Where There’s a Will, There’s a Way – The Wanda Way

Where
There’s a Will,
There’s a Way

22 June, 2013 – A Speech at Huashang College

In June 2013, Huashang College held the first (Summer) Finance and Investment Forum in which Wang Jianlin gave a speech to over 2,000 college students from across China. During the speech, he talked about his personal experience of starting Wanda under huge debt burdens and financial difficulties, expounding on the entrepreneurial philosophy of “where there’s a will, there’s a way”.

Here’s his speech:

Hello everyone, good afternoon!

It’s my honor to be here today to share with you my experience as a businessman, at the request of Professor Liu Jipeng. It’s my first time to Huashang College, and I’m deeply impressed to know that the college has so many courses, with an extensive alumni network throughout the country. As the old saying goes: ‘every subject has its own experts, and every trade has its masters.’

I’m not sure what I should talk about during my first visit here. I understand that students in Huashang College are mostly from private enterprises, and the majority are small and medium sized businesses. During forums I attended in the past, I usually talked about Wanda’s business model and corporate culture, but these are relevant only to large enterprises. I want my speech to be useful for the students here. So what should I talk about? I kept thinking about it over and over again and decided to share with you my insights about successful business management. I’d like to entitle my speech “Where there’s a will, there’s a way.” I don’t like reading scripts, so I’ll speak for 30 minutes and will allow some time for questions and answers. You may send your questions to the host or ask questions yourself. There’s no restriction whatsoever. Anything can be asked.

Four aspects of the theme “where there’s a will, there’s a way” will be discussed.

First, small companies can become large enterprises. You may be running an enterprise with an annual revenue of several millions or tens of millions of yuan. Then, will your company remain a small enterprise forever? And are the large enterprises born to be large ones? No. All the big multinationals in the world are developed from small companies. We all know that Bill Gates – the richest man in the world – founded Microsoft. Gates decided to start his own business and started it up in a small lab in a garage. He only had US$3,000 at first, but now he’s the richest man in the entire world with an annual income of tens of billions of dollars every year.

Li Ka-shing, the richest Chinese, has HK$200 billion worth of assets and ranks among the richest men in the world. He owns such a big company, but it was a producer of plastic flowers at first. Those of you at a younger age may not know that back in the 1960s, plastic flowers were very popular. At that time, it was impossible to have real flowers in houses, and when needed, people used plastic to make flowers. It was very small in those years and made tens of thousands of Hong Kong dollars per year.

Now, take my company as an example. Wanda Group is pretty big today. Our total assets are estimated to exceed 350 billion yuan this year, and were over 300 billion yuan last year. This year, it’ll grow to at least 350 billion yuan. We will pay almost 30 billion yuan in taxes this year. The figure was over 200 billion yuan last year. Our after-tax profit margin will be nearly 10%. In addition to revenue, Wanda has ranked No. 1 among all private enterprises across all other indicators such as assets, profit and taxes throughout the past several years. How did we grow? We borrowed one million yuan in 1988. Back then the minimum registered capital required for real estate companies was one million yuan. We didn’t have 1 million, so we found a state-owned enterprise, a very rich state-owned enterprise at that time, and borrowed one million yuan from them. However, they told us that we needed to provide a guarantor, and it (the guarantor) took half of it straight away, only giving us the remaining half million. We couldn’t say no! After 25 years, the company has now grown into a large enterprise. Our revenue increased rapidly. In particular, despite widespread difficulties in 2012, we managed to maintain a growth rate of 34.8%, and it is projected to be over 30% this year.

Our objective is to slow down the revenue growth slightly from the current rate and hit 350 billion yuan in 2015 and maintain a 15% growth rate in the next several years. Our revenue will grow to US$100 billion by 2020, and we’re well on track to rank among the top 100 largest companies in the world by that time in terms of assets, revenue and profit alike.

The company has developed at an amazing pace. How did we do it? We started as a small firm too. You know, all of the biggest enterprises in the world today are around 100 years old, so not that long. The oldest family business in Europe has gone into the seventh generation and lasted more than 200 years. No company in the world can sustain success for 200 or 300 years. One hundred years is the absolute limit. We always say century-old enterprises but not millennium-old enterprises. Why? It’s unrealistic.

Less than 10% of Fortune Global 500 companies 50 years ago are still on the list today, and about 20% of those listed 10 years ago have disappeared. This may sound surprising to you.

Ten years ago, there were only seven Chinese companies listed as Fortune 500, and it increased to over 70 last year. Large enterprises emerged and died out. Why is this? Because were it not for this lifeand-death cycle of the enterprises and their “short-lived” nature, new generations of entrepreneurs wouldn’t have been motivated to create great enterprises. If enterprises all last 500 years or even longer, it would be demotivating for entrepreneurs, and enterprises would be reluctant to change.

Small enterprises can grow into large enterprises. What does this mean? Although your company is relatively small in size for now, it doesn’t mean that it will stay small in the future. It can’t be small and medium enterprises forever, and it may well become a large enterprise, a super enterprise. This all depends on how ambitious you are.

Second, all excellent enterprises have their unique DNA. It’s unrealistic to assume that an enterprise can perform well only after it has accumulated 500 billion yuan or grown to a certain scale. I always say that excellent enterprises must have unique DNA. What’s DNA? It’s the genetic code of an enterprise, meaning that the enterprise is genetically built to grow into an excellent enterprise during its very conception. Here we hope that small and medium enterprises, most enterprises should have such ambition.

It’s wrong to say that an enterprise can excel only after it has reached a certain large scale. I know a company. It specializes in producing gaskets for nuclear weapons, which used to be a technology exclusively owned by the U.S. and imported gaskets were very expensive. The company owner studied the technology carefully and decided to enter the business. He became successful after ten years of committed efforts. His products are recognized for their unrivalled sealing effect, outshining their U.S. counterparts. His factory is not big and earns 100-200 million yuan a year, but it plays a crucial role. Because it produces the gaskets, China no longer needs to import the central component. Due to the success of his enterprise, his American competitors offered to buy it for US$500 million. If the entrepreneur had chosen to trade it off for a comfortable life, it would be very simple – 500 million dollars are more than what he could possibly spend in his life – but he didn’t sell the enterprise. He had even bigger plans and was determined to continue developing his enterprise in the business or other related industries. In recognition of his ambitious commitment and the highly specialized nature of his business, he received support from the government. I’m sure that his company will become an excellent enterprise in the future.

No matter how excellent an enterprise is, its excellence is not acquired after business scale-up, but “conceived” at birth. From the beginning, the entrepreneur must be ambitious and aspire to a great enterprise. It is such ambitions that drive him to success. They’re written in the genes.

Third, aim high and you’ll achieve more. There are different types of ambitions – big ones, medium ones and small ones. In other words, money can be made on three levels. At the lowest level, one gets rich and enjoys a happy life and family. There’s nothing wrong with this. This is the mostly commonly heard ambition. We work hard to make life more comfortable for ourselves, our family and children. It’s not a low-level thing in itself, but neither is it at a high level as an ambition. Hence, I call it the lowest level of money-making. At the second level, the aim is to create a large-scale business and make money…reap fame and wealth. In other words, the entrepreneur no longer runs a business and seeks wealth only for himself, but for spiritual enjoyment. He’s interested in developing a large-scale, influential and respected enterprise. How to gain the respect of others? Generally speaking, influential large or super scale enterprises are more respected, making it easier for them to gather resources and grow.

Entrepreneurs should aspire to make their enterprises bigger, more influential and more respected. Instead of making money for ourselves, we should incorporate social responsibility into our business operations, making our enterprises part of the social wealth.

At the highest level of entrepreneurship, we develop enterprises at a spiritual level to satisfy our spiritual needs, to make our enterprises the pride of the country, the private sector and industry, or to establish our enterprises as market leaders in the world. This is a spiritual quest. To put it using the buzzword, we need to create excellent enterprises as corporate citizens, where the ultimate goal behind moneymaking is to repay society. At this level, we have more than enough money to spend. That’s why most of the enterprises today who perform their corporate social responsibilities well, who donate a lot, do a lot of voluntary work or focus on specific charitable causes…most of them are large enterprises. This conforms to this theory.

Perhaps all of you here today have just started your enterprises or have been running your business for several years or ten years, but your enterprises remain relatively small in size. What aspirations should such enterprises have? In short, it’s exactly as an advertisement puts it: your stage is as big as your heart. We must aim high.

Let me tell you a little story of myself when I first started Wanda. In 1989, I went to Hong Kong for the first time together with four friends. We stayed at the best hotel back then, “Grand Hyatt.” It was inside the old Hong Kong Convention and Exhibition Center. There were four towers above the center, including Grand Hyatt, Seaview Hotel and an office building. There was an open terrace measuring around 20,000 square meters on the 11th floor of the four towers. It had a great atmosphere. There were two swimming pools for guests of the hotels to relax. We went there during the day and really loved it. We went there again in the evening. Back then, we felt Hong Kong was such a great place. I said it was an inspiring place. I would work as hard as I could to get a building like this in my life.

My friend Mr. Huang asked me whether I knew that it cost a lot of money, about HK$2 billion. I said although I had just started in the real estate business, and I didn’t believe that I couldn’t even own a building 20 or 30 years after my retirement. They laughed and thought it was just a joke. Wanda’s annual profit was one million yuan, but I had the ambition and worked very hard to achieve it, which actually didn’t take us very long and we built the first tower in 1993. It was a little smaller than that in Hong Kong. So how many towers built so far? We’ve opened 80 shopping malls and 50 five-star hotels. We hold 18 million square meters of properties, which will increase to about 22 million next year.

All the five largest real estate companies in the world are from the U.S. where land supplies are large and the population is big. Among them, the youngest is 80 years old, and the oldest has been in operation for over 100 years. Thanks to China’s enormous territory and 8%-9% annual economic growth, we’ve been growing at a similar pace.

If I didn’t have that ambition that day, perhaps Wanda wouldn’t be such a success story today. Of course, there are many factors contributing to success, and ambition is just one of them. Ambition must be supplemented with other ingredients such as the correct direction, professionalism, talent, human resources and the ability to integrate social resources, etc., but being ambitious is the fundamental element. How big your ambitions are dictates how big your enterprise will become. If you only have ambitions at the lowest level, you can earn 200-300 million yuan in China to enjoy the rest of your life, as many entrepreneurs do. There’s nothing wrong if an entrepreneur retires after making a few hundred million yuan, and many entrepreneurs have chosen to do so. Now that I’ve shared with you my theory of success, I hope that some of you here and more people can commit themselves to “big ambitions.” Big ambitions give your enterprise the “genes” for big success and make big success possibilities.

What’s the most important thing after you’ve set ambitions? Perseverance – the determination to work toward the preset goals despite difficulties, challenges, setbacks, criticisms, etc. Here, I have two examples to share with you.

At the end of 1992, when Wanda was still a small enterprise, I was entrusted by the government to develop a project in the downtown area. They tried to talk me into accepting the commission, but I found it too risky. However, for the sake of cooperation with the government, I accepted the old city transformation project under enormous pressure. These days, relocation compensation is paid in a lump sum. But it was different back then, and every household affected was only paid less than 10,000 yuan as the “transition” cost. There were more than 6,000 households in total. The project came to a halt after the first 4,000 households, because rectifications started.

A wave of government regulations came. I experienced seven government regulations during my 25-year career as a real estate developer. At first, it was called rectification and later changed to macro-level regulation. They’re the same thing in essence. The one I’m talking about that occurred in 1992 was still called rectification. At that time, government regulation measures were much tougher. A document was distributed and all real estate related loans were suspended. All property developers were banned from taking out bank loans, not even a penny. Our company operated smoothly and progressed well with the large transformation project until the loan suspension. It left me in a tight corner and there was no way out. I didn’t sleep at all for nine days. I tried everything but just couldn’t go to sleep. I was on the verge of paranoid schizophrenia. I fainted during a meeting at the company. My colleagues sent me to the neurology department of the former Beijing Hospital. Luckily, the doctor said that he knew how to get me to sleep. Perhaps my body took the psychological hint, and I fell asleep the minute I took his medicine. It was all because of the loan suspension.

Leaders of the municipal government understood the company was facing after accepting the government project and came to my rescue. They told the manager of a state-owned bank to grant me a loan of 20 million yuan. Back then, Wanda’s annual revenue was 700-800 million yuan, and it was no longer a small company. However, in order to secure the loan…perhaps the bank manager did not want to give me the loan, or there were some government-related reasons, he told me to come back in five days. I did but it didn’t work out, and it went on this way several times. In the end, I went to his office more than 50 times. I couldn’t break in without permission, so I had to wait outside. Sometimes literally all day long, but I just couldn’t see him.

Just think about it: as a business owner, I waited outside the bank manager’s office all day long…for days in a row. To develop Wanda into a large enterprise, I’ve experienced setbacks even worse than this.

And this is why I submitted several proposals as a member of the CPPCC (the Chinese People’s Political Consultative Conference, a political advisory body in China) appealing for a solution to the financing difficulties small businesses face. I’ve gone through it myself.

If the funding problem can be effectively addressed, private enterprises will be able to develop at a more rapid pace, much faster than state-owned enterprises (SOEs). Seventy percent of financial capital is occupied by SOEs, but they do not offer sufficient employment opportunities. In terms of jobs, SOEs account for 13%, and private enterprises 87%. The latter also contribute over 90% of new employment opportunities every year. In terms of taxes, President XiJinping said during a meeting with private enterprise representatives in 2013 that private enterprises contributed more than half of China’s total tax revenue.

Were it not for our firm commitment to our aspirations, the company would have already died a long time ago. When we were small we had two big problems. The first problem is to do with land purchase. An office chief of the government planning department. If he wants to see you, you must act immediately and visit him straight away. Otherwise, you won’t be able to see him. What’s more, you have to wait outside sometimes for several days, which has happened to me many times in the past. It was exactly because of these setbacks that we decided to set ambitious aspirations. We must develop a unique “Wanda model” and keep improving the company so that we no longer need to ask for the help from others, but people come to us for help instead.

Humiliations like this and the financing difficulties strengthened my determination to scale up my company, and to develop a business model that makes people come to us for help. As we developed over the years…as I just mentioned, Wanda became the second-largest real estate developer in the world, and the Wanda model has gained in popularity worldwide. Today, all of our development projects are conducted on an invitation basis. That is, if there are 100 people inviting us to develop properties, we only choose 50. From 2008 onward, we launched a new business model shifting toward the cultural and tourism industries.

We established Wanda Culture Industry Group last year. It became the largest cultural enterprise and posted 20.8 billion yuan of revenue in its first year of operation. According to the top 50 global cultural companies list released by a well-known European advisory company, we ranked No. 38. We believe that Wanda Culture Group will make it to the top 20 in 2015 or 2016, and grow into one of the world’s top10 cultural enterprises by 2020. Why did we decide to enter the cultural industry? We need to create stronger competitive advantages, with higher entry barriers and specialization…a business that requires creativity and special talent. After all, we want people to come to us and ask for help. This way, the company will be respected rather than humiliated. For any small enterprise, once it becomes highly specialized in a certain business, as I said, a company that has developed a product with core competitiveness will be respected by others although its annual revenue may only be 50-60 million yuan.

Given the time constraints, I only talked about my personal experience of business development to illustrate the topic: the success of an enterprise depends on a combination of factors, but the most important one is to set up “ambitious aspirations” for the enterprise and encode these into its corporate “DNA” – your stage is as big as your heart. Thank you!

Q&A

Q: Why can Wanda always secure land at prime locations at excellent prices, but we can’t?

Wang Jianlin: I’ve already talked about this issue. Indeed, some real estate developers argued that Wanda acquired land at good locations across the country. It’s true that our land prices are cheap, but we rarely purchase land within central business districts. Instead, we typically go to places that most competitors dare not enter. Years ago, land of the Shijingshan and Babaoshanin districts of Beijing was offered by the government, and the government asked us to develop a business center. No other companies were interested. They say that there’s no business outside the second west ring road, and the land is actually located outside the fourth ring road. Who dares to go there? We’re totally confident in our business model. We usually go to places that conform to the general urban development trend, or fully developed areas where business facilities are lacking. Firstly, this caters to the development needs of the government and the local communities. Secondly, Wanda’s business model, it would be an overstatement to say that only we can do the business, but we’re confident that we can do it better. Wanda’s core competitive strength is our speed – within our projects, all businesses are open in less than two years or typically within 1.5 years to be more precise.

Due to our core competitiveness, when we’re invited to develop a project, we have the bargaining power, regardless of whether the inviter is a government department or a company. Therefore, we can ask for 1,000 yuan when the offer is 2,000. If the proposed cut is accepted, we can start the project straight away, and otherwise we can take our time and negotiate with the inviter, since we’ve got plenty of other projects to work on. As I mentioned just now, why can we purchase land at relatively low prices? Competitiveness is the main reason. When you have a trump card, meet the conditions for negotiation and have the bargaining power, it’s only natural that you’ll get land at relatively low costs.

Q: I have three questions: Can Wanda continue to be successful without Wang Jianlin? How are business-government relations handled at Wanda? What’s your approach to wealth inheritance?

Wang Jianlin: Can Wanda be successful without Wang Jianlin? I can tell you for sure, yes, Wanda can do without me. Why? Because even though I’ve stayed in the company my entire life, I’ll die one day. No one can change this. So I can leave Wanda, but it’s only a matter of time. We set it to be 2020. By retirement I meant stepping down as the chairman rather than CEO. I’ve not worked as the CEO for many years.

I said seven or eight years ago that I’d retire when Wanda hits the 100 billion yuan threshold. Back then, I felt that it would take 10 or 20 years for the company to realize annual revenue of 100 billion yuan– it was only 10 billion at that time. My colleagues asked me would I retire after the company hits 100 billion. I said the target set was too low. So I reset it to be 2020, when I’ll step down as chairman.

Second, how to effectively handle business-government relations in China? This is something no one can get around when doing business in China. I once recommended that businessmen should “stay close with the government but away from politics.” Many people argued that I can keep the government away from my business. Actually, even if you were in the U.S. or the UK, you’d still find it impossible to run a business without keeping abreast of the latest government policies, etc. Given the government-dominated nature of the Chinese economy, businessmen here cannot work around the government, and this is particularly true for real estate developers. The best way of keeping normal business-government relations is to develop a business where the government has to come to you for help. Our businesses are all conducted on an invitation basis, and this makes things much easier. These days, wherever our development team goes, they’re wined and dined by our business partners. It’s that simple. One of the benefits of this is that they can drink like a fish now.

Third, wealth inheritance. I think wealth inheritance shouldn’t be interpreted within the context of traditional Chinese culture. Inheritance is not necessarily limited to family members. I’m very open-minded. Wanda currently has 100,000 employees, and this will grow to 200,000-300,000 by 2020, when our annual revenue is expected to increase to US$100 billion. The company will not necessarily be inherited by my child. If he’s qualified for it, he can inherit the company of course. But what if he’s not suitable for it? It’s not a good thing either for the child or for the enterprise. As the ancient Chinese saying goes: ‘If the son is not as good as the father, why bother to leave him an inheritance? If the son is better than the father, why bother to leave him an inheritance?’ I’ll wait and see. I still have eight years. If my son proves himself competent to inherit the business, I’d be happy to see that happen. If not, I’ll choose professional managers, with my son acting as the major shareholder. My son is a very ambitious man and wants to start his own business. He even said that as his company gets bigger, he’ll acquire Wanda Group.

Q: How do you ensure that every partner involved in Wanda projects has equal opportunities for cooperation?

Wang Jianlin: This question should be answered for two types of partners, i.e. constructors and tenants.

In terms of construction operations, we laid down a rule ten years ago that for all construction projects, Wanda only cooperates with China State Construction Engineering Corporation (China State Construction) to ensure smooth cooperation. Our construction partners today are mainly the first, second, fourth and eighth divisions of China State Construction, the reason being only strategic cooperation can ensure quality and prevent bribery. We’re willing to maintain long-term cooperation with the company, and China State Construction receives a large proportion (a third or more) of its business from us. This way, it always attaches great importance to Wanda projects and can make sacrifices for our projects when necessary. In addition, such a cooperation model eliminates bribery for the most part and ensures quality construction.

To be honest with you, the most important competitive advantage of Wanda today is not capital, human resources or our business model, but rather our business resources. At present, we have signed cooperation agreements with more than 5,000 tenants, over 300 of which were overseas. In each project, we select the tenants rather than attract them. For specific businesses, we can’t guarantee that our tenant team allocates among the candidates in an absolutely fair and impartial manner, but we strive to be impartial in everything we do. We have established brand pools for catering, entertainment, gym and closing businesses. Retailers applying to enter the brand pools must meet certain criteria such as the length of business operation, the number of stores opened and so on.

Generally speaking, all retailers that have excellent products and properly qualified construction companies have the opportunity to cooperate with Wanda. We seek to achieve mutual growth with our partners. I never perceive Wanda as “Party A.” Instead, we focus on common development and respect our construction contractors and tenants. Our tenant conference is held every year. I attend each conference in person and meet hundreds of interested retailers. Some of them are limited in size and don’t need to be visited in person, but I want to remind my colleagues by example that all of our partners and tenants should be respected, regardless of their size.

Q: Please advise how we can rent a shop in Wanda Plaza, and will any discounts be offered for Huashang students?

Wang Jianlin: Unfortunately, Wanda sets itself apart, first and foremost, by impartial business management, which involves management regulations, planning and information. Business management is our greatest strength. Because of my military origin, I place great emphasis on management rules. We developed different regulations for every industry and department, and the regulations are highly practical and quantified wherever possible. The requirements are simplified to the greatest extent, and therefore can be easily applied. Secondly, complete planning is carried out before the launch of every single project and tenant attraction campaign. Thirdly, all plans are entered into the information center module.

To be honest, corruption is a widespread issue in construction and commerce, and Wanda is no exception, so I do my best to standardize our actions through regulations. Therefore, my answer to this question is that I can’t break the rules for Huashang students. No discounts, sorry.

Q: Where will the Chinese real estate industry go in the next ten years? Will the government offer support through public finance? Will the housing prices fall? Will there be a day when we can’t afford to buy a home?

Wang Jianlin: The development trend of the real estate industry… one thing’s for sure, you can ask me again after 15 years. There won’t be any major issues or systemic risks for the Chinese real estate market. A crash won’t happen. This is mainly because urbanization and industrialization have not yet been completed in China. First, urbanization. Fifty-two percent of the Chinese population lives in urban areas, but the actual urbanization rate is below 40%. Of the people living in Chinese cities, 250 million of them don’t have urban residence account (household registration) and are not entitled to local social security benefits. The real urbanization should start with the “urbanization of people” – that is, turning migrants into “urban people.” In view of this, the government plans an increase of one percentage point every year, meaning that 14 million people will be added to China’s urban population every year. Judging by the experiences of other countries, the urbanization process won’t slow down until it reaches 80%, by which time the real estate market will start to contract. The urbanization rate in China is 52%, which is well below 80%, or the minimum threshold of 70%, so we still have 18 percentage points to go, corresponding to 200 million people.

In addition, industrialization has not been completed either. China’s steel output is 6-7 billion tons per year, less than 8 billion tons. Upon completion of industrialization, steel output needs to reach 15-20 billion tons. In this respect, the real estate industry will keep growing overall without systemic risks during the next 15 years, but local risks may emerge. It’s up to individual consumers to decide the extent of the risks involved. The larger a city is, the less risks are involved, and vice-versa.

Q: A company wants to pay you to endorse their product. How much would you charge?

Wang Jianlin: Sorry, I’m no longer a young boy, and nor am I any hot girl. It sounds totally irrelevant. If you have a serious business proposition, you may fax it and write me down as the recipient. We can see if cooperation is feasible. I’m not the first to read incoming faxes and mails, as we get tons of donation requests every day. They’ll sort the correspondence for me first. You fax your proposition and my fax number can be found online.

Q: One of the students here has started his own business. He wants to talk with you and is willing to pay you 50% earnings in return. Would you meet him?

Wang Jianlin: He doesn’t need to pay me a penny. I can talk with him and offer some suggestions. He may make an appointment with my assistant.

Q: How will the yachting industry develop in China, in your opinion? Why did you decide to acquire a foreign yacht producer?

Wang Jianlin: There are over 1,000 yacht producers worldwide. The most famous two are from Italy and the UK, and their products are dubbed “Bentley and Rolls Royce on water.” There are two reasons. First, airplanes and yachts are the biggest luxury goods. It takes 80-100 years for any luxury brand to establish itself. Once established, it becomes a valuable asset to acquire. Second, the acquisition was also borne out of business considerations. We’re making investments in cultural tourism sites in Qingdao and Sanya. The local governments require that each site be equipped with yachts. Compared with purchasing a dozen boats for each site, it’s a better deal to acquire the producer. Additionally, I’m bullish about the development of yachts and private jets in China going forward. Yachts and jets are both high-frequency luxury goods, for which the import tariff is set at 45%. If they can be produced in China, tax savings alone will give us a significant competitive edge.

Q: I heard you made a bet with Jack Ma, so who will win in 10 years? Wang Jianlin: I’ve been asked about this over and over again ever since last year. To be honest, the bet was made purely at the request of China Central Television (CCTV). Jack and I teamed up as presenters of the annual CCTV economic awards. The director said we needed to inject humor into the event. How could we do that? We made a bet. This was the most important reason for the bet. It was more like a joke.

Secondly, Jack and I…we needed to play for and against in the debate. He represented the Internet, and I had to represent traditional industries and commerce, and I was playing my role to defend the idea that traditional businesses still had plenty of room for further growth. As to who the winner will be, I can’t tell. If I say I’ll win, Jack won’t be happy to hear that. If I say he’ll win, it’ll make me feel bad.

Q: How will commercial property and health-related property develop in the future?

Wang Jianlin: At present, health-related properties are actually grouped under the category of holiday-tourism real estate. The state will push forward housing properties for senior citizens. I’d say senior citizen housing property represents better opportunities than health. Most of us still don’t have a clear understanding of senior-citizen housing properties. Wanda got too involved and tied up with commercial properties and cultural businesses, and I considered entering the senior-citizen housing property market three years ago. Going forward, the retirement industry will certainly become a major industry in China in five to 10 years, by which time 20% of the national population will be aged above 60. Related businesses will have an enormous market. Furthermore, land may be purchased for developing senior housing properties by directly signing an agreement, and this is also supported by tax incentives. By converting health properties to elderly housing properties, you may even secure the land directly by signing an agreement without public bidding.

Q: Wanda stepped up deployment of its commercial property model in response to the “Chinese Dream.” How’s the Hong Kong IPO (initial public offering) progressing for Wanda?

Wang Jianlin: Wanda has not been listed so far, and this makes many people curious. I’m always convinced that Wanda will be listed, especially my core assets including culture. I missed out on a good opportunity. Previously I could have listed the company in Hong Kong, but I was fooled by an Australian investment bank called Macquarie. They advised me not to launch an IPO and set up a trust fund instead; and then I could establish a management company to control the entire group. I followed their advice and abandoned the IPO, and set up a trust fund, but this was totally new in the Hong Kong market. The CSRC (China Securities Regulatory Commission) insisted that the first company must be a local company based in Hong Kong, and companies from outside wouldn’t be approved. As a result, it took me over one year to list the Link REITs (Real Estate Investment Trusts) in Hong Kong. Tough luck – the state then banned this for private enterprises after the fund was listed, so I had to apply for an IPO again, but government regulation was in full swing all these years. Therefore, we’re considering different listing models, while taking into account the latest market conditions. One thing’s for sure – Wanda will be listed in the near future, and various financial data and development information will be made available.

Q: Please tell us your opinion about football. How much does Wanda football team invest each year?

Wang Jianlin: My opinion about football? None in particular. Investment per year is 200 million yuan, 600 million in three years. I’m a supporter of Chinese football. I ran a club before but no more now; I’ve gotten out of it entirely. The government leaders care about it very much, and the Chinese administration of sports made several appeals, so I came back and am offering support for Chinese football. Despite the recent 5-1 loss to Thailand, the Chinese football market is healthy overall. The Chinese team used to be a leader in Asia. We once beat Japan 2-0. In those days, only South Korea was a strong opponent of China, but the number of opponents has increased in recent years. Many times we advised relevant government departments to look further ahead than immediate results. More attention should be attached to young players, and China’s football can be improved only if the number of young players can be increased. For example, the total population of South Korea is only 40 million, but it has 600,000-700,000 registered teenage players. By contrast, there were only 10,000 registered players out of 1.3 billion Chinese people, corresponding to one registered player every 10,000 people. When I invested in football, there were 400,000 young players in China. There’s been such a dramatic decline. It will be difficult for Chinese football to improve unless the number of young players is increased.

Back then, the Chinese team had HaoHaidong (a famous soccer player in China). He was very fast and could run 100 meters in 11 seconds. Is there anyone in the Chinese team now who can run as fast and play as well?

If we’re really serious about developing football in China, we can’t focus on immediate results. The Chinese football will certainly improve if we have one million teenage players.

Q: How was financing carried out at Wanda during different stages?

Wang Jianlin: Financing at different stages. I just told my story… it used to be a headache before. We had to do whatever it took for the sake of the company. Today, Wanda is a major client at the head offices of the four state-owned banks, and financing has become easier.

I’m not representative of private enterprises here. Financing is still very difficult for them.

Q: My question is representative of most students here. If I want to enter the real estate market, could you give me some suggestions?

Wang Jianlin: You should have done it before. The real estate industry is suffering from overcapacity. If you really want to enter this business, don’t go to housing property. Land purchase for housing property development is now conducted purely through auction. If you bid 100 million yuan, your competitor will offer 200 million yuan. You stand little chance of winning the bid. If you enter now, don’t touch pure housing properties, commercial, industrial or tourism properties, but senior citizen housing property may be a good idea, because listing and bidding are not required. My suggestion is to stay away from the real estate industry, as small enterprises are increasingly deprived of opportunities. Why has the number of real estate developers been reduced to eight? Because almost all land resources have been acquired, leaving little opportunity for others.

I’ve enjoyed meeting and talking with you here for the past two hours. It’s my first time to this forum. Because of my tight schedule and time constraints, I only talked about my personal experiences and stories. What I said is not a textbook or preaching. I just wanted us to be able to share our real thoughts with each other.