wanda Group movie theater in Harbin, Heilongjiang province. The group operates 69 Wanda Plazas, 38 five-star hotels, 57 department stores, 6,000 cinema screens and 63 karaoke outlets. (Photo/China Daily) |
After building dozens of five-star hotels, cinemas and department stores, China's second-richest man has decided to increase his conglomerate's presence in the UK with a project that will transform London's skyline.
At a news conference in one of his own five-star hotels in Beijing last week, Wang Jianlin, founder and chairman of Dalian Wanda Group, announced the acquisition of British yacht maker Sunseeker and the plan to build a 200 meter-high luxury hotel at London's South Bank in a 1 billion pound ($1.54 billion) investment.
The company said it will acquire about a 92 percent stake in the Dorset-based Sunseeker for 320 million pounds and will spend 720 million pounds to build a five-star hotel, which it said will be the "first Chinese luxury hotel overseas".
Wang said the UK investment plan is a major step in Wanda's international expansion, following the company's $2.6 billion acquisition of AMC Entertainment Holdings, a move that created the world's largest cinema owner.
"The overseas operations are expected to have a major say in our group's overall turnover by 2020," said Wang, whose corporation in 2012 reported revenue of 142 billion yuan ($23 billion) and paid the most tax of all private companies in China.
The property tycoon, who is ranked 128th on the 2013 Forbes Billionaires List with net wealth of $8.6 billion, chose June 19, a date which is written 619 in numerals, to hold the news conference, which was a lavish event hosted by two bilingual professional anchors and featured sequin-clad dancers and British singers.
"Six is traditionally associated with smoothness in China; nine has the same pronunciation as the Chinese word for ‘long'. By announcing the deals on this lucky date, we hope our company can smooth its future development and live for a very, very long time," Wang said.
Moving fast
Asked why Wanda was interested in buying a yacht company, he said his company, which also has resort and tourism businesses, plans to build three yacht clubs in coastal cities in China, each of which would require at least 10 yachts to operate.
"Rather than buy 30 yachts, it is more worthwhile to buy a yacht company," he said. The Wanda group, which operates 69 Wanda Plazas, 38 five-star hotels, 57 department stores, 6,000 cinema screens and 63 karaoke outlets, and has several resorts under construction, bought a rocket-shaped Sunseeker Predator 108 Special Edition, which was featured in a James Bond movie, in 2010.
As well as the UK deals, Wang also announced plans to build more high-end hotels in about 10 major cities around the world in the next 10 years. The next one, in New York, is expected to be announced in September.
"Chinese luxury hotels are mostly developed by foreign companies," Wang said. "Why can't Chinese developers do the same in other countries?" He said Wanda will take a "steady approach" to its overseas expansion, while in China it is expected to open 16 hotels this year alone.
Wang is renowned in China's real estate sector for the speed at which his projects are completed. Lan Hongbo, standing vice-director of Wuhan's investment promotion bureau, said that local governments in China are very keen to attract investment from Wanda Group, not only because their commercial projects, such as shopping malls and cinemas, stimulate consumption, but also because the company "moves fast".
Wanda Group has developed six plazas in Wuhan, Hubei province. The construction of the 1,500 meter-long Han Street, a commercial complex in the city's central culture district, took only eight months.
A man, who worked for one of Wanda's contractors on its plaza in Xi'an, Shaanxi province, said the workers built one floor every three days.
"Wanda set up a very tight schedule for the construction," said the man, who did not want to be named. "But if you manage to finish before deadline you get a big bonus."
In the case of the London hotel project, it took Wanda Group three months from becoming aware of the site, to doing the due diligence and buying the site from Green Property Ventures, a property development and investment company operating in core commercial sectors in Ireland and the UK.
Stephen Vemon, chairman of Green Property Ventures, who sold the site of the future Wanda Hotel London, said for such a large transaction the group was the best client his company had ever had.
"We found them very good to deal with. They were straightforward and they asked only the right questions," said Vemon, who refused to reveal the size of the deal with Wanda. He said his company approached Wanda in early March about the site because it was "much too big" for Green Property Ventures itself.
Wanda's luxury hotel, which will be the highest residential building in London and will feature a rooftop swimming pool, will be built in the city's Nine Elms regeneration site, which will also be home to new US and Dutch embassies.
"We've seen a surging number of Chinese companies investing in the UK," said Sebastian Wood, British ambassador to China. "As many as 500 Chinese companies operate in the UK. But in terms of their investment scale and future plans, Wanda Group is absolutely standing at the top."
Vemon said it makes sense for most international developers entering a new market to develop large projects.
"If you are building a long way from your home, it is going to take you a lot of resources to develop a project, whether it is big or small. It is more worthwhile to make it larger," he said.
Money does not seem to be a big problem for Wanda. Wang said that half the investment in the UK will come from his own company, the other half from banks. Though he did not reveal the details, senior executives from the Industrial and Commercial Bank of China, the Export-Import Bank of China and HSBC took part in Wanda's news conference last week.
However, whether Wanda can continue its success outside China is open to question. Liu Hui, chief consultant specializing in real estate with the Beijing Uni-Retail Business and Management Co Ltd, said that Chinese commercial real estate companies will not be ready for such expansion for about five to 10 years.
"The commercial property market in China is still in its infancy, compared with the market in the US and Europe," he said. "Buying a piece of land overseas cannot be interpreted as global expansion. It may be just a good investment."
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