Wanda chairman Wang Jianlin at the Sanya Forum 2013 in Hainan, Dec. 15. (Photo/CNS)
There have been a number of cases over recent months where local governments have reclaimed land purchased by Chinese conglomerate Dalian Wanda Group, which observers claim is backed by an intricate network of vested interests, reports Guangzhou's 21st Century Business Herald.
A plot of land in Dongguan in Guangdong province went on sale on Dec. 6 and was eventually bought by Wanda, the sole bidder, for 1.4 billion yuan (US$ 230 million) — a price 108 million yuan (US$17.7 million) higher than the original offer.
The deal followed the purchase a day earlier of another plot of land in Luogang district in neighboring Guangzhou by a Wanda subsidiary for 830 million yuan (US$ 136.6 million). The same plot of land in Luogang was first released for auction in June and Wanda won the rights to develop the area, only to be ordered to stop its construction project three months later.
Authorities in Zhanjiang in Guangdong issued a similar order on Oct. 31, reclaiming part of the land acquired by Wanda in the Zhanjiang Development Zone. The land was later released for sale and was once again reclaimed by Wanda.
The three land repurchases had one thing in common: Wanda had secured an agreement with local governments ahead of the purchases to allow the company to buy the plots of land at rock-bottom prices. The Ministry of Land and Resources detected the irregularities however and ordered a halt to the monopolistic activities, according to Guangdong's Department of Land and Resources.
In some cases, the local governments were said to have contacted Wanda on their own initiative in the hope of bringing investment to their area. Zhang Jiapeng, an executive at RET Real Estate Consulting in Beijing, said brand name property developers bring a positive impact to areas in which they operate, including becoming long-term sources of tax for local governments and providing improved shopping environments.
Local governments are also attracted to Wanda for its efficiency. It takes a minimum of 18 months for the realtor to develop an area and open it up for business, whereas most other sizable developers take five or even 10 years to develop an area for business. Meanwhile, the company's investments often have the effect of raising land prices in nearby areas, offering an alternative source of revenue to local governments, the paper said.