Being called ‘down to earth' or ‘grounded' signifies sincerity and genuineness. Yet those who are making their fortunes from the ground, in China 's property industry, are conjuring contrasting adjectives. Wang Zhigang keeps his feet planted firmly as he surveys an industry that's leaving a bad aftertaste.
China 's property market has created many a fortune over the past few years. But is it a respectable industry? Fortunes were amassed rapidly in an unregulated industry and by a group of people with neither professional training nor experience.
The feverish conditions of the property market, which have left economists perplexed, are a result of urbanisation. The industry has created vast business opportunities and in turn a group of new property tycoons. Property has become a hot topic for society, like a sitcom being played out in front of us complete with the characters whom we cheer and others whom we boo.
Full moons bring eclipses and turn tides: the government-led lending curbs and austerity measures, designed to cool the economy, are good for the country. It is odd to see prospering property developers all over the country. The average profit margin for foreign developers is only 7%, but a Chinese developer considers it disappointing if the profits dip below 20%. Who wants to maintain a customary business when there is an industry offering such exorbitant profits?
Fortunately China 's property industry is not an ephemeral business. There should be another twenty years of strong, consistent development. But this “kill the hen to get the egg” mentality, which is being applied in this trade, must stop. Unscrupulous property developers need to be brought down to earth and taught not to be motivated purely by greed.
In contrast developers such as Wu Yajun of Chongqing Dragon Lake Real Estate Company deserve respect. Wu does not pitch the price too high, selling a house, for example, that could easily attract RMB 5,000 a square metre at RMB3,500 instead. Wu believes in asking a fair price and delivering a reputable product. At the fifth phase of Dragon Lake , she spent millions perfecting the first two phases - until she felt that it was up to standard: quality over quickness. Wu may not become the biggest developer, but she will do well - and can rest well.
Wu sets an example to be followed. The property industry should set itself higher standards. At least 80% of existing small developers should never have been allowed into the industry. There needs to be more transparency to avoid collusion between government officers and businessmen, protecting the profit of the average person on the street.
For a healthy property industry to evolve there should be two parallel lines of development. First, the government should protect housing safety standards for low-income residents . Second, housing should be marketed under fair competition. Ask RMB 10,000 a square metre so long as it can be sold. This kind of fair competition can bring big profits to developers and create better buildings for society as a whole.
A lot of China 's new rich have started to diversify away from property into expressways, power plants, logistics, and commerce. Some have ventured into the field of finance and become shareholders of banks, whilst a small few have even embarked into the weapons industry. But there are still plenty of opportunities in property that should be explored in more depth, such as property for education, travel, and leisure, and even the development of small towns.
China 's urbanisation programme has another twenty years to run, which will bring with it twenty years of opportunities. During this period there will be an evening-out of wealth created in this industry. No one knows who will be passed the relay baton of wealth, but with the government's initiative and honourable players, let's hope that it will be a fair race.
