From a sweatshop to reshaping Beijing
Having built a property development empire, raised US$1.9 billion through its Hong Kong IPO, and already achieved pre-sales of 10 billion yuan (HK$11.4 billion) this year, Zhang Xin is adamant about one thing: it was never about getting rich.
"Making money was never the motivation for me; I wanted to learn something and be part of the reform," said the chief executive and co-founder of Beijing-based SOHO China. "I was one of the early ones, a mainland Chinese with a western education, but it was always my dream to go back to China and see what change we could make." Choosing to do that in the field of commercial real estate became the logical option after her 1994 marriage to Pan Shiyi. He was already a developer and firmly convinced that, one day, the whole of Beijing's central business district would resemble Manhattan. For private entrepreneurs to play their part, it was just a matter of finding the means and the method.
But even with Pan's local knowledge and Zhang's investment banking experience, acquired during stints with Barings, Goldman Sachs and Travelers Group in Hong Kong, that initially proved a tough nut to crack. For the first two years after founding their company in 1995, every day was a struggle trying to secure land and woo investors.
The breakthrough came, though, largely thanks to former premier Zhu Rongji and his initiatives to reform the housing sector. This spurred lending to individuals, opened the way to private home ownership and, as a result, lit the touch paper for a major explosion in real estate development.
"When the policy changed, we moved very quickly," Zhang said. "[To get land], my husband's idea was to go and talk to the factories in the CBD [central business district] who faced shrinking production and, because of the new planning regulations, needed to move out. You wouldn't believe it, but not many other people went to talk to them." Knowing that a successful business model depended on pre-sales, which access to mortgages made possible, Zhang could see that design and marketing now took on new significance. Freed from the old system of government-assigned housing, people wanted to see what they would get for their investment. Therefore, the company imported the idea of show apartments, complete with furniture, fittings, flowers and music to entice potential buyers and secure down payments.
"For people to want to buy, you have to come out with something exciting," she said. "We were the first to show a property with `move in' conditions, because we knew that the real money had to come from pre-sales. That is why design has to be so good and why our buildings are all distinctive."
Reshaping the look of the nation's capital, balancing aesthetics and commercial viability in high-value projects, is obviously quite a leap from the sweatshops and tenement blocks of early 1980s Hong Kong. But that is where Zhang began her working life, as a 14-year-old middle school graduate from Beijing. For five years, she stitched garments and assembled circuit boards in the factories of Kwai Chung and San Po Kong, attending night school and saving every spare dollar.
Seeing little chance of a university place in Hong Kong, she left for England with the equivalent of just £3,000 (HK$38,800) to her name. After registering with a secretarial-language school, she passed the necessary exams to begin an economics degree at the University of Sussex.
"Back then, the prevailing intellectual movement in China was economic reform, so my choice reflected what was in everyone's mind," Zhang said. "I was always interested in the latest discussions and policies in China about breaking away from socialism and wanted to be part of this campaign of reform." Switching to Cambridge University, her master's thesis was on the privatisation of the Chinese economy which, in 1992, made her an obvious recruitment target for finance houses waking up to the mainland's transformation. However, posted to Hong Kong by Barings, she found her role was less about interpreting the big picture and more to do with analysing the performance of the relatively few companies privatised as B-shares.
"I moved on," she said. "I wasn't going to stay in investment banking and be a fund manager, but nowadays my banking background does come in useful. I do the international financing - we did a convertible bond this year - and I think our IPO is still the largest for a property development company." The fortuitously timed listing in October 2007 had, she said, brought more capital, more visibility and more pressure. It was, though, a natural evolution in keeping with the company's transition from residential properties to small offices and, now, large-scale commercial developments and shopping malls.
"Commercial property in Beijing and Shanghai still has the highest margins, so we have to go with the market demand," she said. "We generally sell everything we build and land is relatively easy to come by." With her focus still on bringing positive change wherever possible, Zhang also set up a foundation to support schools and improve education in China. It has subsidised poor students at major universities, trained teachers in underdeveloped provinces such as Gansu, and given company staff an opportunity to be seconded to ongoing projects.
"We really believe everyone has a heart to render service," she said. "To the extent that I can be an ambassador, I have always felt a self-imposed role to have an active connection with society and make service part of the company culture."
This is the third in a seven-part series on influential women who are based overseas