China Rising, The Times Magazine
Zhang Xin and Pan Shiyi are the It-couple of Beijing: property tycoons who made a fortune at dizzying speed – and whose futuristic designs are reshaping their city. By Bettina von Hase.
Its Sunday night in Beijing, and a private lift sweeps me up to the 32nd-floor penthouse Of Jianwai SOHO tower: the family apartment of Zhang Xin and Pan Shiyi, China's most visible and flamboyant property tycoons. When the door opens, I am led into a huge living room, with floor to ceiling windows and amazing Chinese art on white walls. I have met them before, in London, and they greet me warmly, Zhang, attractive and charismatic, dressed informally in black trousers and leather gilet, and Pan, who looks like a clever faun, with dark eyes that miss nothing behind black-rimmed spectacles.
They have invited me and a couple of friends for an informal dinner, and we sit down to delicious Chinese fare, while the conversation is peppered with financial jargon. No wonder. Jianwai is just one of several large-scale developments they have built in Beijing’s central business district (CBD), making them the largest developers of residential and commercial buildings in the city. Married since 1994, they started their company, SOHO China, in 1995, and took it public last year, raising US $1.9 billion (£950 million) on the Hong Kong stock exchange — a high point in a dizzying career which has seen them build a fortune in 12 years through fusing brilliant land deals, marketing genius and innovative architecture in a city where until recently everything was grey.
By contrast, their buildings are designed by renowned architects such as Japan’s Kengo Kuma, and make use of dramatic visual effects, either white or black. with splashes of colour in the interiors. Their business and personal lives have also been publicly intertwined, turning them into style icons and lending a fascination to the brand they represent. "They are the It-couple of China," comments Sein Chew, an investment specialist from Hong Kong and New York. Pan has become famous through his blog on property and society at sina.com, which quickly surpassed 30 million hits.
Their current portfolio includes seven mixed-use developments: from New Town, their first project, which they started in 1995, on land no one wanted, to Chaoyangmen, due to complete in 2011. There is a residential development in Boao, on the emerging leisure destination Of Hainan Island. and the extraordinary "Commune by the Great Wall”. Opened in 2002, it was mainland China’s first high-end luxury resort – a showcase of houses master-planned by Hong Kong architect Rocco Yim and designed by Asian architects, including Yung Ho Chang.
Boao and the Commune are managed by Kempinski Hotels, as Zhang, by her own admission, was not experienced in running resorts. “It didn’t really start as a business, it was a dream,” she says, a dream fuelled by her interest in architecture. Now, corporate giants such as Motorola, LVMH, Diageo and the Museum of Modern Art New York come for business weekends and brainstorming.
In the process, Zhang and Pan (the Chinese put surnames first), 43 and 44, have become symbols of the New China. Their success is underpinned by a deep knowledge of their customers — both the international corporate community and the rapidly increasing Chinese middle class, who are building their fortunes in the economic climate that emerged with the reforms of the Eighties and Nineties.
After all, before they became billionaires Zhang and Pan lived the life that SOHO China’s customers aspire to, young cosmopolitan types for whom the SOHO concept – “Small Office – Home Office” – was perfectly suited. The concept was inspired by the emergence of internet technology, the rise of small companies and the need for more live-work spaces. The company changed its strategy two years ago, from luxury housing developer to a focus on office and retail developments — in response to a government clampdown on the top-end housing market designed to control soaring prices.
Their own home, informal yet elegant, makes apparent that they have moved on to greater things. Zhang and Pan are frequent speakers at international conferences such as the World Economic Forum in Davos. Zhang, chief executive of SOHO China, of which Pan is chairman, was selected as one of the "Ten Women to Watch in Asia" by the Wall Street Journal. But they are still adjusting to the responsibility of running a publicly quoted company.
"I am exhausted," Zhang tells me, every inch the chief executive in a Prada tweed suit and stiletto heels when I visit her in her office. “Since the IPO, we are on a different level. The projects are just flying through the doors. Everyone knows we have capital and a brand name and there are thousands of developers thirsty for cash.” She becomes visibly excited when talking about her latest project, Tiananmen South (Qianmen) – 360,000sqm of conservation and 201,831sq m of new buildings, in the largest hutong conservation zone in Beijing.
Hutongs are the low traditional houses that have disappeared rapidly in China’s construction boom, but now the government wants to breathe new life into the city’s cultural heritage. It turned to SOHO China for this project, and the company took it on once the government had relocated the people living there. Her description makes me melancholy, the sweeping away of old for new in the name of progress; she acknowledges it was painful to watch parts of old Beijing disappear. But only three years ago, there were dilapidated houses with severe fire hazards, and "20 families living on top of each other, shops with lots of yelling and screaming, and grandmothers sitting with their grandchildren". Zhang says.
“IT DIDN’T REALLY START AS A BUSINESS – IT WAS A DREAM”
Top right: SOHO's Jianwai complex, where Zang and Pan live and work. Bottom right: Tiananmen South, a project restoring part of old Beijing
For the project Zhang employed leading international architects, from Herzog & de Meuron to David Adjaye. The main street will open in time for the Olympics, complete with a large Apple shop. The company is restoring old facades or working with photographs from the Thirties and Forties to re-create the authentic style. The irony of SOHO China being involved in conservation when it was part of the modernisation process is not lost on Zhang, but she is realistic: "On the whole, everyone is better off than they were ten years ago. When I am mandated to do a new building, I do that. But I am equally proud to rebuild [old] Beijing."
In her office, there are photographs of their sons, Sean, 9, and Luke, 8. who go to the international school and speak fluent English. At our dinner, it was Pan who put them to bed, while Zhang continued the conversation. And at SOHO China, Zhang’s office is lighter than Pans more modest one. They are not very social: "My kids are my priority," she says. Their lives rotate around work, family and, increasingly, a search for spiritual values. She became a Baha'i two years ago; Pan is a Taoist who is "still exploring". Zhang says. She is arguably the more worldly. Her parents were Chinese immigrants in Burma who returned to Beijing in the Fifties; they were translators at the Bureau of Foreign
Languages, her mother translating Chou-Enlai and Deng Xiaoping "from Burmese to Chinese and vice versa", says Zhang. Zhang herself worked her way up from a garment factory in Hong Kong and an assembly-line job at an electronics manufacturing plant to study economics at Sussex and Cambridge, and later work on Wall Street.
In the mid-Nineties. like other expatriate Chinese fascinated by the economic change, she wanted to move back to China. A friend suggested she check out a property company called Beijing Vantone, where Pan was a partner. They met and four days later he proposed; a year later they started a company called Hongshi, renamed SOHO China in 2002.
"I'm a person with a strong concept of family," Pan tells me through an interpreter at his office. He was born in Gansu Province to a family stricken by poverty during the Cultural Revolution - his father a thwarted teacher. his mother an invalid, "My father is the one who has influenced me the most." Says Pan. He taught me how to live and survive in the worst environment. During my childhood [in the early Seventies] in my village many children died of disease and starvation. In my family. no one died."
He went to college at the Beijing petroleum Institute in 1982, and worked in property, before co-founding Vantone. He sums up the extraordinary developments Beijing has been through: “Twenty years ago, the average living space was 7 to 8sq m. Now, the average living space is almost 30sq m - that's a big change."
Of meeting Zhang he says. "At different stages you have different needs. and our needs coincided" - and arguably marrying her may have been the best business decision Pan made. They complement each other perfectly: Zhang is in charge of aesthetics and design; Pan is the dealmaker. "How we divide work is just semantics," he says. "Both of us have mutual respect and understanding and even if there is conflict, we can overcome it."
With the Olympics looming - the Opening ceremony is on August 8 — China's major cities, in particular Beijing, are gripped by the building boom, which even warnings of a downturn cannot quell. It is a period of consolidation for the property market, where the big players swallow smaller companies. Indeed, SOHO China spent about $300 million of its raised money buying two high-end properties in Beijing - and the companies that owned them.
"In China there is a saying that the economists are never right; businessmen have been right; and the government sometimes right," Pan says. "The reason that economists haven't got it right is because China has been static for hundreds of years — the Tang Dynasty is the only one which has interacted with the West. But now the Chinese deep down are really interested in the outside world."
“MY FATHER TAUGHT ME TO SURVIVE IN THE WORST ENVIRONMENT”
SOHO China is currently building in Beijing only, but Zhang says this may change in the future. A city with an official population of 12.04 million, it has a migrant population of 5.1 million more. Rural workers are making their way to the city and the middle class is expanding fast, creating extraordinary demand. There are various estimates on billionaires. but China is closing in on the US’s No 1 spot. A year ago, there were 15 billionaires in China; Forbes has now documented 66, many of them property barons like Zhang and Pan.
When I ask them about the future, Zhang mentions their foundation, launched two years ago, which focuses on an educational strategy adapted to today’s needs: "Education is stuck in the Seventies and Eighties, as if China still had a communist ideology."
But it sounds as if, in the longer term, they are also intent on developing SOHO China into a world-class company. "The world is becoming one," Pan said at dinner — and perhaps what this means is that it will be more Chinese. "I want to see what a company will look like in ten years’ time." Zhang says. "It will not be like a US company. There will be a dominant company in China then, which will be very different. Ultimately, US companies are the result of capitalism, but China is neither communist nor capitalist. Each has pros and cons — clearly, the world is moving ahead." Tellingly, the invitation to their party at the Commune by the Great Wall, in honour Of the Olympic Games, reads: "The 8th day of the 8th month of the 8th year of the millennium is proclaimed the official start of the new China Century." And they are setting the pace.
Above: houses in the Commune by the Great Wall, a luxurious resort consisting of 11 villas and a clubhouse, designed by some of Asia's leading architects