Chief aims to make Centaline biggest mainland firm
Shih Wing-ching, the founder of property service organisation Centaline Group, spent three decades building his fledgling privately owned company into the largest real estate agency in Hong Kong.
The man who has now stepped into those sizeable shoes at the helm of the group is Sherman Lai Ming-kai. He was appointed to the newly created post of group chief executive in January with the task of growing the firm into the biggest property agency on the mainland in the next decade.
Prior to the appointment Lai, 46, was the vice-chairman and in charge of Centaline's mainland agency business. The challenge of being chief executive is one that he relishes and the succession gives clear effect to the strategy of the group to shift its development focus to the mainland in the next 10 to 20 years. Its competition is no longer with large listed local rival Midland Realty only.
'The turnover of Centaline Property Agency has surpassed that of Midland. Our target in Hong Kong is the revenue of Ricacorp Properties, another agency owned by the group,' Lai said. On the mainland, the real estate industry was still in a 'Warring States period', he said, referring to a time of conflict and growth in ancient China.
No single agency dominated the industry in the country, he said, but Centaline regarded New York-listed E-House (China) Holdings, Shenzhen-listed World Union Properties Consultancy and the privately owned Beijing Homelink (Lianjia) as its main competitors.
'Homelink was set up just six years ago but has already expanded to 600 branches in Beijing. I was surprised by this fast expansion and wondered if Centaline (China) could make it. Homelink has proved it can be done. If they keep expanding into other cities, that will be a threat to our business as well,' Lai said.
Currently, Centaline is the largest property agency in Shenzhen and Tianjin. It also has the largest market share in the secondary market in Guangzhou and Shanghai, and in the primary market in Chongqing and Chengdu.
Lai said the group's present market share in mainland cities ranged from 3 per cent to more than 10 per cent, but the company has set the bold target of becoming the biggest agency in the country, hoping to capture 20 to 25 per cent market share in each major city.
But he concedes it will not be all plain sailing and says Centaline will face challenges. 'Many of the large property agencies on the mainland are listed and have strong capital reserves. This helps them to expand rapidly. But our edge is that we are stronger in sales and marketing.'
Also, government policy is not friendly to property agencies, particularly to foreign ones such as Centaline. He said procedures for opening a new branch were complicated.
Lai joined Centaline (China) in 1995. Last year, it finally tasted notable success and recorded a strong growth in profit. But the road to success was not smooth.
'We expanded in second-tier cities after our businesses in the four major cities started to generate profit in the late 1990s. However, we were not cautious enough in our expansion,' he said.
Also, the mainland operations ran into bad debt problems in 2004 and 2005, which hurt cash flow.
In 2008, the firm also underestimated the impact of the government's cooling measures and continued to expand, calling a halt only after the market had been hit by the measures, the big snowstorms, the Sichuan earthquake and the global financial crisis.
'We are more cautious now,' Lai said, adding that he was nonetheless confident about the outlook for the mainland property market.