China UCF’s purchase of an English country estate is a case study in how to make an overseas asset work

The mainland Chinese investment group purchased the 400-hectare estate in Hampshire, featuring am 18-hole golf course and a spa hotel, from hotelier Martin Shaw in 2013. Now Shaw helps manage the asset

PUBLISHED : Friday, 25 November, 2016, 1:31pm
UPDATED : Friday, 25 November, 2016, 10:34pm

Buying a historical Tudor hunting lodge in a suburb of England that was once visited by King Henry VIII and his second wife Anne Boleyn may not be a big problem for wealthy Chinese investors, but managing the asset is another issue fraught with challenges.

China UCF Group, which has invested in hospitality projects in Britain, has found a solution.

“We respect and hire local talent to help us to run the business in England and it has worked very well,” said Shirley Hsu, chief executive of UCF Capital, the overseas investment arm of the mainland company.

UCF is among the mainland companies which can afford to invest in overseas projects. Hsu believes Britain is a good market for investment.

“We have looked into hospitality asset management in France, Italy and many others, but we found the British management is the most disciplined. This is why we decided to invest actively in Britain,” Hsu told thePost during a meeting in the Old Thorns Golf Hotel and Country Estate in Hampshire, about two-hour’s drive from the City of London.

A mutual respect between the Chinese owner and the British management and to share a common goal to make money is the key of how to a make a merger work well
Martin Shaw

The project was formerly owned by British hotelier Martin Shaw, 56, who has invested in hotels since he was 28. 

He bought Old Thorns, a spa hotel situated on a 400-hectare site, and featuring an 18-hole golf course, from Japanese investors in 2006. He sold the property to its current Chinese investor three years ago but has stayed on as a director to help manage the hotel for a fee.

During the joint interview, Shaw explained his vision of combining capital from Chinese investors with British management to expand the hotel into a much bigger scale, doubling the number of rooms to 160 and adding more facilities.

“A mutual respect between the Chinese owner and the British management and to share a common goal to make money is the key to make a merger work,” Shaw said.

UCF is a mainland investment company involved in financial services, fintech, hospitality, jewellery distribution and wine. Chinese investors have completed 171 acquisitions worth US$88.4 billion across Europe in the year to November 10, up 40 per cent on the 122 deals for the full year of 2015, according to accounting firm Deloitte.

Angus Knowles-Cutler, China services group chairman for Deloitte, said Chinese companies have invested in Britain and Europe for the long term, but the challenges are on the management of these projects.

Chinese businesses have no problem finding acquisition targets and are now focused on the challenges that arise after signing the deal

“Chinese businesses have no problem finding acquisition targets and are now focused on the challenges that arise after signing the deal. This includes managing and motivating Western business leaders, and delivering on the promises made,” Knowles-Cutler said during an interview in London.

Shaw said his working relationship with Hsu and other staff of UCF has been smooth.

The relationship has gone so well that Shaw and China UCF have recently joined hands to acquire a Tudor lodging that formerly once visited and stayed by hosted King Henry VIII and his second wife Anne Boleyn.

“We are still working on what to do with this property. The potential option is to turn it into a hotel or to redevelop it into a residential project. I believe this would be another good opportunity for cooperation between Chinese and Western investors to develop a project in England,” he said.

He acknowledged there were differences in approach, but said that keeping focused helped to bridge the gap.

“There may be a lot of cultural difference between the Chinese and British, but we share the same goal that we want the hotel project Old Thorns to make money so that it is a win-win co-operation,” he said.

He credited Hsu, an US educated Chinese who is a former investment banker who worked in New York and Hong Kong, for acting as a bridge to facilitate communication between the two parties.

Hsu speaks fluent English, Putonghua and Cantonese, and travels frequently to help identify investment opportunities in Britain and other Western markets.

“For the Chinese investor, we are concern about investment returns. For the British management, they are more concerned about local regulation, impact of the projects on the local market and profitability of operating the hospitality business. We rely on Mr Shaw and other local talent to deal with the town planning and other local authorities to get permission to develop our projects,” she said.

Shaw is passionate about the Old Thorns development and can draw upon his significant experience in dealing with town planning and other authorities.

Old Thorns has become a popular venue for corporate events, as well as wedding parties and funerals, with facilities that can accommodate up to 750 people.

“We arranged over 200 weddings last year,” he said, adding that it is not unusual to host several weddings along with a funeral during the same weekend.

“For me, the business I got from Friday is to pay the bank loan, the money I got from Saturday is to pay for the staff and cost of food and other supplier, while the revenue received on Sunday is to maintain the hotel facilities upgrade. The business from Monday to Thursday is how I can get profit,” he said.

While Hsu is based in Hong Kong and visits London time to time, Shaw handles the daily management of Old Thorns.

“Old Thorns will continue to be popular as it is a venue suitable for corporate events and also for weekend holidays. Young professional nowadays take work-life balance very seriously” he said.

In terms of currencies, he credits a downtrend in the pound, which has fallen 15 per cent since the Brexit vote in June, as helping to rekindle interest in domestic tourism, as Britons weigh up the higher cost of overseas travel.

“Brexit has led to a fall in the value of the sterling which has led to more domestic travel within Britain,” he said.

Among challenges brought by Brexit, he expects higher imported food prices from next year, while imported goods will also be more expensive.