The Monday Interview

May 27, 2012 3:27 pm

Builder with a global view

As China’s richest shopping mall tycoon strides down the hall in a sharp pinstripe suite, it is hard to imagine him as a teenage soldier who didn’t have enough to eat.

But Wang Jianlin, the founder and chairman of real estate group Dalian Wanda, smiles as he describes the strategies he once used to stave off hunger. “In the early days we really had to scramble to eat,” he says, resting a hand on his silver-coloured tea mug. “The hardship then was unimaginable.” When food was available, he used to half-fill his rice bowl on his first time through the canteen queue so that he could eat it quickly enough to go back for seconds before the food ran out. “That experience helped shape my character, taught me never to give up and never bow your head to hardship,” he says, in a lisping accent that hints at his Sichuan birthplace.

But Mr Wang, China’s sixth-richest man, lives in a very different world now. His $35bn, 50,000-employee business is a household name in China, where its mixed use “Wanda Plaza” developments are found in all major Chinese cities. With company revenues estimated to grow at a rate of at least 30 per cent a year, he is now going global, starting with the $2.6bn purchase last week of AMC Theatres, the second-largest cinema chain in the US. When the deal is completed it will create the world’s largest cinema company by revenues and be the biggest US acquisition ever by a private Chinese company.

Mr Wang himself already has the lifestyle to play the part of global executive, with trips to Paris to buy Lanvin suits, a 33m Sunseeker yacht docked in Shanghai and a private jet. “I was one of the first in China to buy one,” he volunteers.

In the next breath, however, he offers a more humble view of himself. “I am not a person who pursues luxury. I am not like those people who, once they have money, compulsively squander it or show it off,” he says, seeing no contradiction. “Just don’t show off, don’t flaunt your wealth because nowadays China’s wealth gap is relatively big.”

Mr Wang’s focus is to turn Wanda into a multinational corporation within 10 years. To achieve that, the company will be making more acquisitions, focusing on hotels, retail and cinemas. After the purchase of AMC, he estimates that he will control about 10 per cent of the global cinema market, and he hopes to increase that share to 20 per cent by 2020.

But it may be harder to replicate his success outside of his home country. Mr Wang’s rise personifies the heady rush of China’s development over the past three decades – as well as the close ties between business and politics in a country run on “socialism with Chinese characteristics”.

The CV

Born:October 1954 in Sichuan province
Education: Dalian Army College
Career:1970 Joins the army. First posted to Inner Mongolian border.
1986 Posted to work as office director of Dalian Xigang District Government
1988 Joins the Dalian Xigang District Housing Development Co, which later becomes Dalian Wanda
1994 Buys Dalian soccer club. In 2000, sells the club to Dalian Shide Group, saying that he wants to get out of soccer because of regulatory problems and match fixing.
2002 Sets up Dalian Wanda Commercial Property Co.
2005 Begins investing in culture and entertainment. With 730 screens in China, Wanda is the country’s largest cinema chain.
2007 Founds its first department stores and hotel business.
2012 Buys AMC Entertainment, the second-largest cinema chain in the US, for $2.6bn plus $500m in future investment.
Family: married with one son

Mr Wang spent 17 years in the army before leaving in the late 1980s to work in real estate. The first project of which he took charge was one that no one else wanted: a shantytown redevelopment in Dalian, north-east China. His willingness to take on whatever the local government was willing to give made him popular with officials. As one Chinese newspaper put it, “he scratched the place where it itches”. Soon Wanda was the first private company working in several cities, a concept unheard of at the time because of byzantine regulatory restrictions.

Mr Wang says that the company was able to grow because he was constantly finding ways to circumvent those restrictions. For example, in the early 1990s, real estate companies weren’t allowed to operate outside their home cities. So when Wanda wanted to develop a project in the commercial hub of Guangzhou, Mr Wang says he rented a business licence and bank account from a local Guangzhou company to get the job done.

“His luck was to lay down a stake across the country as a brand well before anyone else had a vision,” says Rupert Hoogewerf, founder of the Hurun China Rich List.

His network of relationships built up during his years in the army probably didn’t hurt, either. “Real estate deals a lot with the government,” Mr Wang acknowledges. “It isn’t like manufacturing, logistics, home appliances or the auto sector, which deal with consumers.”

Today, he can pick and choose which officials and projects he deals with: Wanda accepts only about a third of the opportunities proposed by local governments. “We choose officials who really want to develop and who want progress. It is easier for us to reach agreements with this kind of official,” he says.

One of the officials Mr Wang has worked with is Bo Xilai, the deposed Communist party chief of Chongqing, whose dramatic fall from power this year sent shockwaves through China’s highest corridors of power.

After Mr Bo’s downfall, several prominent Dalian businessmen were questioned because of their affiliation with the former leader. Internet rumours claimed, incorrectly, that Mr Wang was among them. Wanda issued a strong denial, and at about the same time the company announced that Mr Wang was receiving an award at the central Chinese leadership compound in Beijing, a rare honour.

“I know Bo Xilai well,” says Mr Wang. “But our relationship was based on our work, we didn’t have a personal relationship.” He declines, however, to speculate at Mr Bo’s present fate. “Almost no one knows what is happening with him, let alone me.”

Although Mr Wang is a Communist party member – and serves in political advisory roles – he has a deep-seated faith in capitalism and playing by the rules. “There are not many companies in China that dare to say in public ‘we don’t offer bribes’, or companies that operate only by market rules,” he says. “But we will say it directly: we rely on market forces for our growth.”

Mr Wang’s main worry is that it is harder to be an entrepreneur in China today than when he started in the chaotic 1980s. “China’s biggest problem is not how fast or slow the economy grows, but the loss of the spirit of entrepreneurship,” he says. “In the late 1980s and early 1990s many officials, military officers and professors went into business to make their fortunes. But now not many people have the courage to do that. The business environment, public opinion, the capital, the system – it’s more and more favourable to big firms.”

He is also critical of Chinese businessmen who have decided to cash in and emigrate. About 60 per cent of the country’s wealthy have begun the process of leaving or are considering doing so, according to a survey of people worth more than Rmb10m ($1.6m) that was conducted last year by the Bank of China and the Hurun Rich List.

“Many successful entrepreneurs, or even small-time entrepreneurs, are emigrating and even selling their companies in order to spend their holidays on some foreign beach. This is a very bad phenomenon,” he says. “When the majority of entrepreneurs no longer have the spirit of struggle, and sell their company to enjoy life, the nation is done for.”

Additional reporting by Gwen Chen

This article has been amended since original publication to reflect the fact that the original stated that Dalian Wanda employed 55,000. In fact, it employs 50,000.

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