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The woman helping to build the new China
by Lifen Zhang
Zhang Xin cuts a relaxed figure. Smiling broadly, the chief executive of Soho China, one of China’s biggest commercial property developers, takes a seat in her art deco-style office in Soho Tower, the company’s headquarters; the air is infused with the sweet scent of the osmanthus flower in her herbal tea.
But the tranquil atmosphere inside is very different to the one viewed from her windows – down on the streets of Chaowai, Beijing’s central business district, people rush around at a frenetic pace.
The woman sitting across from me is also very different to the one I first met when we were both Chinese research students in London in the early 1990s. I show her a picture I took at a London conference on the Chinese economy. It shows her wearing a green woolly jumper sitting in the audience, listening intently. Now, as a member of China’s business elite and one of the wealthiest individuals in the world, with a net worth estimated at more than $3bn (€2.2bn, £1.9bn), she is centre stage.
The 44-year-old’s serenity is unusual among corporate leaders in China. While the past three decades of spectacular economic growth have produced profound economic and social change in the country, it has also spawned a generation of business executives who are, quite simply, exhausted. A 2008 survey by a Chinese entrepreneurs association showed the endless conveyor belt of meetings, work trips and dinners had left one in four Chinese executives with hypertension, while 90 per cent complained of excessive workloads.
“They are out most nights. They don’t see much of their wives and kids,” says Ms Zhang. “Foreigners often think we Chinese are more traditional when it comes to family values. These days we are not. In fact, family values in China are getting increasingly weak and a bit chaotic.”
With this in mind she set a new rule for her family five years ago, to eschew most work-related parties, conferences and business functions. The only big event she attends regularly is the World Economic Forum at Davos. This year, she even used Wei-Bo, a mini-blogging site that is a sort of Chinese version of Twitter, to post updates. But normally, Ms Zhang and her 47-year-old husband Pan Shiyi, the company’s chairman, devote their evenings and weekends to their two sons.
Such domesticity is in marked contrast to the pair’s reputation as an “it couple”. Unlike many other Chinese entrepreneurs, the two have courted publicity, opening their lives to China’s glossy magazines and establishing themselves as regular fixtures on the party circuit. They encouraged the idea that they embodied the glamorous lifestyle to which many of their countrymen aspire in a deliberate ploy to market their company.
Now household names, the pair, who have been married since 1994, can afford to ease off their personal branding drive. The company, which was floated in 2007 on the Hong Kong Stock exchange in Asia’s biggest commercial real estate offering and raised $1.9bn, has a market capitalisation of HK$20bn ($2.6bn, €1.9bn, £1.6bn).
The couple started Soho China in 1995, with money Mr Pan made as co-founder of a previous property business. Inspired by Japanese development, they saw a gap in the market for Soho-style housing projects (small office, small home) catering to China’s rapidly burgeoning middle class. They targeted this new customer by creating apartments with a simple, modern aesthetic designed by western architects. Their white-wall and blond-wood-floored housing was a very different proposition to their competitors’ dark, empty concrete shells.
In 2006, following the imposition of restrictions on high-end housing as the government tried to control rising house prices, Soho China switched to office and retail developments.
Still, it has not been a story of uninterrupted success. In the stock market turbulence of 2008, the company’s shares took a battering – falling to as low as HK$2.04. After the government announced a huge fiscal stimulus package worth Rmb4,000bn ($586bn, €423bn, £365bn) at the end of that year, the property sector – and Soho China’s share price – revived.
Yet Ms Zhang says the government’s fiscal stimulus poses a threat to the viability of the sector. A few months ago, she warned that the government was creating a property bubble. “Real estate prices should only go up because people want to actually use the space, but at the moment we can see more and more empty buildings across the whole country and in every real estate segment,” she said. “The rising prices are a direct result of so much money coming from the banks and the Chinese banks should be very worried.”
Her comments alarmed fellow real estate developers, as many Chinese people called to ask if they should sell their properties.
But her reaction to government policy also helps to explain how private business is constrained in the communist country. When it comes to strategy, for example, Ms Zhang suggests that her options are limited. “Strategy? I am afraid we don’t have a strategy and we only know we must respond to government’s initiatives,” she explains.
“If the Chinese government adopts a loose monetary policy, there will be bubbles in the property market. When people are keen to buy properties, it would be unrealistic not to build or sell new properties. As long as people want to buy houses, I will continue building them. After all, my personal power is nothing compared with the power of the state.”
Still, Ms Zhang admits that property developers such as her bear some responsibility for the bubble. One of the problems in China, she says, is that so many property developers have bought up swaths of land with the sole intention of selling at a profit. “Many publicly listed Chinese companies’ value is based on the value of the land bank, [so] it is not surprising property companies are focusing so much of their energy on land hoarding,” she says. “For some, only a fraction of the land [will] be used for actual construction – the land bank serves the purpose of driving up the stock price.”
Her decision to speak out publicly in such forthright terms was a bold one but she says she owed it to her “conscience” to highlight the dangers of government policy.
It would be tempting to dismiss Ms Zhang’s comments on morality as a new chapter in her personal branding drive – a way of distancing herself from an industry that has a reputation for greed and profiteering. Yet there is also a spiritual foundation to her comments. In 2005, she converted to the Bahai faith.
Has her new-found faith influenced the way she runs the business?
“Being a Bahai has transformed me,” she admits. “Without [it] I would have blindly pursued profits at any cost. But now I will make choices. For example, I am not prepared to invest in casinos in Macau even if it makes huge returns. I’ve long passed that stage of blindly pursuing growth and profits.’’
Like many wealthy Chinese business leaders, Ms Zhang has also started to devote attention to philanthropy. She has focused her charitable work on helping poor children in the remote and impoverished Gansu province, where her husband is from.
In some ways, it is also a nod to Ms Zhang’s own difficult childhood during the Cultural Revolution. Her parents, both government translators, were separated during the political chaos and in 1980, when Deng Xiaoping reopened China’s economy to the outside world, her mother took her to Hong Kong. They were almost penniless and Ms Zhang got a job, aged 14, at a garment factory.
In 1987, following a few years of secretarial studies, she was awarded a scholarship to study economics at the University of Sussex and then studied development economics at Cambridge before landing her first job as a young analyst at Goldman Sachs on Wall Street.
In spite of this success, she says her children have a grounding influence. “I recently bought myself an iPhone and the kids immediately started to question why I needed this new gadget since it is so expensive,” she says.
In fact, when the family goes shopping at a local market in Beijing, the children ask their father to wait in the car.
“His face is too recognisable in China, which would make kids’ bargaining with vendors doubly difficult,” she laughs.