By Li Hongmei
Zong Qinghou, chairman and CEO of beverage giant Hangzhou Wahaha Group, has publicly expressed concern over the country's realty bubble, but the tycoon has elicited much criticism as he is actively investing in the realty market, reports the Chinese Entrepreneur magazine.
Following the opening of Wahaha's Waow Plaza in Hangzhou in eastern China's Zhejiang province last year, Zong has greatly expanded his realty portfolio, notably a large commercial complex in Yichang in central China's Hubei province. Insiders said the complex will consist of a shopping center with 100,000 square meters of floor space, a high-rise five-star hotel, six office buildings, and 18 residential buildings.
The project broke ground on Nov. 12 with a projected investment of 5 billion yuan (US$820 million), and is scheduled for completion in 2016. The project will generate huge potential profits for Zong as housing prices in the neighborhood have risen to 6,000 yuan (US$980) per square meter, compared with the estimated cost of a mere 569 yuan (US$90) per square meter for the project.
In September, Wahaha inked a 15 billion yuan (US$2.5 billion) framework agreement with the Guizhou provincial government in southwestern China for a litany of projects, including a commercial complex near a university community in the Guian New Area. The announcement of the project further contradicts a recent statement by Zong which said that he was unable to handle the complexity of realty investment and was choosing to stick to the field of industry.
Insiders said that many municipal governments have sought cooperation with Zong - China's second-richest man - for joint investments in commercial projects, attracted as they are by the leading status of Wahaha in the beverage market and its abundant cash reserves, which top 15 billion yuan (US$2.5 billion), Zong has said. "Many municipal governments welcome us to invest in commercial projects with the provision of attractive incentives," he said.
However, the double-handed stratagem of Zong in the realty market has further testified to his nickname as an "old fox," the paper said, adding that he earned the nickname after he was successful in litigation with French beverage giant Danone in 2000.
