With the Olympics a year away, Beijing's construction boom is
in overdrive. Some analysts and government officials even fear a real-estate
bubble. Yet Zhang Xin, chief executive of developer Soho China, says the company
will post its highest growth this year and next.
Ms. Zhang and her husband, Pan Shiyi, 43, are one of China's
best-known business couples, renowned for their funky aesthetic. Their first
project, Soho New Town -- for "Small Office-Home Office" -- attracted wide
attention with its multicolored buildings in contrast to Beijing's grayness.
Today, Soho China has switched its focus to retail and office
spaces, where Ms. Zhang says margins are the highest. With more than 16.7
million square feet, it's the leading developer in the capital's central
business district. The couple plans an initial public offering in Hong Kong next
month, in which they hope to raise $1.65 billion.
A former investment banker with Goldman Sachs in New York, Ms.
Zhang, 42, grew up in Beijing and Hong Kong. Mr. Pan's rags-to-riches tale is
legendary in China. Before the offering was announced last week, Ms. Zhang spoke
with The Wall Street Journal about how they share running the business and
balance it with life at home with their two children. Excerpts:
WSJ: How have you been able to get parcel after
parcel of land in Beijing's central business district? There's a perception you
must have very good political connections.
Ms. Zhang: We don't. I can honestly tell you we don't
spend any time cultivating anyone. As a private company in this country, we are
neither government-owned nor Communist by nature. The only way we can work is
under the law. Our contracts have to be governed and supported by the law. Our
behavior has to be. In 1995, when we wanted to buy this piece of smelly land [Soho
New Town, which replaced a rice-wine factory] and we talked to the government,
no developer wanted it. As for Jianwai Soho [in the central business district],
I spent two years trying to get serious developers outside China to come in with
us, but we couldn't get anyone. So we did it alone.
WSJ: In the past year, the government has taken some
tough actions with real-estate developers, such as restricting bank loans and
land supply for them, fearing a property bubble. Why haven't you been affected?
Ms. Zhang: We don't focus on the size of the land bank.
We're a commercial developer so we focus on the quality of the land. A massive
land in Heilongjiang means nothing to us. But land in the central business
district means a lot to us.
WSJ: How do you and Mr. Pan work together?
Ms. Zhang: If you look at our two backgrounds, I come
from a more consultative background, having been Western-educated and Wall
Street-trained. Pan comes from a more traditional Chinese way. I think his
mentality was more like the head of the family makes the decision on behalf of
everyone for the goodness of everyone.
WSJ: Who changed whom?
Ms. Zhang: We've come to a middle ground. I have
certainly brought him to see the world outside China and how people think, how
people work. He has brought me to see how the core of the Chinese system works.
WSJ: At least in the Chinese media, your company is
associated more often with Pan Shiyi -- the farmer who grew up so poor he had to
beg for food -- than with you. Are you jealous of that association?
Ms. Zhang: No, after all he is my husband. But the
founders of Soho are Mr. Pan and Ms. Zhang. It's very hard for two people to do
the media. You almost always have one image. He does it so well, so why not?
People love the story of this nong min [farmer] from Gansu province who
has come a long way and still keeps a humble attitude and still has a lot of
drive.
WSJ: Yet you are the Cambridge graduate with the
economics degree and the Wall Street veteran. Why have you focused on the softer
aspects of business like aesthetics and design?
Ms. Zhang: Pan is by nature a better businessman. I am
not as intuitive as he is in terms of smelling where the market is today.
WSJ: In terms of picking a site and pricing it, who
has gotten it right more of the times?
Ms. Zhang: So far we have done only one development that
we stopped half way through. It just didn't sell that well. It was my instinct
to do it; it was his instinct to cut it.
WSJ: Mr. Pan has been quite open about his criticisms
on recent government actions to slow real-estate development. Are you concerned
that he is so public with his remarks?
Ms. Zhang: No, I think this is a good way of
communicating with the government. It needs to hear our opinions. Where would we
talk to the government if it wasn't through the media, the most powerful
channel?. . . You'll be surprised how much attention they pay to the media.
China is a different place today.
WSJ: Mr. Pan keeps a very popular blog which he uses
to comment on China's real estate industry. Whose idea was that?
Ms. Zhang: His idea. I should give credit to him because
when he started it I said this was such a waste of time and he should be running
a company, not writing a blog. But he kept writing and it came to a point where
the blog has become an important speaking place for us.
WSJ: You were against Mr. Pan appearing as the
Chinese Donald Trump in a local version of "The Apprentice," and he didn't do
the show. Why was that so important to you?
Ms. Zhang: I didn't think the association was right for
him. I have a bit more exposure to the Western world to know what should be the
right association for him. Pan was a poor peasant who came to where he is today.
He is such a socially conscious person and very compassionate.
WSJ: Are both of you very concerned not only with how
foreigners see Soho China but also how they see China?
Ms. Zhang: Absolutely, yes. I'm a CEO. I'm a wife. I'm a
mother. When I go to conferences, when I talk to the media, I'm also seen as a
window to China. The reporting doesn't have to be all good, but it has to be
with justification.
WSJ: How do you balance your work with home?
Ms. Zhang: I am very strict in dividing my work hours
and home hours. My colleagues all know that I don't work on weekends. I feel
like the weekend is for my role as a mom and a wife. Evenings too, I hardly ever
go out.
WSJ: Then how do you network?
Ms. Zhang: I don't. Work hours are work hours. Let's
meet in the office, and we can have lunch together. I don't need to go out for
dinner. Pan doesn't either.
WSJ: In May, Mr. Pan addressed a conference in Hong
Kong on Taoism. Have both of you become more spiritual?
Ms. Zhang: When I met him, he was already reading a lot
of Taoism. He got me interested, and together we became more advanced in our
research.
WSJ: Have you picked a religion?
Ms. Zhang: I have been a Baha'i for two years. I think
he's still investigating.