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Editorial Content
Development of a Massive Beijing Business Park
and the Rags-to-Riches Man who Made it Happen.
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A World Away –
The second largest and the
best-known dam in the United States is the massive Hoover Dam. On
the Colorado River, at the border betweencc Arizona and Nevada, the
concrete structure extends in height to 221 meters (726 feet) and
its maximum thickness is 200 meters (656 feet). In length it is 379
meters (1,244 feet) and about 3.33 million cubic meters (4.36
million cubic yards) of concrete forms the structure.
That is enough concrete to wrap
a four-foot-wide sidewalk around the Earth at the equator.
What has this got to do with
business in China? The writer will use the Hoover Dam as a western
point of reference and comparison for a sometimes hard-to-grasp
scope of development – and to introduce one representative story of
progress, entrepreneurship and new economy in a changing nation.
Advancing Project and Premise
—
Case Study in
China's Headquarters Economy
To meet the accelerating demands of
ambitious public projects, expanding domestic enterprise and
on-the-march multinational operations, China’s builders formed out
963 million metric tons of cement in 2004. That’s equivalent to
constructing about 120 Hoover Dams in a single year. A fair share of
that concrete went into a project that typifies the speed, scale and
human ambition driving China’s astounding development, Advanced
Business Park (ABP), a 500-building development conceived by a man
who just 15 years ago arrived in Beijing with total venture capital
of 2,000 yuan – about $250.
Material, Mass and Manpower
If it were a national goal to
consume China’s output of concrete, ABP’s principal creator, Xu
Weiping, and his development team would have done their part. The
single largest commercial development in the Zhongguancun area of
Beijing, known as “China’s Silicon Valley,” the project’s total mass
comprises 1,400,000 cubic meters – 92,000 metric tons of concrete.
By the standards of most US-based
business parks, ABP’s other stats are also impressive. On a
campus-like setting, with 55 percent of the land reserved for green
grass, gardens, trees, winding paths, plazas and exterior artwork,
the total site spans 65 hectares (160 acres), enough expanse to
accommodate more than 120 NFL-scale football fields.
Intended primarily to house
corporate headquarters, total usable interior space is 1.3 million
square meters (13,993,000 square feet). That’s well more than three
times the interior space of America’s tallest building, the
110-story Sears Tower, which in the US is second in office area only
to the Pentagon, officially the largest office building in the
world, with 3,800,000 square feet of usable space.
To provide a perhaps more graspable
concept of the scale: ABP encompasses more office space than the
downtown areas of many US cities. The single project well surpasses
San Diego at 9.2 million square feet of central downtown space,
Miami at 9 million, Orlando at 8.1 million, Fort Lauderdale at 7
million, Tampa at 8 million, Kansas City at 10.5 million, St. Louis
at 12.5 million, Oakland at 12.8 million, and it edges out
California’s capital, Sacramento, at 13.1 million square feet
(according to a 2004 study by Colliers International).
But it is the speed of construction
that would serve the fantasy life of hard-charging US-based
developers. In less than two years, 303 ultramodern, eco-friendly,
energy-efficient mid-rise office buildings rose from the earth.
Employed to make it happen, more than 10,000 workers were on site at
one time. More than 7,000 today remain on the job, erecting the
other 200 buildings that are set for completion by 2008.
Portfolio and Potential
At a combined investment of 6
billion yuan (US$725.5 million), and with the support of the Beijing
municipal government, the project was realized by the British
Dauphin International Group, Beijing Fengtai Science Park
Construction and Development Co. Ltd., Beijing Dauphin Digital Park
Construction & Development Co. Ltd., and the principal executive
common to those firms, Xu Weiping.
Each year the businesses housed at
ABP are projected to yield 1.5 billion yuan (US$181 million) in
taxes, with industrial and trade volume expected to cap 50 billion
yuan (US$6 billion).
Today ABP accommodates the
headquarters of top Chinese concerns and international corps. These
include Samsung, the Long March Launch Vehicle Technology Co., Ltd.,
China Aerospace Times Electronics Company, Jianlong Steel Holding
Co., Ltd., China Material Storage & Transport Corporation, China
Automotive Technology & Research Center and other high-profile
state, private and multinational firms.
Besides the sale and lease of
buildings to house the headquarters of domestic and multinational
firms, the ABP complex will comprise general offices, R&D
facilities, light manufacturing, apartments, condominiums, IT
service centers, health clubs, auditoriums, banks, an international
clinic, a post office, supermarket, entertainment venues, a full
range of international dining houses, various other service
providers and a five-star hotel.
From $250 to 500 Buildings
The ABP project was envisioned and
conceived by Xu Weiping, CEO of Dauphin (UK) International Group,
and Chairman and General Manager of Dauphin High-tech Business Park
Development Ltd.
Born in 1960 in Haining, Zhejiang
Province, after graduating university with a degree in automation
processes, Xu first worked as a manager and director with state
industries, in journalism and in government. He realized rapid
advancement and promotions, but after a few years he gave up the
safe career harbor of a state assignment. This move was due in part
to his drive to participate more directly in China’s market reforms
and opening up to the outside world.
In 1990, now a free agent, Xu
relocated to Beijing’s Zhongguancun district. Although now in
“China’s Silicon Valley,” his first entrepreneurial venture would be
somewhat less than hi-tech and a bit shy of high-powered.
Xu arrived in Zhongguancun with
2,000 yuan (now about $250). In the course of scouting-out
opportunities, he happened to establish Contact with a Guangdong
appliance manufacturer holding a surplus of thousands of new but
unremarkable room fans. It was midwinter and the units were stored,
predictably so, considering there was approximately zero demand for
non-heated air movers. But while most would have seen the fans as a
storage liability, he saw an opportunity.
Xu structured a deferred-payment
purchase on the fans and proceeded to use his available capital to
print up thousands of discount coupons. Using his knowledge of
government procurement policies, he distributed the coupons to the
administrative heads of government offices. The concept was that the
coupons would serve as productivity awards and gifts for thousands
of state employees. Upon presentation, the employee received a free
fan, the state offices paid a much discounted price.
Before the fan game was over, Xu
managed to convert his 2,000 yuan startup capital into 200,000 yuan.
That sum in turn went into establishing what would prove a highly
successful (and actually hi-tech) plant manufacturing electronic
components. Based on an OEM model, the single operation was soon
realizing annual volume of 10,000,000 yuan. Xu launched into other
ventures and by the mid 1990s he was one of the top tax payers in
China.
It was in early 1996 that Xu took
an extended sabbatical to live in the UK as a visiting scholar and
to further explore the ways of western industry and culture. In late
1997, he returned to China, now heading up the Asia-Pacific Division
of Dauphin (UK) International Group, also to serve as Chairman and
General Manager of Dauphin High-tech Business Park Development Ltd.
The Headquarters Economy
Within the next few years, Xu
conceived of Advanced Business Park, his most ambitious venture to
date. He sees the park as accommodating the expanding demand for
headquarters facilities befitting a new breed of domestic enterprise
and the China ambitions of established multinationals. This, Xu
says, is part of China’s evolving “headquarters economy,” a fiscally
dynamic reaction sourcing from the collectively beneficial
centralizing of lasting enterprise and progressive ventures. This
self-generating effect will create a tangible driving power within
China’s new economy, according to Xu.
According to Zhao Hong, deputy
chief of the Economic Research Institute, Beijing Academy of Social
Science, the term is relevant and broadly applicable. “The
headquarters economy concept envisions an assembly of multinational
companies, creating attractive conditions and forming a rational
division of labor.”
Xu puts the theory in perspective
relative to ABP: “We are creating a master environment favorable to
domestic and multinational headquarter operations in virtually every
respect.”
Goodwill and Greater Good
According to Xu, the entire ABP
project represents a particularly productive collaboration between
industry and government. Metaphorically, he explains, “It is
something like a courtship. We are the suitor pursuing our bride
[government]. We explain to her the good that we can offer to a
family, and we express our honesty and our sincerely faithful
nature. Then we bring flowers in the form of increased tax revenues,
more jobs, and added vitality in the community.”
In less metaphorical terms he
explains the fundamental reason why such cooperation must work.
“Ultimately, we and the government are working to a single goal… the
greater good, to use a western expression. While the governments and
corporations of fully developed countries have the luxury of
focusing on the bottom line, we must also educate our people in the
ways of a new economy and better their lives. Only by taking these
first fundamental steps and working together can we bring China to a
par with now greater powers. To become the equal of more advanced
nations, it may take us five, ten, a hundred, or a hundred and fifty
years, but we will eventually succeed.”
Xu Weiping has guest lectured at
Harvard University in the United States and he has been invited to
direct an MBA program at the prestigious Tsinghua University,
Beijing. The ABP business model will soon be part of the MBA
curriculum at Tsinghua and Peking universities.
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