Zhongkun revives resort project

By Hu Yuanyuan (China Daily)
Updated: 2010-09-09 07:59
Large Medium Small

BEIJING - Zhongkun Investment Group, a Beijing-based tourism and commercial property developer, plans to restart construction of a resort in the United States.

"We think now is a good time to kick off our project in Nashville, Tennessee due to lower costs(following) the global financial crisis," said Huang Nubo, chairman of the group.

"Meanwhile, US banks haven't reduced credit to well-financed Chinese companies which were less hurt by the financial crisis."

Other than enjoying great success in the domestic residential real estate market since 2003, Zhongkun also injected $4 million into building a 20,000 square meter commercial center in Los Angeles.

Later the firm purchased a 1,000-hectare parcel of farmland in Nashville, Tennessee with the goal of constructing a resort. However, after suffering from the US subprime mortgage crisis in 2007, Zhongkun suspended the Tennessee project.

Given the huge domestic market and handsome profits at home, very few Chinese property developers, including both State-owned and private ones, are striving to expand into overseas markets. In addition to Zhongkun, Vantone also spent 500 million yuan ($73.5 million) to set up a Chinese center in New York.

"Zhongkun bought land in the US for risk diversification," said Huang. "We can also gain experience and find more development opportunities in the US property market."

In order to access alternative financial sources, Zhongkun bought a stake in Royal Business Bank for $1 million, and became one of the biggest shareholders of the bank. Zhongkun has gained banking management skills from being a shareholder and may enter the banking business in the future, according to Huang.

Besides two projects in the US, Zhongkun is also expanding its tourism property business in Japan and northern Europe as part of its overseas development strategy, Huang said.

The group acquired a land parcel in Hokkaido, Japan's northernmost island, to build a holiday resort due to its fascinating natural scenery. The company plans to set up a Japan-based subsidiary there to provide skiing facilities and services and build a golf leisure club.

"But the biggest block in Japan's development is our human resource management. Japanese employers have a different language and cultural background from Chinese staff," he said.

Meanwhile, the different legal system, heavier taxation and higher labor costs are all challenges, said Huang.

Zhongkun also plans to expand its resort and tourism businesses in northern Europe, because "there are a variety of tourist attractions there", Huang added.

Himself a poetry fan, Huang's firm Zhongkun will organize a poetry forum in Reykjavik, the capital city of Iceland. He has published poetry anthologies in different languages including English, Japanese, French and Mongolian. The group has injected 1 million yuan into the "China-Iceland Culture Fund" that will enhance cultural communications between East Asia and northern Europe.

All the group's overseas expansion efforts, Huang said, are to meet holiday demand for the country's elite. The group has set up the "Hawthorn Vacation Club", a high-end leisure club for premium customers.

"Most of the customers of our overseas resorts are people from our Hawthorn Vacation Club who want to spend their holidays in foreign countries," said Huang.

For the next five years, Zhongkun aims to increase its land bank to 2 million square meters on predicted assets of 100 billion yuan, with a debt ratio no more than 10 percent.

Chen Jia contributed to this story.

China Daily