China property giant Dalian Wanda makes 95 billion yuan bet on Yunnan tourism
As part of plan to spread empire across country and enter the booming industry, property giant will build 19 malls and resort in the province
China property conglomerate Dalian Wanda Group will invest 95 billion yuan in 19 shopping malls and a tourism resort in the next four years in Yunnan province, said Wang Jianlin, the company's chairman and Asia's richest man.
The investment is part of Wang's plan to spread his empire across the country and enter the booming tourism industry.
With the Yunnan commitment, the company has signed deals totalling 775 billion yuan this year with provinces, including Sichuan, Henan, Liaoning, Guangxi and Guizhou, to penetrate the country's third and fourth-tier cities where, it says, customer loyalty is higher.
However, some analysts are increasingly worried about the property glut in small cities, putting a question mark on Wanda's financial soundness and profitability.
Xishuangbanna, in Yunnan, is rich in cultural and tourism resources, and is an example of the untapped nooks of China that Wanda and other developers want to develop into resort cities like Sanya, on Hainan Island.
"We will revolutionise Yunnan's tourism industry," Wang said at the ceremony on the weekend to mark the signing of project deals with Yunnan.
The ceremony also marked the opening of Wanda's 15 billion yuan resort in Xishuangbanna, close to China's border with Vietnam, Laos, Thailand and Myanmar.
Xishuangbanna is Wanda's third tourism project. The first was a ski resort in Changbaishan, Jilin province, and the second, opened last year, was in Wuhan, Hubei province.
Wanda has built a 5.3 sq km new town in Xishuangbanna from scratch outside the old city. It includes a Wanda Plaza shopping mall, three hotels including Mandarin Oriental and Hilton, a hospital and some schools.
Wanda is selling apartments and villas priced at about 6,000 yuan per square metre, mostly to non-locals interested in its rainforest and fresh air.
"More developers are coming in," said Bao Jiangjun, a senior executive of Beijing Wanda Cultural Industry Group. "The launch of a high-speed railway in 2018 will unlock the full potential of Xishuangbanna as it is now crimped by the limited capacity of flights that connect it with other cities."
Wanda's plan is to open 15 resorts by 2020 with 200 million visitors a year and revenue of 100 billion yuan, replacing Disneyland as the world's biggest entertainment park operator.
Culture and tourism are among the four pillar industries Wanda plans to build in its restructuring efforts to cut reliance on the cyclical, and struggling, property industry. The other two are finance and e-commerce.
China's domestic tourism industry ran to three trillion yuan last year, growing 15.4 per cent from 2013. The number of inbound travellers dipped last year on the global economic slowdown but their spending rose 10.2 per cent to US$56.9 billion.
To fast-track its expansion into the tourism business, Wanda in July led a six billion yuan investment - including 3.58 billion yuan from its own coffers - in online travel service platform Ly.com which sells tickets to scenic spots mainly in, but also outside, China.
Wanda has also acquired about a dozen domestic travel agencies in the past three years, whose revenues were expected to reach 10 billion yuan this year and 40 billion yuan by 2020, Bao said.
Wang said earlier this year Wanda could invest in the aviation industry. That would help bring traffic to its resorts, including venues like the Dai Show Theatre in Xishuangbanna and the Han Show Theatre in Wuhan.
These venues are part of its strategies to beat competitors, including rival property developers seeking newer growth areas as weak housing demand takes a toll on their bottom lines.
Dalian Wanda Group and International Hospitals Group on Monday announced a partnership for the British healthcare services company to manage a hospital in Qingdao built by China's biggest real estate developer upon completion in 2018.
The 20-year lease will mark the first hospital on the mainland to be managed by IHG under its Chinese brand "Yingci", which literally means British kindness.
"We will also be bringing a leading NHS [National Health Service] hospital trust into the project to support its development and operation with an emphasis on training, clinical links and quality assurance," said Chester King, chairman of IHG Asia, in a statement, without elaborating.
The Buckinghamshire-headquartered hospital group, founded in 1978, has completed over 450 health care projects in 49 countries for private and public sector clients, including the United Nations and the World Bank.
The 200-bed hospital, with an investment of one billion yuan (HK$1.2 billion), is part of the Qingdao Oriental Movie Metropolis, a 50 billion yuan film and television project launched by Wanda two years ago in an event attended by Hollywood glitterati such as Nicole Kidman and Leonardo DiCaprio.
"We are delighted to have chosen to partner with IHG due to their excellent track record in managing hospitals throughout the world," Wanda chairman Wang Jianlin said in the statement.