A Beijing company has purchased a shopping mall in the US, marking the largest overseas acquisition of commercial property by a Chinese enterprise to date.
Beijing's Toward Group said it will open the mall in Milwaukee, Wisconsin, in August 2010 when 40 percent of tenants are expected to have moved in. The company announced its acquisition of the property on Dec 24.
"August is the warmest and most beautiful month in Wisconsin," Wu Li, CEO of Toward, told METRO. "For the first six months, we will waive the rent for our tenants."
More than 200 retailers are expected to open shops in the center, most coming from Beijing and Ningbo, a coastal city in Zhejiang province, Wu said.
The mall will be called "Amesia Plaza".
Toward Group is located in the Huatengbeitang Business Center in Chaoyang district. The walls of the offices are lined with photos from the Pacific island nation of Palau where the company is building a 116-room hotel.
"We made a small fortune by making antibiotics in 2000," Wu said while preparing to give a presentation on the Milwaukee shopping mall to a clothing factory in Beijing.
But why Milwaukee? Because it is cheap, Wu said.
"The sales tax rate in Wisconsin is only 5.5 percent, much lower than the average level in California, which is 7.25 percent to 9.75 percent," he said. "The purchase only cost $6 million. It would cost $100 million to build a similar property."
"If the occupancy rate is high enough, this mall will be worth a lot of money in the capital market," Wu said. "That is how we will make our profit."
"Besides, it is the economic center of Wisconsin and is only an hour away from Chicago," Wu said. "There are almost no big malls dedicated to sell Chinese products. We face far less competition than on the East and West coasts."
Toward has also considered acquiring malls in Ohio, Los Angeles and Washington DC.
The company initially is focusing business recruitment in Ningbo, Milwaukee's sister city.
"We already have about 200 candidates from Ningbo," Wu said. "But we are targeting 300 to 500 tenants for our final list."
Products to be sold in the mall include bags, clothing and furniture as well as a few famous Chinese brands.
"We are talking with Ruifuxiang Silk Store but have not closed a deal yet," Wu said.
Cai Dongmei, chairman of Toward's board of directors, said the plan will benefit Milwaukee's local economy.
"We can create at least 300 to 500 jobs for Milwaukee along with tax revenue for the government," Cai said. "At the same time, we are highlighting Chinese culture associated with the products, so the local business owners may show less hostility."
Chinese products or not, Milwaukee storeowners say the new mall will likely have an impact.
"There is always the potential to hurt local businesses," said JC Paustian, a Milwaukee business owner. "But the world economy has changed a lot. People understand not everything is made in the US anymore. Now people are looking for less expensive things because money is tight."
