China Center for International Economic Exchanges

Wei Jianguo: It is now the best time for China’s real estate industry to go abroad
Date:Feb 01,2018    Source:CCIEE

Wei Jianguo: I have been thinking about a question: what kind of opportunity will the Belt and Road initiative bring for China’s real estate business? Some people say that China’s real estate companies has not even done well domestically, how could they expand their business overseas successfully? I don’t agree with this kind of view and I will use ten minutes to explain my viewpoint.

The following five reasons will explain why is it now the best time for China’s real estate business to go abroad.

My first point is that there is a need for Chinese real estate business to go abroad. Everyone says that the Belt and Road initiative is China’s third reform and opening up. In the first reform and opening up, comrade Deng Xiaoping established the special economic zone in Shenzhen and hence opened up a window through which China can understand the world and also give the world an opportunity to know more about China. The second reform and opening up is China’s accession to the WTO, which allows China to export its products worldwide and turned China into the world’s factory. The third reform and opening up is the launching of the Belt and Road initiative, which will be one of our long-term directions and plans for the next 50 to 100 years. So what is the difference between the three rounds of reform and opening-up?

First of all, the first two rounds can be summarized as the inflow of foreign capital, technology, personnel and equipment. This time however, a large amount of China’s capital, equipment, rules, personnel and management will flow abroad. Secondly, both of the previous two rounds are about economy and trade, which means many factories were set up to conduct processing trade and then export goods to other countries. The belt and road initiative is not just about economy and trade but covers a wide range of areas, including Waller culture, science and technology, tourism, agriculture, and infrastructure. Last but not least, we have nurtured a large number of entrepreneurs in the past 30 years of reform and opening up and it is now a good time for China to further strengthen itself in all respects. In order to achieve that goal, all of us here today must know that what do we need now. The first thing we need is strategy, especially a global strategy. The second need is the requirement of the Belt and Road initiative. I have spent 20 years in Africa and I have presided over the China-Africa Cooperation Forum and the China-Latin America Cooperation Forum. I would like to tell you two stories.

How the local people in Africa welcomed us when we went abroad. Firstly, we built 12,000 houses for the local people and they were really grateful for our help. Many of them cried because their ancestors have no house or very simple house to live. We built 12,000 houses for them and thus, they appreciated China for making their dreams become true. This is our role.

Another example is the project we conducted in Cambodia. I introduced the project to an entrepreneur, Zhou Haijiang of the Hongdou Group in Jiangsu, China. That was the first time he engaged in the real estate industry there and now, all 90,000 workers in Cambodia live in the houses built by us. In Ghana, a private company from Shandong province built many houses for Ghanaian soldiers. The third is the need of the local government. For example, China’s railway companies completed a railway projects worth of 900 million US dollars. Nigeria’s population has increased from 130 million to 190 million and this figure is still increasing rapidly. When I was meeting with the Vice President and ministers of Nigeria, the Vice Presidents asked me if the Chinese enterprises can help them to renovate the old houses? The capital of Nigeria is already full and they have moved to the new capital, but they still have a severe shortage of housing. Also, Venezuela has a large area of land waiting for development. I think that all these represent a great opportunity for China’s real estate companies to expand their business overseas. The last need is the need of the belt and road initiative. For example, the Maasai Mara National Reserve of Kenya is very popular among tourists but unfortunately there were very few hotels there, and Chinese companies built many hotels there and now all the international photographers and wildlife lovers can easily find a place to stay.

Therefore, I think that there are many opportunities for Chinese real estate companies to expand their business to Africa, Asia, Latin America and other developing countries. I have told many famous entrepreneurs like Feng Lun, Guo Guangchang, and Wang Shi that we don’t have to conduct many M&A overseas, instead we should seize the opportunities in the third world. Nonetheless, I would like to make two suggestions to those real estate enterprises who would like to expand their business abroad. First, we should prevent a sudden large outflow of Chinese real estate enterprises to those areas to avoid too much unnecessary competition among Chinese companies. Second, we must have the proper guidance to prevent various risks when expanding business abroad. We should take a gradual working approach. Now that Africa has a population of 1.4 billion, the population in Indonesia and Latin America is also increasing, plus the 65 countries and 93 port cities along the Belt and Road region, there are plenty of opportunities for Chinese real estate business to go abroad.

Finally, I would like end my speech by citing the words of the former Chief Executive of IBM, “No one can defeat you when things are difficult, when you feel confused, unless you give yourself up.”

 

Page views:62