In stark contrast to the highly successful trading debut of CGN Power (01816.HK) earlier this month, Dalian Wanda Commercial Properties (03699.HK) not only failed to chalk up any significant gain as it started trading on the Hong Kong bourse on Tuesday, the counter even took a nosedive of over 8 percent at one point.
This is not surprising as the mainland real estate industry is largely unappealing at the moment given the oversupply in the sector. At the same time, Wanda’s main business, commercial property, is facing stiff competition from online shopping.
Wanda founder Wang Jianlin was on top of Forbes’ mainland wealth chart last year with an estimated net worth of 86 billion yuan (US$13.82 billion). But that was before e-commerce tycoon Jack Ma listed his flagship Alibaba, which took his personal wealth.
Alibaba shares shot up right after it went public in September, taking the combined assets of Jack Ma and his family to 150 billion yuan, according to the Hurun China Rich List.
With the stock market’s lukewarm response to Wanda shares, Wang is unlikely to regain the title of richest Chinese any time soon.
Some market watchers suggested that the Wanda IPO was Wang’s attempt to compete with Ma, but Wang dismissed such comments and said he didn’t see Ma as a rival.
“Ma is living in the online world where he can go 10,000 miles in a second,” Wang said, adding that he is from the old school and has to go one step at a time.
Wang admitted that e-commerce is hurting the brick-and-mortar retail business to a certain extent, but it is limited to what he called the “shopping bag consumption” category, referring to such items as clothes, accessories and electronics products.
China’s total consumption market is over 25 trillion yuan, and “shopping bag consumption” only accounts for 10 trillion yuan or 40 percent of the market. Other categories such as tourism, food & beverage and cultural consumption make up another 10 trillion yuan. And this is the area that Wanda is targeting.
Although real estate still makes up the bulk of Wanda’s revenue, Wang said the group is seeking other growth engines as rapid expansion in China’s property market is coming to an end.
Culture is a key area in his business plan. Wanda will unveil a transformation plan next month, which will involve developing new businesses in culture, tourism, finance and e-commerce.
Wanda has been exploring the cultural business in the past few years. The group has launched a “cultural tourism city” program, building facilities for tourism, entertainment, shopping and dining across China.
As part of the plan, Wang said his group will build theme parks in a number of Chinese cities. The company announced last month that the group would invest 50 billion yuan to build a Wanda City in Guangzhou. Wang is confident Wanda City can compete directly with Hong Kong Disneyland.
“Our tourism cities will try to rival Disneyland in Hong Kong and Shanghai in terms of visitors and revenue. If we do well, Wanda will probably build theme parks in the United States as well,” he said.
Over the long run, these theme parks could become spin-off targets, Wang added.
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