Property

Makeover time

Evergrande announces new plastic surgery resort

SONY DSC

Hainan: new medical destination

Evergrande boss Xu Jiayin suffered bit of a slap in the face in Sydney at the beginning of March, when Australia’s Treasurer Joe Hockey ordered him to sell a $30 million mansion in the affluent suburb of Point Piper.

Evergrande bought the villa “via a string of shell companies” located in Australia, Hong Kong and the British Virgin Islands, Hockey told the media. But the purchase was improper because Xu forgot to notify the Foreign Investment Review Board (FIRB) that it was being made by what was ultimately a non-Australian company.

Hockey said Evergrande had 90 days to find a buyer for the mansion.

The forced sale is the first such case for more than eight years in Australia. While non-residents can purchase newly-built properties, existing structures are not so immediately available. “The rules are straightforward,” FIRB chairman Brian Wilson, told the Australian Financial Review. “It’s an existing property: you have to be either a resident, or a citizen or a temporary resident. You can’t be a foreign investor.”

Xu Jiayin hasn’t responded publicly to his Sydney setback, although it seems unlikely he will recoup the full value of the mansion in such a pressured timeframe.

As a billionaire, he might not be too bothered. And certainly, Xu is busy with other matters, including Evergrande’s continuing diversification away from its core property business, this time with the launch of a plastic surgery resort for tourists who want nips or tucks while they are on holiday in Hainan.

Last year the developer bought a stake in South Korea’s biggest plastic surgery operator, Wonjin Aesthetic Surgery Clinic, on the back of growing demand for cosmetic surgery among Chinese customers. Highlighting that it plans to expand further in the sector, Evergrande’s latest purchase will be built in Lecheng in the special economic zone of Boao in Hainan province. The goal is to attract tourists who want to relax in tropical climes as they recover from double-eyelid procedures, botox and other treatments.

Analysts are generally supportive of the move. China’s beauty industry – which includes the sale of cosmetics – reached Rmb850 billion ($137 billion) last year, an increase of 15% from a year ago, says Beijing Business Times. “The anti-aging healthcare industry, in particular, is still in the early stages of development, so there is huge market potential. In addition, the plastic surgery industry has a much higher profit margin compared with property development,” an insider told the newspaper.

Evergrande is also moving ahead with plans to rename Hong Kong-listed New Media, its most recent acquisition (see WiC262), as Evergrande Health Industry Group. It will then inject its bottled water division, which it launched in January of last year, as well as other new ventures in grain and cooking oil production.

New Zealand-based infant formula maker Cowala Dairy – purchased last October – will also be included in the health group.

Evergrande already owns a plastic surgery centre in Tianjin, which it operates with Wonjin Beauty. The Korean firm is also a partner in Boao, where Evergrande will face competition for patients from Sincere Watch (a shell company owned by Hong Kong-based businesswoman Pollyanna Chu), which is investing Rmb380 million to engage in medical tourism. Sincere says it plans to expand into treating more serious diseases such as cancer, and will eventually offer organ transplants.

“The idea (of Boao) is similar to the Shanghai free-trade zone. The only difference is the Shanghai zone is to attract banks and brokers, and Lecheng in Hainan wants to attract doctors, nurses, beauticians, Chinese herbalists and dieticians,” claims former Hong Kong Hospital Authority chairman Anthony Wu Ting-yuk, who is now co-chairman of Sincere Watch.

Other Chinese property firms are also looking for ways to respond to the slowdown in domestic real estate, although most have opted for ideas closer to their previous experience. Vanke has been switching into commercial real estate and sizing up overseas deals, for instance, while Wanda has also branched out into entertainment.

But Evergrande is going for a bolder makeover, it seems.


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