(Yicai Global) Jan. 9 -- Jay Wei is a 36-year old wunderkind. The JC Group he heads as chief executive has lately taken China’s public-private-partnership field by storm.
The Group has created innovative new ‘characteristic towns’ throughout the land that have transformed the lives of China’s rural residents and pushed the edge beyond what most would consider profitable -- or even possible.Not content to rest on their laurels at home, Wei and his Group are now poised to foray even further abroad and export their unique vision of planned human settlements.
China’s official government policy is to encourage rural residents to quit the countryside, which is exhausted from millennia of intensive cultivation, and to turn it over to extensive agriculture -- actuated by food security, environmental and economic considerations -- and to move as much of the nation’s rural population as possible into cities and towns.
To urbanize takes cities, but not all of China’s people can cram themselves into its existing megapolises -- which are in any case capping their headcounts -- and even smaller metropolises have reached their carrying capacity.
Geography 101 instructs that cities spring up organically where the natural conditions that foster them -- rivers, ports, spring lines, oases, arable land, natural transport and trade routes, etc. -- are present, and wither away as these do.
How then to create new cities and towns where none existed before? How to reconcile the conundrum of those relocated from the countryside being caught up in a contradiction that may arise between national rural policy and local urban reality?
Enter JC Group. Formed in 2008 and headquartered in the hotbed of China’s entrepreneurial innovation, Hangzhou, in southeastern Zhejiang province, the Group is a preeminent player in China’s private-public partnership sphere. It has branch offices in 60 cities in eight countries and owns five public companies. It concentrates on developing ‘characteristic new towns’ tailored to local conditions throughout the country, but mostly concentrated in the east. Whether they specialize in crayfish cultivation or song and dance, JC Group’s thriving themed towns now speckle China’s countryside in ever-greater proliferation as the nation’s drive to urbanize gathers steam.
Wei was the keynote speaker at the New Urbanization Forum held in Beijing on Jan. 5, on the sidelines of which he granted Yicai Global an exclusive interview.
“China’s best investment opportunities over the past 40 years have lain in reform and opening, when its production and trade offered the prime prospects. Afterwards, the choicest chances for investment lay in the intrinsic demand urbanization has spawned as ordinary Chinese advanced from relative backwardness to affluence, with budding buying power,” he said.
“Yet no urbanized goods were available for them to splurge on, and this naturally was a bit of a let-down,” he continued. “Hordes moved to the first-tier cities, since they wanted the citified lifestyle, and thus was demand for urbanization born. Because such citification is high in first-tier municipalities, the overall shortfall is therefore rather small, and thus they offered slim pickings for investment. JC Group accordingly opted for second- and third-tier cities, as China’s market is massive and booming, and even these mini-metropolises are packed with people and their demand for more urbanization is correspondingly high, and opportunity in highly-urbanized places was slowly evaporating, unlike the tier-two and tier-three towns where goods and services to fulfill the high demand were in relatively short supply. We therefore looked at these lagging locations as the ideal ground in which to entrench our investment,” he explained.
This approach has seen the group build 59 themed towns in 10 Chinese provinces. Many, such as Xuyi Fishing Town in coastal Jiangsu province are pragmatic and take advantage of traditional local features or natural advantages, but in ways Mother Nature never foresaw. Others seem purely whimsical, like Huaiyang Amorous Town in east-coastal Jiangsu province. All are thriving magnets for rural residents and those seeking a respite from life in the big city and resort to a more idyllic setting and pace of life. Wei is a vocal exponent of digitization. So much so indeed that many Chinese farming families will soon find themselves catapulted from a state not far removed from medieval subsistence agriculture straight into the midst of the breaking wave of urban futurity.
The philosophy underpinning the Group’s achievements is simple and lucid.
“PPP should not simply be deemed local government acting in tandem with private enterprise, or real estate development erected on an official foundation. Translated into the Chinese context, PPP is a company-government joint venture or, more importantly, a dual-track system, an organic fusion of the old planned economy and the modern market economy. This I believe is the true significance of PPP; it is not simply a question of how much the authorities commit to a project or how much financing a private enterprise inputs, because if you look only at these two elements cooperation becomes thorny. Only when the two unite as a public-private joint undertaking, i.e. in the original signification of the three words PPP -- public, private, partnership -- which creates a third-party entity that develops independently in its investment, construction and operational phases -- only then does it hold forth truly grand prospects, while also setting a new paradigm,” is how Jay Wei outlines his recipe for success, which he is convinced also embodies adaptability and universality.
“Eastern culture is traditionally inclusive, syncretic, and thus presents no great impediment to communication. I have embarked on several -- including international – roadshows recently, during which we used mostly Western technical crews, and I found in our interactions that everyone is the same when it comes to recognizing truth and esthetics. You can’t say I’m Eastern and you’re Western and thus a huge and fundamental gulf gapes between us in the way in which we perceive beauty and verity. I believe our core values are identical and -- particularly on the global roadshow -- when I spoke on matters of common concern, everyone’s resonance was very striking indeed.”
“East and West should first seek out points of convergence and then a state of mutuality and cooperation based on acknowledged differences. Though this is not strictly speaking PPP, but rather a different approach, but one with equally satisfying results -- government on this side, the private sector here, but we work together, though actually on this side is ‘E’ for East, ‘W’ for West, and ‘P’ for partner, and thus you get ‘EWP,’” is how Wei succinctly encapsulates his credo for internationalizing his conglomerate.
“Our strategy for expanding the Group domestically and abroad is the same: to resolutely seek victory. We are untroubled in taking this step, since we have already done a more-than adequate job with our unique and competitive themed towns, and so we will hew to this approach throughout 2018 and, based on this same three-word motto, will develop our markets abroad. We may open new offices in Asia in areas where opportunity beckons for our investment. In Europe, we are already in talks with prospective partners -- not just in technology, but also finance and human resources -- and hope to have a plan in place to open offices in the EU soon, but all schemes are necessarily subject to our intrinsic needs, and we will select our partners abroad based on the Group’s domestic dictates, not vice-versa.”
As JC Group stands poised to launch itself into the world arena, using its Hong Kong-listed affiliate GOLD-FIN HLDG [HK:01462] as a springboard for going global, look for novel infrastructure projects and innovative new themed towns coming to green fields near you soon.