Chinese Billionaire Is Ready for His Hollywood Close-Up
Wang Jianlin, founder and head of Dalian Wanda Group Co.
Photograph: Tomohiro Ohsumi/Bloomberg
RECLINING IN A BEIGE LEATHER seat in his Gulfstream G550 private jet, Wang Jianlin barks an unlikely order as the aircraft descends into a remote pocket of Southwest China.
From Beijing to Hollywood to London and elsewhere in his expanding property, film and entertainment empire, Wang, the billionaire chairman of Beijing-based Da- lian Wanda Group Co., is known as a stick- ler for formality. Not only does he favor dark business suits and ties, he empow- ers his receptionists to fine employees who fail to meet his dress standards. To- day, though, China’s second-richest man is clad in khaki pants and sneakers. And as the jet prepares to land in China’s poorest province, Guizhou, he instructs his entou- rage to follow his example. “This is a trip to lift poverty,” Wang tells them. “Suits are not appropriate.”
Swiftly, all jackets are discarded.
Despite Wang’s efforts, his reception on the ground is anything but casual. Lo- cal officials in pressed black suits stand to attention in a piercing December wind. A police escort clears roads for his motor- cade. As he approaches the hardscrabble city of Danzhai (population 170,000), neon signs along the four-lane main street flash the message, “Warmest welcome to Chair- man Wang.” It’s the kind of treatment typ- ically reserved for visiting government ministers. And though Wang, 60, has no political rank, he has rapidly growing fi- nancial clout, in China and abroad.
In the leadup to the December initial public offering of one of Dalian Wanda’s listed units and the January IPO of an- other, Wang’s fortune jumped more than 60 percent to $24.6 billion, according to the Bloomberg Billionaires Index. That moved him closer to China’s richest man, Alibaba Group Holding Ltd.’s Jack Ma, who was worth $27.3 billion as of Jan. 15.
Wang’s empire had revenue of $40 billion in 2014. He controls the world’s largest chain of movie theaters, measured by number of movie screens, and the second-largest commercial property company, measured by leasable floor space. Wanda’s malls, offices and luxury hotels boast a total floor space of 93.5 mil- lion square meters (1 billion square feet), 11⁄2 times all the leasable space in Manhattan. Among the marquee projects: Western Europe’s tallest residential building, One Nine Elms, in London; and Qingdao Oriental Movie Metropolis, which upon completion in 2017 will be the world’s biggest movie studio and theme park. For the studio’s 2013 groundbreaking ceremony, in the Chinese coastal city of Qingdao, Wang flew in Nicole Kidman, Leonardo DiCap- rio, John Travolta, Catherine Zeta-Jones, Ewan McGregor and Kate Beckinsale to provide star power.
In lesser deals, Wang has also snapped up a British yacht manufacturer, Sun- seeker International Ltd., and bought a 20 percent stake in Atletico Madrid, the reigning Spanish football champions.
Wang has even taken a shot at help- ing tackle one of China’s most intractable challenges: narrowing the wealth gap between the rural poor and the country’s new rich such as himself. Hence his appearance at Danzhai, where far from tread- ing the red carpet with Hollywood royalty, he trudges through pigsties while talking up the $160 million worth of philanthropic investments he has planned. Wang hopes his efforts, which include awarding scholarships and building food-processing plants, will double the living standards of 2 million farmers in the next five years.
The tycoon visits a crumbling hovel in- habited by Huang Jinhe and his family. There, surreptitiously, Wang has his personal assistant slip a wad of cash to the 64-year-old farmer: 10,000 yuan ($1,600), the equivalent of two years’ income for the Huangs.
WANG, A FORMER SOLDIER in the People’s Liberation Army who still retains a ram- rod-straight military posture and close- cropped hair, made his first pot of gold developing real estate in Dalian, a north- eastern coastal city. Then he started buy- ing up movie theaters across China. In 2012, he began producing and distributing locally made films, including the English language Man of Tai Chi, directed by Keanu Reeves, star of the Matrix movies.
That same year, he paid $2.6 billion plus debt to acquire AMC Entertainment Holdings Inc., the second-biggest U.S. cinema operator. Now, he says, he’s in talks to buy a majority stake in Lions Gate Entertainment Corp., the Hollywood studio that made the Hunger Games films. And he says he’s also keen to invest in Metro-Goldwyn-Mayer Inc., producer of the James Bond and Hob- bit franchises.
In readiness for those deals, and deals to come, Wang in September paid $1.2 billion for land on Wilshire Boulevard in Beverly Hills, California, on which he says he will build the headquarters of his nascent U.S. movie empire. As Wang tells it, U.S. movie studios are falling over themselves to sell stakes to him. “Many people come knock at my door, but Wanda is only interested in the big players and we want control,’’ Wang says.
Spokesmen for Lions Gate and MGM declined to comment on any discus- sions. Wang, however, is less reticent. Cocooned in the woodpaneled luxury of his Gulfstream, he describes his Hollywood strategy as key to transforming Dalian Wanda from a company heavily dependent on China’s volatile property market into a more-diversified global business empire. “I give myself six more years to make Wanda a world-class company in the league of Microsoft and WalMart,’’ Wang says while devouring a simple breakfast of plain congee (rice porridge) and corn ac- companied by a bowl of fresh cherries.
More specifically, Wang says that by 2020 he wants to increase revenue by 21⁄2 times to $100 billion—equivalent to the current annual sales of International Busi- ness Machines Corp. His target for net profit is $10 billion, more than Coca-Cola Co.’s estimated earnings for 2014.
Last year, 70 percent of Wanda’s reve- nue came from its property arm. By 2020, Wang aims to reduce that dependence to 50 percent, with much of the rest of his income coming from the burgeoning Chinese film industry, which is now the world’s second largest by box office re- ceipts, surpassed only by Hollywood.
China’s movie box office is growing at 40 percent annually and in 2014 came to an estimated $4.9 billion, according to the Chinese Film Producers’ Association. By contrast, U.S. theater takings rose just 1 percent in 2014, to $10.9 billion. If that trend holds—and Wang predicts it will— China will overtake the U.S. as the world’s biggest movie market by 2017. Buying Hol- lywood studios, Wang says, will give him the expertise, content and distribution he needs to conquer that market.
“Wang has a great thesis,” says David Tawil, president of Maglan Capital, a New York–based hedge fund that owns about 1 percent of MGM. “We all know the boom- and-bust cycle that occurs in property markets, and it could be particularly bad in China. Wang knows it the best. It’s wise of him to be diversifying away.’’
The U.S. motion-picture industry, how- ever, may not be entirely convinced. “Everyone respects that Wang has the clout and money,’’ says Robert Cain, president of Santa Monica, California–based Pacific Bridge Pictures, an industry adviser that counts Universal Studios Inc. and China Film Group Corp. as clients. “But there’s a healthy degree of skepticism in Hollywood regarding Chinese money because there hasn’t been much delivered, only big talk.’’
Tawil says Wang could change that. “His AMC purchase in 2012 makes him the most credible buyer,” Tawil says.
AMC has made Wang a popular man among U.S. equity investors. He bought the company outright and then sold roughly 20 percent of it in a New York IPO in late 2013. The stock rose 29 percent in 2014.
Wang has gone back to the IPO market twice since the AMC sale. His flagship, Dalian Wanda Commercial Properties Co., made an unspectacular debut in Hong Kong on Dec. 23. On Jan. 22, however, Wanda Cinema Line Co., which oper- ates 14 percent of the movie screens in China, soared 44 percent on the Shenzhen exchange.
SHOULD WANG INDEED END UP owning a Hollywood studio, he could find worse story lines than his own rise from boy soldier to billionaire.
The son of a Communist guerrilla who fought alongside Mao Zedong on the Long March, Wang decided at age 15 to follow his father into the army—in part because in those harsh times, soldiers received slightly larger rations of rice and oil than their civilian comrades.
He was dispatched to China’s wild and windswept northern frontier with Russia, where the two erstwhile Communist allies, by then bitter rivals, were fight- ing a bloody border war and the only entertainment was one propaganda film a week.
Wang rose through the ranks to become a battalion commander before he left the army at age 32, a surprise to friends, who thought he had a good shot at becoming one of the top brass. “It was no longer war- time,’’ Wang says. “The slogan changed from ‘Ready for war any time’ to ‘It’s all about economy.’ It was crystal clear to me where I should be going.’’
Following his discharge, Wang worked for the local government in Dalian for two years before taking over a near-bank- rupt state-owned property company that was 6 million yuan in debt. “The government was freaking out and said whoever can turn it around will get the company for free,’’ Wang says. “I thought to myself, If I get some bank loans and land, it should be possible.’’
Business deals in China have for millenniums been oiled by guanxi a term meaning connections or relationships. Wang says he tapped connections made during his army career to secure loans, then convinced the Dalian government to sell him land where malodorous slums were clustered. He redeveloped it, paid off all the debt and made his first 10 million yuan.
As his empire grew, he says, he figured out better ways to maintain relations with local authorities in cities where his signature Wanda Plaza shop- ping malls are located. “We tickle the right spot,’’ Wang says. “Government wants to show po- litical performance, so we give them a fair share of the profit in taxes and help solve their prob- lems like employment.’’
Wanda in turn benefits be- cause it receives subsidies for culture-related projects such as entertainment parks with film or historical themes. Wanda Group received 7.9 billion yuan in government subsidies in the 31⁄2 years through June 2014, according to Wanda Commercial’s IPO prospectus. “Wang leverages his cultural projects to get support from provincial and municipal government,” says Peter Schloss, a partner at Beijing-based Phoenix Media Fund, which invests in China’s entertainment sector. “That way, he gets government subsidies and land.”
It wasn’t always such a smooth ride for Wang. After Bo Xilai, a high-ranking Chinese official subsequently jailed for corruption in 2012, became mayor of Dalian in the 1990s, Wanda’s business suffered because it wouldn’t pay bribes, according to Wang.
“I was quite depressed. For a few years, I could only buy land secondhand from other people,’’ Wang says. “We still made money, but it wasn’t a pleasant time.”
As he tells it, his bad relationship with Bo forced Wanda to do a growing share of its business outside Dalian. By 2008, he had moved the company headquarters to Beijing.
HIGH ABOVE THE PATCHWORK rice paddies of a country whose borders he once fought to defend, Wang pauses to reflect on how, almost 30 years after leaving the army, he still sa- vors the discipline and simplicity of military life. One legacy is an employee code of conduct difficult to imagine elsewhere. Wanda’s receptionists are nicknamed the dress police, because they keep a marking sheet of staff who don’t turn up in the de facto company uniform of a dark suit with a light-colored shirt for men and a below- the-knee skirt for women. Violators have 100 yuan deducted from their salary for each breach.
Unlike many Asian tycoons, who work until they drop, Wang says he will retire in six years, to devote himself to philanthropy and help turn China’s notoriously underperforming national soccer team into a globally competitive outfit.
His only son, Wang Sicong, owns 2 per- cent of the company. However, Wang says he hasn’t decided on a succession plan and will eventually donate most of his holding in Dalian Wanda to charity. “I don’t need that much money,” he says. “It’s never about the wealth but the process of pursuing wealth. As long as the process is thrill- ing, the numbers in the end don’t matter.’’
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