Wong rejects golf as he stays the course

Unlike other players, the boss of China Properties maintains his focus on key cities in the mainland

A self-confessed workaholic who has never touched a golf club in his life, property developer Wong Sai-chung is always on the scout for new business opportunities.

After more than 30 years in business, the managing director of Hong Kong-listed China Properties Group is considered a bit of a corporate jack-of-all-trades.

After starting as a steel trader in West Africa in the 1970s, he moved into watch and cosmetic manufacturing before riding the property boom in Hong Kong in the 1990s.

Now with the mainland economy surging, the 57-year-old is heavily focused on the property market in key cities including Shanghai where his landmark Concord Plaza is located.

But his enthusiasm for property is tinged with caution, warning prices are 'crazy' and that the market could be headed for a slump.

After privatising Pacific Concord in 2003, he hived off China Properties Group in a HK$1.6 billion initial public offering in February this year.

As part of international expansion plans, China Properties Group last month invited the Children's Investment Fund Management (TCI) to buy a 5 per cent strategic stake.

TCI is an activist hedge fund well-known for swooping on companies and demanding widespread changes. But Mr Wong pledges that his company will change faster than the fund requires.

Q: Why did you invite TCI as a strategic shareholder? Do you lack capital for expansion?

A: We do not need money but want to push China Properties Group into the international market. Having a global fund as a partner will help.

Q: What is the attraction of the partnership?

A: With TCI it will be easier in terms of getting more international shareholders and raising funds.

Q: Are you worried the fund will interfere with operations and pressure you to pay higher dividends?

A: No. Our investment style is similar: once we pick a good project, we go ahead with it, fast. As a result, we reap good profits. I am not worried that they will ask for changes. We can change fast and we may think they are too slow.

Q: What is your company's business model?

A: Companies have different business models but the rationale behind them is more or less the same - maximising profits without having to take high risks.

Therefore, we have decided to invest in four major cities in China - Beijing, Shanghai, Chongqing and Tianjin.

Because of strong domestic demand, we can sell our flats even if the market is at the bottom of the cycle. The only risk is whether we can make greater profits or not. In remote cities, you will not find buyers when the market falls.

Q: Will the mainland property market keep rising?

A: It has reached the peak of the cycle. Nowadays, companies do not look at fundamentals when they invest. Prices are so high and the share prices of property companies are trading at a premium to their profits.

One day the international funds which financially support these mainland developers will go. Once they do, local developers themselves cannot support the market.

Q: What will be the trigger for these international funds leaving?

A: The subprime issue is one of them. It will affect the United States and hit China's booming economy as 20 per cent of mainland exports go there.

Q: How are you preparing for the likely property market crash?

A: By not raising our hands at the auction halls. The market is crazy and land prices are very high at these auctions. We will look for sites through private negotiation.

We will not buy sites in remote cities and we will only look for projects that can make profits within a three-year period and have a gross margin of 50 per cent. It is difficult but we have to insist on this criterion.

Q: Your company's most valuable project is Concord Plaza in Nanjing Road, Shanghai, which you estimate is worth 40 billion yuan. How did you get the site?

A: It was 1992 and it was the first time the Shanghai city government had offered such a big site for sale.

We beat many Asian and Hong Kong developers to the sale and this was probably because we had built up a relationship with the city government since 1987 with the operation of two shopping malls there.

Q: You spent 10 years to win approval for the entire project. Were you frustrated?

A: No. In the 10 years, we spent a lot of time enlarging the site by merging it with other nearby properties. Because of its core location, any changes in design plan needed approvals from various departments and each procedure took time. But it was not unexpected.

Ten years is the normal timeframe for a redevelopment project of such scale, even in other countries.

Q: Do you think your project will replace Xintiandi, owned by Vincent Lo Hong-shui's Shui On Land, as the landmark of Shanghai?

A: Between the late 1970s and 1990s, our 'Tianba' watch brand was very popular in Shanghai.

However, with European brands now imported into the city, no one remembers Tianba. Only people in the rural area know about them. The fate of Xintiandi will be the same.

In terms of size, Xintiandi is not the biggest. In terms of location, it is not best located.

Q: You have been quiet in Hong Kong for a while. Why?

A: I do not know where the Hong Kong market is going. I have a lot of land in Lok Ma Chau but I dare not develop it.

Today, the market is good but what about tomorrow? It is not stable. Right now, I will concentrate on the mainland real estate sector which is more predictable.

Q: Some say Hong Kong's housing market is about to start its bull run. Do you agree?

A: With home prices reaching HK$40,000 per square foot, I reckon the market is crazy.

How can this market be sustainable? Who are the buyers? Mainlanders? There may be some mainlanders buying.

But look, when prices of houses in the mainland are cheaper, the size is bigger and the environment is much better, why do they need to buy units in Hong Kong? China is strong and is improving very fast. Hong Kong leaders should think about how to face the growing mainland market.

A city mayor [in the mainland] is better than Hong Kong's Chief Executive Donald Tsang Yam-keung, in terms of knowledge and international perspective. Mainlanders are clever and hard working.

Q: You have been involved in many industries - from manufacturing to property, how can you manage such a variety of businesses?

A: We only target businesses with growth prospects. I did not know all about the businesses at the beginning but I hired professionals to run them. Like Li Ka-shing who started with the plastic flower business [before moving to property], we all learn to cope.

Q: What is the secret of your successful career?

A: When you steer a ship, you need to know where to go. The process is painful but once you decide, you must go ahead as you have planned.

Even if you choose the direction, it does not guarantee that you will arrive at that destination. So during the process, you must insist on and believe in yourself. If you can do it, you will win.

Q: What are your plans for the next five to 10 years?

A: With the wealth of mainlanders improving, demand for homes will surge. So we will focus on the mainland property market for the next 10 years. Having said that, I have a national licence to run a commercial bank in Ningbo and that will be the next area to expand into.

Q: What has been one of your worst experiences?

A: In the 1980s, our factories were confiscated as some officials were not happy to see foreign companies earning money. But they returned them to us quickly.

Q: How do you spend your leisure time? Do you play golf?

A: I have never touched a golf club. I spend all of my time working but I enjoy it very much.

Q: What is the secret of staying young?

A: [Laughing] I am no longer a young man.