It
seems like everything is topsy-turvy, and that the world can change with just
a cast of the dice on the board of destiny.
This is the feeling that lingers in my mind after my encounter with the almost-legendary
Pan Shiyi, President of Beijing SOHO.
Born and brought up in a small mountain village in Gansu Province, he still speaks with a heavy Gansu accent and keeps the habit of sitting cross-legged on chairs. But nevertheless, here he is, a developer of modern, cutting-edge, avant-garde architecture.
Prologue
Pan Shiyi began our talk by joking: I feel like Aunt Xiangling (the protagonist of a famous Chinese novel by Lu Xun) because I keep talking about the same experience every single time I am interviewed. When I have to repeat the same stories about the SOHO project three times a day, it feels like a form of torture. I'm getting a little tired of it so I hope you have some more creative questions and we can talk about something more interesting.
Comprehending poverty
WIN: I can't help asking how you managed to raise so many millions of
dollars for your real estate projects? I find it extraordinary when I consider
that you grew up in a rural Gansu that was dominated by a planned economy, and
that you don't have a lot of experience or an academic background in business.
Pan Shiyi: Half of my success is probably due to a natural talent for business, and the other half is due to the feeling for the market that I've gradually developed over the years. I believe that the insights I've gained from reflecting on my experiences have played no small part in helping me make investment decisions.
WIN: Your wife, Zhang Xin, says that while you are not a particularly skilled speaker, you understand issues much more thoroughly than most people can talk the talk, so to speak. She attributes this to your upbringing in the poor countryside. What are your memories of your life there?
Pan: I'm from Tianshui, in Gansu Province. Have you ever heard of Mount Maiji? It is next to a valley that was, I recall, full of wild flowers. Back then, my town was called 'Dongquan Commune', and it's now called 'Maopaoquan Town'. Actually, when you are a little child, you are not concerned with either poverty or illness, but after I got to be a bit older, I remember going to town and coming back shocked by the sharp contrast between town and country. Later, when I went to high school, most of my classmates' families lived in town and their parents worked in the army or in factories. Only three or four of my schoolmates were from remote mountain villages like I was. Our clothing, accents and circle of friends were so different from the kids from town. I remember that for the majority of my first year in high school, a few of us village kids hung around together and were very sensitive to the teasing we would get from the other children.
WIN: That's reminiscent of the youth of 'Sun Shaopin' described in Lu Yao's novel the Ordinary World.
Pan: Later on, we moved to a town. We had to postpone our move until my father, who had been unfairly labeled a rightist, could have his case redressed. But even after the move, I would often go back to my village to visit relatives.
As an example of the kind of poverty my family lived in, I remember one particular trip I made to my uncle's house in order to see my grandmother. My grandmother wanted to cook some food for me but they had been out of rice and flour for several months. We found some old flour bags in the kitchen and she asked me to hold them while she beat the bags with a stick to gather the remaining flour.
She beat the bags for a long time and as a result, we managed to collect a tiny handful of flour. My Grandmother made a really thin tortilla with the flour, added some corn flour on top of it, and wrapped them around some scallions, garlic and pickled cabbage. These fried vegetable dumplings were shared by the whole family because my uncle's children also hadn't had flour for a long while.
Things were like that. We didn't have enough food to eat or clothing to wear. The thing is though; we thought that was the way life should be, that we should have been that hungry and cold.
Looking at today's China, maybe you cannot even imagine how much of an impact the 'household output quota contract policy' [ed. this policy enabled farmers to sell at market whatever surplus they had left after fulfilling government production quotas] had on farmers at that time! That policy gave me my first concept about market economics. For the first time, I realized that there could be other ways of production besides a 'people's commune'.
Five years after that, I left Maopaoquan and went through a series of moves that took me to Beijing, Shenzhen and Hainan. Because I had come from the countryside, all the things that the city people took for granted seemed fresh and new to me. I had a sharp sense of what was happening in those cities. The words 'market economy' to me mean the magical power to move people out of stagnancy, to let them regroup and to achieve equality.
Hainan, Hainan?
WIN: You have already made your mark on Beijing's future CBD (Central Business District) with SOHO NewTown and Jianwai SOHO, and work has started on 'Commune By the Great Wall.' Reports now say that you have bought 66.7 hectares of land in Bo'ao, Hainan Province in order to construct Bo'ao Canal Village. Does your choice of 'returning' to Hainan have anything to do with the fact that you started your career there?
Pan: I think so. To be honest, Hainan is one of my favorite places. I was touched by Hainan the moment I first stepped on its soil in 1989. I was going to Xiuying by sea and it was already evening when I got there. I went ashore only to find that the whole island was dark. Walking down the street, I saw light bulbs sparkling everywhere. With a moist sea breeze blowing through my hair, I sat under those sparkling lights and ate my dinner at an outdoor restaurant. I felt a little like 'Liu Atai', the blockade runner in the movie 'The Strait'.
To my surprise, crowds of people suddenly appeared all along Longhua and Datong Avenues. It had all the color and excitement of a market. There were people singing, writing poems, dating, selling pancakes - all of them had come from the mainland to the same place at the same time due to fate.
There were college students who had come for opportunities, high school graduates, working people who wanted to escape their old environment, farmers who wanted more than just land, marriage deserters... The tiny island was already packed with 150,000 people when I got there. What a weird and wonderful place I thought!
WIN: That sort of scene was a common sight on Hainan during the 1988 and 89 when thousands of people settled on the island within a few short months. The time reminds many people of the Europeans' grand adventure after Columbus discovered the New World.
Pan: That was probably a unique moment in the island's history, but at that time I'd found that I'd cast off all of my earlier constraints: There would never be section chiefs or any other superiors any more. I would never need to bow to anybody. It was like I was reborn.
WIN: So with your newfound sense of freedom, you started working on the island. Did you know where your plans were leading?
Pan: I did have some goals and directions. I knew Hainan would need construction and that construction requires bricks. So I went to Xinghai Brick Factory in Haikou.
I had shown management talent in some of my previous jobs and so I became the manager of the brick factory. In a short time, I managed to make it profitable. I remember managing the brick factory as one of the happiest times in my life, because my management talent was brought to full play and I could put all sorts of ideas into practice.
At its peak, the brick factory had two or three hundred employees. Even though most of them were local manual labors, the factory was orderly under my management. They even cleaned the toilets everyday, which back then was something of an exception. But Hainan Island was attacked by a typhoon in 1990.
After that the economy fell into depression and the brick factory really felt the drop off in demand. The bricks didn't sell well, so I had to lay off people. Out of 300 total employees, in the end there were only 80 left.
WIN: No wonder you say you have a Hainan complex. That was the place
where you experienced prosperity for the first time and also the place where
you learnt how an enterprise's destiny is controlled by the 'overall situation.'
At the end of 1991, the 27-year-old Pan Shiyi took a picture of himself alone
in Hainan, which he keeps as a reminder.
Pan:
Hainan is the place where I experienced absolute loneliness.
The toughest time was in February of 1991. Haikou had basically become a ghost town. That year there was a great watermelon harvest in Hainan but nobody cared enough to pick the watermelons. All the watermelons were left to rot in the field. On the eve of Spring Festival, I bought a watermelon.
I put my camera on the top of a wall, set up the timer and took a picture of myself eating watermelon. I wrote my feeling at the time on the back of the picture. When I look at that picture today, I think I was actually in great shape and high spirits considering what was going on. It is rather hard to think about going back to that condition now.
I was 27 then.
I wasn't able to go back home on the eve of the Spring Festival and all that
I could afford for that night was the cheapest room in a hostel. I knew my family
must have been watching the holiday specials on TV, so even though I could not
be with them, I thought that I could at least feel their happiness if I could
watch the same program. I went to the first floor of the hostel to beg the young
girl on duty to let me watch the program on TV and she agreed. I'll never know
why she changed her mind shortly after the celebration began. She wouldn't allow
me to watch anymore no matter what and she kept urging me to leave. I went back
to my room and was overwhelmed by loneliness. I wanted to talk to somebody really
badly at that time. Man or woman, old or young, I didn't care, so I went to
stand beside the window on the second floor, trying to see if there was anybody
passing by my window. The only thing I found was the sound of firecrackers from
a distance. After more than half an hour, a couple walked by my window talking
and laughing. I watched them laughing together and then they walked away. Before
they disappeared I took my camera and continued to watch them through the lens.
As they walked further and further away, I was so lonely and homesick I burst into tears when
I put down my camera.
WIN: Yet you remained in Hainan despite the tough situation and entered the real estate market, which had begun to develop thanks to the opportunities brought by Deng Xiaoping's visit to the south. A few years after, before its big slump, you withdrew from the Hainan real estate market completely. Was that merely a coincidence or you had already mastered the rules of market by then?
Words on the back of the photo, testimony of this man's thoughts at that moment
Pan: I stayed in Hainan because I loved the freedom there. You may do whatever you wish without fear of being interfered with by the authorities. As the saying goes, heaven is high and the emperor far away. Some friends of mine came from Beijing in 1990. We raised some money and started 'Agricultural High-Technology Investment Company' (predecessor of Vantone Real Estate Development Company). We, the six partners including Feng Lun, Yi Xiaodi and Wang Gongquan, are now referred to as 'the six noblemen of Chinese real estate industry by the media. Those people's minds were very active and they all had a great deal of influence on me. We got a loan of five million RMB from a corporation in Beijing, bought some villas and started speculating in real estate.
Back then, speculating in Hainan real estate, was something like investing in '.com' companies. It was all so crazy. No company should be like that. Last year I went to Silicon Valley and discussed the issue with some people there: when the market goes up, you feel like you are doing exactly the right thing.
Even while everybody is investing like mad, you should always hold on to solid fundamental principles and be able to get out at a logical point. You are a fool if you stay away from a strong market, but really smart people don't follow everybody else. Even when other people are still investing, you should get out when you think you should.
Think outside of the box
'I think that if people remain in the same environment for too long, they will become lethargic. If you always hear the same thing from the same people around you, your thinking can easily become fixed and you won't be able to think outside of the box.
WIN: Beijing Vantone grew really quickly and you became wealthy almost overnight. Be honest: you must have needed some time to adjust. Many real estate developers lost sight of where they were when they got rich very quickly. That was one of the reasons that many of them disappeared from the scene. How did you make the adjustments?
Pan: When people achieve a certain degree of wealth, I feel that Churchill put it best when he said: the higher a monkey climbs, the more clearly people can see its buttocks. At that time I was earning my money, I became very interested in the state of mind of wealthy foreign people. I also developed an interest in history because I wanted to see how historical figures responded when they gained their wealth and power. It was initially all very confusing, but with a lot of personal effort I managed to make the adjustment smoothly.
I registered my own Redstone Industrie Co., Ltd shortly after I came back from a trip to Europe. Even though I wasn't happy about leaving Vantone, I knew clearly that if I stayed in one place for too long a time, I would become lethargic and complacent.
WIN: I assume your wife, Zhang Xin, is one the driving forces to motivate you to break free and be original.
Pan: She is an 'import' from Oxford, Cambridge and Wall Street, but I am an authentic Chinese peasant. Sometimes our discussions become contentious and there is a struggle between two mentalities and two cultures. She is always pushing me to move forward. From the beginning of Redstone Industries to SOHO NewTown, Jianwai SOHO, the Commune by the Great Wall, etc, she has promoted and inspired many innovations in the company.
WIN: In order to be able to really 'think outside of the box', you should have a good understanding of your environment while looking beyond the environment; meanwhile, you should always keep a keen eye on the development of everything around you. This is not easy for those who are deeply involved with practical everyday matters
Pan: It does indeed involve more than a just a couple of factors. You need to be highly sensitive to changes in the times and society. From a businessperson's perspective, it means taking advantage of 'transformations'. Some transformations are very subtle and not easy to detect if you are intimately involved. For example, have you ever given serious consideration to the fact that Chinese people have been using an additional one billion cellular phones during the last few years? Many people simply take it for granted the dramatic changes brought by Internet technologies. People are used to the way things are and don't think critically about social phenomena. If you lift your gaze just a little bit higher, what can you see? You can see the trajectory of history, the present and the future. Once you have a hold on it, you will find business opportunities. This is a businessperson's eye and a moneymaking secret.
WIN:
How did you apply this insight to your real estate projects?
Pan:
It is easy to copy another building model, but it is difficult to break free
from rules and conventions. Our generation experienced a special time when we
were nurtured by revolutionary heroism. We often reveal the rough, egocentric
side of our personality as well as a drive to sacrifice, to be selfless and
thrifty. It is hard for this generation to produce a major work of architecture
of lasting significance. This stems in part from the fact that our initial assumptions
in real estate need to be changed. Developers should not blindly seek 'the biggest,
tallest and greatest'. We should rather return to the basics and analyze ordinary
people's behavior, emotions and interests. That way we can build spaces that
fit their needs.
Just like artists need to surround themselves with different ideas in order to create, business people need to have profound life experiences to develop an accurate and long-term view about the market. I myself try to cultivate many kinds of knowledge and experiences, and my interests include religion, fine arts, architecture, and psychology. I have been to more than ten countries this year and I have a heartfelt interest in each one. It was like my personal pilgrimage for architecture. I did it with a camera.
In reality, all aspects of society are full of meaning and one value system alone can no longer judge beauty and ugliness. Business people should not always sit inside the office, neither should anyone else do the same thing every day. Eating the same food everyday, drinking the same tea everyday and meeting with the same people everyday, it is all too confining and doesn't inspire a better life. When you have more contact with the world, you can see the world more clearly. When you become stronger mentally, you won't be able to fool yourself any more.
A stoneroller is a stoneroller,
a water vat is a water vat.
WIN: I heard you are into Zen? I noticed there is a cartoon of you meditating on the back of your business card.
Pan:
I care deeply for simplicity and love Zen from the bottom of my heart. When
I read a Buddhist Sutra I feel a deep sense of peace and tranquility.
The essence of Zen is to seek out nature. Zen teaches that formal things should not influence people. There are no Zen textual classics, no authority figures, no idols, and no monasteries.
Despite these teachings, I tend to try to explain everything with logic. The more complicated that logic becomes, the further away I get from the real meaning of Zen. People seek out the complicated formal explanations for things and lose confidence in their innate understanding. What often happens is that the more people want to understand the nature of the universe, the further they get from nature.
For example, in order to protect the environment, people destroy it first; in order to put out a forest fire, we interrupt the natural process of which that fire is a part; in order to have more green in a residential area, we block people's walkways?
WIN: What spirits of Zen does your ideal architecture embody?
Pan: There are three stages to Zen, these are similar to the way we build houses, go about business and think about issues. The first stage is a lack of enlightenment. When people remain in a line of business for too long, the more confused they become. The second stage is an awareness of things but at the same time it seems that the more you try to understand, the more confused you become. Late at night, tens of thousands of phrases and remarks flash through your mind in a confused whirl. The last and highest stage is simplicity. There are no more grand theories. Just like the lyrics of the song 'Fences', women and dogs say "a stoneroller is a stoneroller while a water vat is a water vat." Father is father and mother is mother. It is what it is. Before understand it, it is one way; after you understand it, it is still the same way.
At certain times, residential constructions and architecture in general can give people a clear direction, but over time, it might become a hindrance to innovation. Coming back to the essence of building, designing and construction is Zen.
I think John Christopher's life is like a river-however certain parts of the
river seem to be asleep, only the field and the sky reflect in the river, it
moves, changes, stands still. Sometimes a rushing torrent hides beneath the
motionless surface, violent forces await within the river waiting to reveal
the power accumulated there. The river absorbs the thoughts of the banks and
continues its journey to the ocean, to the destiny of us all.
--Roman Roland
