宏斌 孙
Prior to his real estate fame, Sun received a masters from China’s elite Tsinghua University, and worked for Lenovo for several years. He is also notorious for serving a four-year prison sentence in the early 1990s for a conviction that was later overturned. He also completed a two-month executive management course at the Harvard Business School.
Since 1994, Sunco has been shaking up China’s real estate industry through speedy development, rapid growth, and aggressive advertising campaigns in a quest to outpace the best, such as main rival Vanke, with which it competed head-to-head in 2005 with sales of US$1.2 billion based on purchases. Sun Hongbin’s rise was achieved in some 13 years, starting out with a property agency business in his hometown of Tianjin in 1994, and expanding into a real estate brokerage chain by 1996. His experience as a property agent was also the foundation of his secret strategy for gaining local intelligence: ‘We normally send our property agency into a new city first, allowing it to get a firm understanding of market demand, before starting with developments’ (Hoogewerf, 2004).
Sun’s big breakthrough arrived in July 2002, when the Chinese Ministry of Land and Resources issued a directive stipulating that henceforth all government land was to be exclusively sold at public auctions, which triggered Sunco’s nationwide expansion. Under Sun’s aggressive growth and marketing strategies, sales nearly tripled each year thereafter, from US$110 million in 2001 to US$1.2 billion in 2005. Content with this success, Sun prided himself on the advantages of size: ‘We will benefit from financing advantages, human capital advantages (the better people will want to work at the best place) and execution advantages’ (Ibid).
Besides fierce competition, Sun Hongbin also understood the value of partnership. Among of his favorite partners were Tianjin Trust, Tianjin municipal government, Binhai municipal government, Jinbin Development, Tianbao Holdings, Tianjin Daily, and Lenovo, Sun’s former employer. In April 2004 he also explored partnerships with Morgan Stanley Real Estate Trust as well as two other international investors, and since 2006 Softbank Asia has paid US$30 million for a 15 percent holding and the US venture firm Carlyle invested another US$15 million for 7.5 percent of his company.
After reaching the highpoint of his success in 2005, Sun unsuccessfully waged a drive for a listing, and then began to divest into other businesses. First he resigned all official positions and began giving out shares to his key cadres who were already compensated more plentifully than the high-ranking employees at Motorola, also headquartered in Tianjin, to which Sun liked to compare his management salaries. By early 2007, Sun retained only a 5.26 percent stake in Sunco, which was after the Hong Kong-listed Road King Infrastructure Ltd acquired 39.74 percent for 1.3 billion yuan in January 2007, on top of the 55 percent that it had already acquired in September 2006 for 1.27 billion yuan.
Analysts attributed this divestiture to cash flow problems at Sunco. It seemed unrealistically aggressive for a RMB1 billion company to develop over 7 million square meters simultaneously. This was complicated by several coinciding factors: after an initially lax period, the central government finally began to implement more forcefully the 2002 directive, which would have benefited companies like Sunco since it would close loopholes and make it harder for small land speculators to maintain their businesses using connections with the banks or local governments; however at the same time, the government also enforced better protection to former occupiers of land, as reflected in a recent change in the constitution, which offered legal protection of private property. Consequently it has become much more expensive to tear down old houses and relocate the former occupants. While lamenting his extraordinary US$1.2 billion expenditure in the first half of 2005, Sun still denied that all this, coming amidst the credit crunch that started in China in May 2005, would affect Sunco: ‘We already have our land bank, so our advantages will become more obvious. The only change is that the credit crunch will slow down our expansion because of the difficulty to gain bank financing in the near future’ (Ibid). However Sun did not stick around to test his assumptions as Sunco was sold at the end of January, 2007.
