We went to a cocktail party yesterday evening and the guest speaker there was Vincent Lo, the developer of Xintiandi in Shanghai.
Mr Lo is the Chairman of Shui On Group in Hong Kong. One of his famous property investment projects is Xintiandi in Shanghai. I'm sure every westerner who has been to Shanghai in the last couple of years has been to Xintiandi. Now Mr Lo is building another Xintiandi inHangzhou; the new development is called "Xihutiandi" which is obviously named after the beautiful West Lake in Hangzhou.
When talking about how he had picked up the projects such as Xintiandi, Mr Lo said that he always believe his guts regarding a potential development and what also equally important is he always calls a group of experts to go to the potential development site and carry on a thorough investigation so that he understands fully about the market there. He emphasised that his success in property development is mainly due to his thorough due diligence on the site. When he is ready to talk to the local government about his plan, he always has enough reason to convince them.
Another point he made about doing business in China is that you've got to have enough patience and work the way according to the locals. The Chinese locals will never come to your way; you have to follow their rule no matter whatever it is. He gave us a couple of examples about Xintiandi development. One of them is that he only signed a 4-page contract for this billion $$ development! That's the local way; you don't predict everything in your contract; on the contrary, you change according to the current situation. There is an old Chines saying "Plan is never as fast as the speed of changes." That indicates how flexible the Chinese people are and how ready they are always for the new changes. That's why Chinese contracts have a totally different concept from the western contracts.
The other example Mr Lo gave us is that for the development of Xintiandi, he has moved about 2000 families from the site to relocate them. Now there is only one family still living on the site and refusing to move unless they are paid $4 million for the relocation. The issue has been going for the last two years and still hasn't been solved. Mr Lo said you've got to be patient and settle the issue in the Chinese way. One funny thing he pointed out is that the very family remains on the site doesn't actually have any title to the land they are living on; the local government doesn't want to vacate them because they want to have a "harmonious" social environment and would never seek violence.
Mr Lo verified the theories of how to do business in China by Mr China. Understanding the local culture and market, being patient and respecting the local people are all gold secrets to a success in terms of doing business in China.
Mr Lo said apart from his other projects happening in Hangzhou and Chongqing (the largest city in the world), he is helping building a Silicon Valley in Yangpu District, Shanghai. I'd be interested to go to visit the site when I arrive in Shanghai.