Time Finally Running out for Guangzhou's Problem Plaza Tom

B2 BUSINESS COMPANIES & FINANCE MONDAY, OCTOBER 13, 2003 SOUTH CHINA MORNING POST Fashion firm seeks Time finally running out for Lai See liquidity [email protected] Guangzhou’s problem plaza DENGUE FEVER INDICATOR Think advertising doesn’t work? in listing Especially those annoying television infomercials that go on Tom Mitchell in PROMISING START forever and give a hotline number Toh Han Shih for viewers to call? Think again. Guangzhou relates Developments surrounding Swire's Taikoo Hui Our Markets editor arrived at Ports Design, a fashion firm focus- the many twists Guangzhou Cultural Plaza development, 1999 - 2003 One project, two incarnations work on Friday to find more than 50 ing on China with investments messages on her voicemail – and from the Singapore government, and turns that Autumn 1999: Decision to award Guangzhou Daily Guangzhou Daily Cultural Plaza Taikoo Hui Guangzhou Cultural Plaza still more streaming in. plans to list in Hong Kong this year, Cultural Plaza design contract to Miami-based It turned out that an infomercial according to managing director Al- have bedevilled a Arquitectonica; Guangzhou Daily Group editor-in-chief on ATV Home for an electric fred Chan. hastily summoned to Beijing; contract award retracted Ownership Guangzhou Daily Group (100%) Swire Properties (55%), mosquito-killer broadcast a num- The Government of Singapore potential city Guangzhou Daily Group (45%) ber almost the same as her’s but Investment Corp (GIC) owns a sub- April 2000: Design contract formally awarded to Investment 1.3 billion yuan 4 billion yuan with two digits reversed. Lai See London-based Terry Farrell & Partners stantial minority stake in Ports De- showpiece Project size 230,000 sq m 370,000 sq m didn’t believe it – until we took one sign, while Mr Chan’s family owns of the calls: “Mosquito Killers March 2001: Guangzhou Daily and Swire Properties Architect Terry Farrell & Partners Arquitectonica more than half of the Hong Kong- In the autumn of 1999, diplomats sign letter of intent to develop a retail, office, hotel Limited, how may I help you?” based company. CFS, a Canadian- from the United States consulate in and cultural complex in Guangzhou Features 64-floor office tower, retail space, Major retail centre, offices, “Waai! I want to buy one of listed investment holding com- Guangzhou were en route to a sign- civic plaza, library, bookstore, hotel, performing arts centre those electric bug killers,” the caller pany, also owns a stake. ing ceremony. Summer-autumn: Guangzhou Daily president Li arts centre and exhibition hall and municipal library shot back in Cantonese. We gave Mr Chan said one reason for the Arquitectonica, a Miami-based Yuanjiang promoted to Guangzhou party committee Original her the right number and hung up – listing was to give shareholders li- architectural firm, was to be an- and head of committee's propaganda department completion only for the phone to ring again. quidity on their investments. nounced as the winner of a US$5 January 2002: Guangzhou Daily editor-in-chief He target Early 2002 2005 And these were just the people The initial public offering will million tender to design a head- Xiangqin detained in corruption investigation who misdialled. Imagine how raise $300 million to $400 million, quarters-cum-civic plaza develop- many called the right number. according to market sources. ment for the Guangzhou Daily April: Guangzhou Daily and Swire sign joint venture Ports Design had begun the ap- Group. It was a nice little scoop for contract to build Taikoo Hui Guangzhou Cultural 30-YEAR ANTENNA CURSE? plication process for a Hong Kong the Americans, won at the expense Plaza, Arquitectonica brought back into project Who says investors have short listing, Mr Chan said. He said the of eight other international bidders memories? When a mainland July: Li Yuanjiang detained in corruption company was “more than qualified during an 18 month-long competi- company that makes telecoms investigation to list on the main board”, given its tion. network antennas received prelim- track record of profitability. Suddenly, one of the diplomats’ October: Guangzhou mayor and project inary approval to list on the Growth The company’s gross profit mobile phones rang. The ceremo- backer Lin Shusen promoted to party Enterprise Market last week, some margin has grown from 51 per cent ny had been cancelled. secretary investors and commentators were in 1999 to 54 per cent in 2000, 58 per Unbeknown to Arquitectonica reminded of another antenna cent in 2001 and 62 per cent last and their consular lobbyists, the June 2003: Meeting between Guangzhou company that took the market by year. Mr Chan attributed the Americans had just been am- Daily, Swire and party secretary Lin storm 30 years ago. growth to economies of scale. bushed by the British – and Beijing. Shusen fails to break deadlock; it is later Hong Kong Antenna made Its China business realised a Then president Jiang Zemin was suggested that Guangzhou Daily reduce aerials for a curious new invention profit of five million yuan (HK$4.69 scheduled to make a state visit to its stake called the television that in 1973 million) on turnover of 50 million London, and the central govern- October: Swire Pacific chairman James was selling like hotcakes to the then yuan in 1994, and a 92 million yuan ment needed some presents for Hughes-Hallett tells Sing Tao Daily project colony’s nouveau riche populace. profit on turnover of 470 million their hosts. completion delayed until 2008, citing “a Hong Kong Antenna seemed yuan last year. China accounts for “Arquitectonica were initially number of partnership issues” the perfect play on the more than 95 per cent of its busi- told they had got [the Guangzhou phenomenon, and its stock shot up ness and Mr Chan said the firm had Daily contract],” said one diplomat December 31: Deadline for restructuring from $1 to $50. no plans to expand in other coun- involved in the skirmish. “But then agreement; Guangzhou government The company’s Cantonese tries for the next two years. there was a hasty trip to Beijing by poised to take back the land name, incidentally, was Heung Excluding the period from [then Guangzhou Daily Group edi- Gong Tin Sing, which some SCMP Graphic Sources: Guangzhou Daily Group, Swire Properties, media reports March to May, when year-on-year tor-in-chief] He Xiangqin. Ms He observed rhymed with the local sales growth slowed to 3 per cent came back and announced that a slang for “crazy” – “chi sin”. It was due to Sars, Mr Chan said revenue British firm had won it.” is that they rarely pay for them- The Americans thought they zhou Daily was in full swing. Ms He group officials loath to sign off on one of the last market crazes before grew 18 to 20 per cent per year. Its The beneficiary was London- selves and while Guangzhou Daily had laughed last. Time was to prove was swallowed up by the Chinese even obviously legitimate initia- the great crash of 1974. Time to call return on equity had been about 40 based architect Terry Farrell & Part- Group had operated a profitable that they had not. Communist Party’s secretive inves- tives and expenditures, lest they your broker? per cent in the past few years. ners. Terry Farrell’s coup was con- property business since 1995, it had “This is a very sensitive issue,” tigative apparatus that usually pre- somehow come back to haunt Ports Design has 250 retail out- firmed the following April. It was to neither the knowledge nor the ex- said one source close to Terry Far- cedes formal criminal charges and them in the future. lets in more than 50 mainland cities design the Guangzhou Daily Cul- perience sufficient to build and rell. “There are still unresolved trial. She has yet to emerge. As one media industry source and four Hong Kong stores. It em- tural Plaza – then a 1.3 billion yuan manage such a multi-use complex. matters between Terry Farrell and Despite Ms He’s disappearance close to Guangzhou Daily said ear- ploys about 2,800 people on the (HK$1.21 billion), 230,000 square Enter Swire Properties, which Guangzhou Daily. They reckon and the ongoing investigation, lier this year of Mr Li and Ms He’s mainland, including 1,300 in its metre project which the Guang- began discussions with Guangzhou they are owed a fairly substantial Guangzhou officials told Swire that successors: “They can’t do any- manufacturing plant in Xiamen. It zhou Daily Group was developing Daily not long after Terry Farrell sum of money by Guangzhou Dai- the matter should not effect what thing before these cases are plans to increase the number of re- on its own with a completion target was awarded the project’s design ly.” The source added that the dis- was, after all, a contract between cleaned up. Right now, they are go- tail outlets in China at a rate of 10 of early last year. “The Brits had contract. With prestige retail, office pute between Terry Farrell and companies. The formal joint ven- ing backwards.” per cent a year, he said. worked damn hard [for Terry Far- and hotel projects such as Pacific Guangzhou Daily centred on work ture contract was duly signed in Guangzhou Daily sources said Today: AustCham presents “Australian Its stores carry the Ports Inter- rell] for two years,” said another Place under its belt, Swire was in done early on in the project, before April last year. the group’s conservative new lead- Tax for Expats”. For details, call 2522 national clothing brand and that of diplomatic source. “It was a big many respects a perfect partner. Swire entered the picture. After the signing, negotiations ers became more reluctant to 5054 or visit www.austcham.com.hk German carmaker BMW. thing for them.” Swire was also champing at the Between the signing of Swire’s continued over various terms and commit themselves to a project On the mainland, its products But it was also just the first of bit to get into China. It had yet to letter of intent in March 2001 and conditions that had to be met be- they had inherited rather than initi- The HKGCC hosts a joint subscription sell at an average price of 3,000 many twists in a commercial dra- enter the mainland property mar- the joint venture contract in April, fore Swire would commit its money ated. Their reticence has been rein- luncheon – “How Metro Changed the Newspaper Industry” – at the Island yuan – two to three months’ salary ma that was to involve the ambi- ket in any meaningful fashion and to the project. Though trouble- forced by ever tougher competition Shangri-La. Visit www.chamber.org.hk for many Chinese workers – but Mr tious vision a new mayor had for the Guangzhou Daily Cultural Pla- some, such wrangles are common in the local media industry and a Chan said it was not short of cus- Guangzhou, international diplo- za seemed like the perfect starting “We have found both to most joint-venture property less promising financial outlook as The HKGCC also hosts a “Pearl for tomers. macy and a corruption scandal at point. projects on the mainland and the domestic property sector – Youth” briefing at the Conrad hotel. the heart of arguably the greatest First, the project offered a cash- an excellent therefore did not suggest any major which is central to the group’s ad- success story in China’s fast-mov- rich partner under the entrepre- problems ahead. vertising business – cooled. Today, Shanghai: The Centre for Asia ing media industry. And it is not yet neurial stewardship of Mr Li and partner and a The situation, however, had The end result was another year Private Equity Research presents its over. Four years after the American Ms He. Second, it enjoyed the sup- prime site to changed radically in July last year, of drift that not even Mr Lin – de- “Private Equity Series”, an executive Draft eases diplomats were informed of Arqui- port of Mr Lin and the Guangzhou when Mr Li was also implicated in spite both his keen interest in the investment management workshop for tectonica’s bad luck and turned government. Third, high-grade enable us to the corruption investigation and project and his promotion from SMEs (until Wednesday). For details, their car around to head back to the property projects were relatively detained by party investigators. mayor to party secretary late last call (852) 2861 0102 or visit controls on Guangzhou consulate, construc- scarce in Guangzhou compared undertake our first According to Guangzhou media year – has been able to arrest. www.aisape.com tion on the plaza has yet to begin. with Shanghai and Beijing, giving sources, an already tense atmos- Swire has said it remains com- significant Tomorrow, HK: The International Even before the Guangzhou Swire a better entry point into the phere at Guangzhou Daily began to mitted to the project, which on bal- derivatives Association of Business Daily Cultural Plaza became briefly market. Finally – and most impor- investment in the border on paranoia. Other senior ance remains an attractive one. De- Communicators Hong Kong Chapter entangled in Sino-US-British rela- tantly – Guangzhou Daily was will- mainland” executives were swallowed up by spite rapid development, Guang- hosts a networking cocktail night at Bei Hu tions, it had emerged as a pivotal ing to cede a 55 per cent stake to the party machinery. Some zhou still lacks a top-flight com- Vong. Call Linna Leung 2869 6536 project in Guangzhou’s develop- Swire. Swire statement last year emerged weeks later back in their mercial and retail project. And it Domestic and foreign financial in- ment and one that was of keen in- A letter of intent was signed be- old jobs. Others did not. has been about 10 years since a new Wednesday, HK: The HKGCC hosts a stitutions in China would be al- terest to then mayor Lin Shusen. tween Guangzhou Daily and Swire The former head of the group’s up-market hotel – also envisioned Europe Committee roundtable lowed to trade derivatives for cli- After the Guangzhou Daily in March 2001 and a formal joint property development company, as part of the project – was built in luncheon: “Eurogate Hamburg: ents and themselves under draft Group’s phenomenally successful venture contract followed in April, last year, there were two important Deng Zequan, was charged with Guangzhou. Explore New Opportunities to do rules in a consultation paper that transformation in the mid- and last year, by which time the developments that were to prove taking bribes during the construc- But Guangzhou Daily and Swire Business in Europe”. appears to hint at a relaxation of late-1990s under the leadership of project’s size had been expanded to fateful. tion of employee housing and the have only a few months to restruc- heavy mainland regulatory restric- group president Li Yuanjiang and 370,000 square metres and its in- The first was Mr Li’s promotion group’s state-of-the-art printing fa- ture the project, with the newspa- AmCham hosts “Do Hong Kong Asset tions on derivatives trading. editor-in-chief Ms He, China’s vestment scale tripled to four bil- to the Guangzhou Party Commit- cility on the western outskirts of per group likely to take a much Values Travel Well? Making the Case for Globally Harmonising Asset With approval from the China most commercially successful lion yuan. The project was rechris- tee in the latter half of 2001, where Guangzhou. smaller stake and not relocate its Valuations”, a lunch at the Conrad Banking Regulatory Commission print media group was flush with tened Taikoo Hui Guangzhou Cul- he headed its propaganda depart- The party investigation was so headquarters to the development. hotel. Visit www.amcham.org.hk (CBRC), they could act as brokers cash and keen to build a bold new tural Plaza. ment. Mr Li was replaced as secret that even senior executives In the absence of a restructured or market-makers of derivatives headquarters complex. “We had been looking for the Guangzhou Daily Group president inside the paper were not sure what agreement, the Guangzhou munic- Friday, HK: The HKGCC and SCMP ranging from forward contracts But as the Guangzhou Daily right opportunity to invest in main- by Zhang De An, a much more con- Mr Li and Ms He were being inves- ipal government is set to reclaim present “The Second Pearl River Delta and commodity futures to options was also the official mouth-piece of land China – one that would allow servative operator with a People’s tigated for. It was – and remains – the land at the end of this year. Conference: Charging Ahead to a New for clients including mainland in- the Guangzhou party committee, us to utilise our particular expertise Liberation Army background. possible they were not guilty of cor- Time is the one thing that this Pearl River Super Zone”, at the stitutions and individuals. even commercial endeavours were in property development and man- The second was Ms He’s deten- ruption but simply that Guangzhou project has had plenty of during the HKCEC. Call 2565 2420 or visit They could also engage in pro- suffused with politics. In a 1997 in- agement . . . we have found both an tion in January last year as it Daily played the same games with past four years. But even that pre- www.chamber.org.hk prietary derivatives trading for both terview with the South China excellent partner and a prime site emerged that a party-led corrup- company funds that so many state- cious commodity is finally begin- hedging and profit, according to Morning Post, Mr Li said running to enable us to undertake our first tion investigation into the Guang- owned enterprises do. That made ning to dwindle away. The HKGCC hosts a Distinguished the consultation paper the CBRC the Guangzhou Daily was like walk- significant investment in the main- Speaker Series luncheon, in honour of released yesterday. ing a tightrope between profits and land,” Swire said in a statement an- Financial Secretary Henry Tang Ying-yen, at the HKCEC. The draft rules would apply to politics. nouncing the agreement. mainland lenders ranging from Mr Lin was embarking upon a One ironic consequence of Peattie & Taylor policy banks, trust and investment three-year infrastructure spending Swire’s participation was the return Alex ➤ If you have information on companies to rural co-operative spree that was to change the face of of Arquitectonica, with which it events that should be banks. The document does not ap- Guangzhou. This transformation worked on its signature Festival included here, please e-mail [email protected] pear to limit foreign lenders to a was part of the city’s larger ambi- Walk and Cityplaza developments narrower business scope. tion to reclaim its traditional role as in Hong Kong. Smarting from earlier deriva- south China’s economic and com- Indeed, Terry Farrell would COMPANY ANNOUNCEMENTS tives-related scandals, China has in mercial hub back from Hong Kong. eventually withdraw from the Tracker Fund of Hong Kong B2 recent years imposed heavy restric- The mayor also wanted to re-es- project – to the chagrin of the Brit- Zhejiang Southeast Electric Power B6 tions on domestic companies’ de- tablish Guangzhou as the region’s ish diplomats who had fought so rivatives trading activities and the leading cultural centre. To that end, hard for it in the first place. “The More notices and announcements development of the domestic mar- the Guangzhou Daily Cultural Pla- Brits thought: ‘Er, wait a minute, in Classified Post ket in recent years. za was to devote significant space what’s a British company [Swire] The mainland has three limited to civic facilities such as a library doing knocking out another British commodity futures exchanges and and a theatre. company [Terry Farrell]’,” said a Contact us no financial derivatives. The problem with such facilities western diplomat. Business news desk: Doonesbury Gary Trudeau Tel: 2565 2212 Fax: 2565 1624 E-mail: [email protected]

Business Editor Simon Pritchard Trade fair hopes [email protected] Associate Editors Jane Moir Guangzhou is expecting a record [email protected]

200,000 visitors at the 94th China Tom Mitchell Export Commodities Fair, which [email protected]

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