A LITTLE OVER 12 YEARS AGO, Dongguan was nothing to write home about. The municipality was best known as the area you had to travel through between Guangzhou, Guangdong’s capital, and Shenzhen, its booming special economic zone. But it had the potential that investors with a grasp of pre-developing market economics would appreciate. And so Harley Seyedin decided to build China’s first western-owned power plant in Houjie, one of Dongguan’s unremarkable townships closest to Guangzhou.

The rest, as they say, is history. Today Dongguan has the highest per-capita GDP for a municipality of its size in China, its population has grown from around 1 million to nearly 9 million, Houjie has a Sheraton, and the Dongguan Houjie Power Plant Company has made a handsome return on Seyedin’s investment.

What was it that made Dongguan take off? A simple decision that its leadership took at the time: allow foreigners majority control of their joint-venture investments, help them set up, and then wait patiently for the taxes to roll in.

That might not sound so revolutionary to foreign investors today. But to appreciate how important – and how brave – that policy decision was back in 1993-94, you have to look at what was happening in China.

“Former premier Zhu Rongji was clamping down on the banks,” Seyedin recalls, referring to a period when the economy was clearly out of control and extreme austerity measures were imposed by the central government on what was then a nascent financial system. “It seemed obvious to me that all of the development that was being driven by state-directed lending was in for a hard time.
“We looked at Shunde (opposite Houjie, a short drive away over the Humen Bridge, which was then ranked No. 2 in China for per-capita GDP), which had a booming economy but everything was locked up in state-funded joint ventures, and then we looked at Dongguan, which had ambition. It was a gutsy thing for them to do, allowing foreigners majority control of their projects, and so we decided to go with the little guy.”

Market forces took care of the rest, of course, and today Dongguan is the poster boy of economic development across the country as China’s banking system becomes more in tune with a capital-driven economy and state-owned companies are the exception rather than the model.

It wasn’t just the initial boldness that helped Dongguan – and Seyedin – succeed, however. There are plenty of stories in China of failed investments where foreigners had majority control. And the power sector has some of the most high-profile of these, such as Enron’s US$200 million project in Hainan.
Where Seyedin made it work in Dongguan was with the most valuable commodity of all: trust. Rather than listening to the promise of riches from local officials who were dreaming of a day when they would all soon be living like Californians, Seyedin did his homework, and looked at where demand was most likely to come from.

“Too many foreign investors are caught up in the illusion of government guarantees written into Purchase Power Agreements (in which the state buys electricity from the supplier),” Seyedin says. “And then, when this or that industrial park doesn’t materialize, they are surprised when their contracts are reneged upon, and they become absorbed trying to sue for compensation.”

Instead, Seyedin looked at smaller areas where real development was taking place of its own accord, rather than within the confines of someone’s five-year plan for a grand industrial park. Dongguan fit the bill, literally. “Our bills have always been paid on time,” he says with a satisfied grin, adding that another of Dongguan’s most remarkable points of pride is how few corporate failures it has seen.
Today, Dongguan is a completely different place than when Seyedin first looked at it. It has run out of land for industrial development, and so is pushing the growth of hi-technology investments. Five-star hotels are everywhere, including the Sheraton in Houjie, the Sofitel in Huying Park, and the Hyatt Regency in Songshan Lake. Three of the province’s finest golf courses are within an hour’s drive of each other: Harbour Plaza in Houjie, Long Island in Chang’an, and Hillview in Huying.

Seyedin’s 70-megawatt power plant is still, however, the only one of its kind in Houjie. It runs at virtually maximum output, around 5,000 hours per year. And yet, walking through the plant, it seems eerily lacking in people. “This is probably the most efficient power plant in the country,” he explains, pointing out that he does with 33 staff what the average domestic power plant does with more than 100. He is also proud of the plant’s emission controls, a sensitive subject in the Pearl River Delta, with heat-recovery boilers on the plant’s exhausts allowing him to get six per cent more efficiency in generation. Strict maintenance controls kick in another 15 per cent of efficiency savings compared to a typical plant of its size.

Seyedin also has a lot more on his plate now than just this plant. He recently bought an 87-megawatt power plant in Zengcheng, a district of Guangzhou that has been growing by more than 30 per cent for the past few years, and he is looking at building two more generation plants on his land in Houjie. Unlike the first oil-fired plant, however, he is hopeful of getting these to run on Liquified Natural Gas, which is more expensive but better for the environment. Negotiations are continuing with the government for allocation of supply from its massive LNG project in Shenzhen.

He also jokes sometimes that all these investments are distracting him from his real job as president of the American Chamber of Commerce in South China. Membership is now up to more than 1,000 companies, and he has his hands full with a busy schedule of engagements, often involving high-level discussions between major foreign investors and government officials.

Perhaps not surprisingly, Seyedin is bullish on the economy’s future, not just in Houjie, but Dongguan and the rest of southern China, too. He sees real potential in the consumer-driven sectors as rising wealth levels kick in to retail sales, pointing to the performances of two Amcham members as evidence: Amway, which turned a US$100 million investment in 1994 into US$2 billion in sales a decade later, and Proctor and Gamble, which now has 40 per cent of the national market for personal care products. At the top end, too, demand is booming: Rolls Royce sales in the Pearl River Delta surpassed Japan last year.

“This is where the smart money is,” Seyedin says. He should know.
ANTHONY LAWRANCE

By 2012, Icecap would pay US$50 million to Xinfeng for the garbage plant to develop methane-based pwer generation projects and in return, Xinfeng would cut its carbon dioxide emissions by five million tons by the same year.

This deal would make it the biggest Kyoto Protocol Clean Development Mechanism (CDM) project in Guangdong.

China accounts for more than one third of the world's total carbon credit provider, making it the biggest in the world and is expected to surpass the U.S. as the world's largest greenhouse gas emitter by 2009.

Polluting factories that operate in electroplating, dyeing and printing will not be eligible to renew their licenses to operate in Dongguan if they did not clean up their act.

Dongguan Mayor Li Yuquan says it is paramount to start cleaning up Dongguan, where it is suffering from a serious water pollution problem and all of its rivers are black. By the end of this year, he said 36 sewage works and 200km - 400km of main sewage treatment pipes would be completed.

According to the report, an estimated 8,800 Hong Kong enterprises operate in Dongguan, or 58 per cent of the total 15,000 foreign companies.

The factories are given an option to move into nine businses parks were waste water would be treated collectively.

Throughout all of 2006, 3,110 newly incorporated companies were set up, an increase of 1.2 per cent over 2005. However, registered capital fell 6.4 per cent over 2005, at 557.63 million MOP.

Branson plans to open Macau’s most expensive casino resort yet, a US$3 billion, 2.1 million sq. ft. casino and entertainment complex with three hotels on the Cotai Strip, next door to the Venetian Macao Resort. He aims to open his new resort by 2010 in partnership with Tabcorp Holdings, the world's sixth largest casino operator and owner of the Sydney Star City casino.

This will be Branson’s first foray into the casino industry, although not his first attempt at entering the Macau market with Virgin Blue several years ago. Virgin Blue did not take off, evidence that the casino industry is proving to be a much easier way to enter the Macau market than the airline sector.

“We have done a lot of market research but ultimately it is about gut-feeling and mine is that a Virgin casino in Macao will be a success,” Branson told the Financial Times.

He also told FT that his casino will be more for family with more greenery, swimming pools and facilities for people of all ages.

The Virgin Atlantic Hong Kong office, which welcomes its new Country Manager, Joe Thompson today from India, said it could not comment on Richard Branson’s Macau move just yet.

“In Asia, we delivered another strong quarter at The Sands Macao, with our mass market, VIP and slots businesses all reflecting increases in gaming win compared to the quarter one year ago,” William P. Weidner President and Chief Operating Officer for Las Vegas Sands Corp said. “For the fourth quarter total, despite the addition of incremental capacity in the marketplace, we captured 19 per cent of the table game market in Macao.”

He said the Venetian Macao is on track to open this summer and construction or preconstruction activities have commenced on all of Las Vegas Sands’ seven sites on the Cotai Strip.

Weidner is also optimistic toward the leasing of retail space and MICE (meetings, incentives, conventions and exhibitions) business at the Venetian Macao.

“We have also made strong progress in the leasing of our retail space and the development of our convention, tour and travel, and corporate meetings businesses on The Cotai Strip,” he said.

In neighboring Zhuhai, he said the Las Vegas Sands Corp is making significant strides toward the development of the Venetian Hengqin International Convention and Resort Project, although it remains subject to governmental approvals.

On February 8 in Singapore, the Marina Bay Sands breaks ground. Slated to open in 2009, Marina Bay will have 2,500 rooms, 1.2 million sq. ft of meetings space, 1 million sq. ft. of retail as well as gaming and entertainment venues.

When the first phase of the 47-storey Grand Lisboa opens on February 11, SJM will be competing on a level playing field, says Frank McFadden, President, JV and business developments for SJM.

“With this new product we bring to the market, we are ready to compete on a new, level playing field,” he says.

“The fact that we’re opening a new building gives us the opportunity to update and modernize our product. It’s an evolutionary step that enables us to compete. It’s a comfortable process, one that help us to evolve and improve.”

On Sunday, the Grand Lisboa will open with 240 tables and 480 slots. “And if we can squeeze in more, we will,” McFadden adds with a smile.

Don Alfonso, an Italian restaurant featuring Chef Alfonso Iaccarino; The Eight; the Crystal lounge and deli; The Grand Buffet; the Noodle & Congee Corner and a Round-The-Clock Coffee Shop are also anticipated to open on Sunday.

Louis Ng, Director and COO of SJM estimates 50 – 60,000 people will visit the Grand Lisboa on an average day and to attract people, they will be holding lucky draws for players at the tables throughout the day at 10-15 minute intervals.

The new Grand Lisboa is connected by footbridge with the original Hotel Lisboa which Stanley Ho opened back in 1971.

A Guangdong official said that the three cities would each have to pitch in to pay for the bridge’s construction, which is slated to open in 2015.

After two years of talks, 23 of the 25 points for discussion had been worked out, he said. The final two issues over the type of construction and investment would need one more year. The China Central Government is keen to push forward with the construction of the bridge linking the Pearl River Delta cities and has therefore set up a committee to address the outstanding issues quickly.

An estimated 20 billion MOP alone will be needed for construction of the bridge which is designed to connect the west side of Hong Kong with Macau and Zhuhai would become the one of the world’s longest bridges comparable in length to the Lake Pontchartrain Causeway, a 38.4-kilometers long bridge in the United States.