Fengchun Liu
Case Western Reserve University - Weatherhead School of Management
Chris Laszlo
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Using an innovative Public-Private Partnership (PPP) Model to develop industry parks and industry new cities in undeveloped cities to improve the industry, infrastructure and social lives, thereby boosting the local economy.
China Fortune Land Development Co., Ltd (CFLD) is well known for its innovative operation model. Instead of buying land directly to develop its own properties, and working through the slow processes of government approval, CFLD forms a Public-Private Partnership Model (PPP) with the government. This model allows CFLD to help government develop projects aligned with their goal of urbanizing China, and plays a match-making roll for commercial partners, who provide valuable jobs within the new communities. In return for its city and community master planning and match-making, CFLD gains lower cost access to land from the government. CFLD develops the required buildings and infrastructure, at costs that enable attractive pricing for commercial partners to purchase/rent. This is a win-win-win operating model for the government, commercial partners and CFLD.
Ms. Xueyu Zhang, Senior Financial Manager for the company said, “Some people may think of CFLD as a developer of real estate, however what we really do is implement sustainable communities for the good of the people and country, in partnership with the Chinese government and commercial partners.” The unique approach of public-private partnerships inspired Wang Wenxue to found CFLD, and for the company to be governed by four key principles in the development of new industry cities:
- A commitment to green development
- A commitment to quality of life in our cities
- A commitment to continuously innovate
- A commitment to bring industries together
According to Ms. Xueyu Zhang, “What would you do if you had the chance to build a new city from a clean canvas, or to rebuild a declining city? Our work is answering that question for China, using PPP to ensure that the infrastructure, employment and quality of living is implemented together, all in a sustainable way.”
CFLD has projects and new industry partnerships in 70 regions, including Beijing, Hebei, Shanghai, Guangdong, Liaoning, Jiangsu, Zhejiang, Hubei, Sichuan, Anhui and the Republic of Indonesia. CFLD has 22,000 employees that have transformed over 20 cities or districts, creating over 64,000 jobs in the process. A good example is Gu'an, a very poor district of xx in the city of Langfang. In 2002, the district population had a combined annual income of less than $14.9 million, and by 2015 annual income for the district increased 529% to $88 million. This was done by CFLD applying public-private partnerships to reinvent the district, with developments like the Gu'an Aerospace Industry Park, Gu'an Satellite Navigation Industry Park (GSNIP), Gu'an Peptide Valley Biomedical Industry Park (GPVBIP) and the Gu'an E-commerce Industry Park.
CFLD is benefiting from its PPP model in cooperation with the Chinese government and private commercial partnerships, and is expanding the PPP model in Asia, including projects underway in Indonesia and Singapore. Their business model is succeeding, where 2016 full year results delivered annual sales growth of 40% to $7.6B, with a profit of $943M. It has a public share Market Cap of $14B and 22,000 employees worldwide. In 2016 212 new companies partnered with CFLD in new industrial cities, showing a sharp YoY growth of 226%. Contractual investments in 2016 were $1.26B billion, a 26% YoY growth.
Urbanization is one of the key driving forces in the economic development of China, which has helped GDP to grow from $1 billion in 1998 (when CFLD was founded) to $11 billion in 2016. CFLD enables urbanization through the development of new smart urban cities – all with a priority to create cities that are accessible, can drive economic opportunity and are green. This will improve the quality of life for the people who live there and improve job opportunities for the long term. In the Shenshui Eco-Technology Innovation City, CFLD has created $ 1billion of investment to develop 1 million square meters of industrial and living communities, a new high school, a free trade zone that has dozens of new business and jobs. The project also focuses on the environment, preserving nature along the Hun River waterfront and protecting 4,000 square kilometers of wetland. In Gu’an, CFLD has invested in infrastructure that moves the city from medium to large, providing over 1 million people with an increased standard of living.
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Xueyu Zhang, Senior Financial Manager
