From Oriental Outlook: reporter: Dai Wenming (戴闻名)
Oxford University graduate Jerome Vaughan (方哲伦) came to Shanghai in 2002, in his mind was only “the Bund (外滩) skyline” which was just started to appear in the western newspapers at the time.
From an early age he wanted to leave the United Kingdom to look at the “big world”, but in his imagination years ago, the world should be in India – where not only the rapid development, but also with the history of the United Kingdom, and there was no language barrier. However his mother’s words changed his life direction.
In 2002, his mother told him that go to China and take a look there, the newspaper said, over there “changes are happening rapidly”. Just like that, without knowing any Chinese, not even read any China-related books, he landed in Shanghai.
Worked in a business for over a year, he gradually adapted to life in Shanghai and the Chinese Society. 2004, coming from a family of real estate Jerome Vaughan started his own commercial real estate company – Belfrey Housing Real Estate Consulting Co. Ltd. (Belfrey Partners) That year, his company is only him and one other partner. In order for the new-born small company to look “larger” he put the word “Partners” in the name.
His business model is not complicated. It is providing intermediary services in Shanghai, transnational, local businesses and commercial real estate providers. However, real estate agents are more than rice shops in the city where business is extremely competitive. In Shanghai, the commercial real estate sector, there are referred as the “six biggest” agencies which has the largest market shares, as well as a long list of foreigners, also the Sino-foreign joint ventures Shanghai intermediary medium-sized companies.
A British young man with poor Chinese and with no local “connections”, how does he start developing?
Speaking one language is not enough
The first step of Jerome Vaughan’s entrepreneurship was “knocking on doors”. And he knocked for 6 month.
In the first six month, he was working every day at the street level. When he saw houses may be suitable for corporate customers he would stop and knock on the door and contacted the landlord. In six month, he established his first commercial real estate database of Shanghai, not only the large office buildings, also 60-70 buildings which only has 5-8 floors, but with good location, reasonable rents, cost-effective “middle market” properties, particularly suited to his target customers – small and medium sized foreign company just came to Shanghai.
“You think that if a medium-sized family business in Europe decided to go to Shanghai to open a trade representative office, most of them require easy access and also want to be in line with their Europeans taste – such as the former French Concession hear Hengshan Road. I found some of these offices, they are most suitable.” Jerome Vaughan said.
Now, Jerome Vaughan already has over 500 office spaces with detailed information. Varity of International companies in Shanghai often calls him and ask for them, but he found that there are still many difficulties he faces.
For example, internally with the volume of the business expansion, he gradually added a number of Chinese employees. Responsible for internal operations of the American colleague told him that the Chinese employees are “a little scared” of him. He was very puzzled, because he thinks he is always very courteous.
Externally, the Shanghai real estate leasing market competition is fierce, a shop on lease for office space which is about to expire, this information is often first known internally, rather than open and transparent. Shops who have the this information often at the same time and there are many competitors, while the outcome of the competition often does not depend on how high or low the bit is.
Jerome Vaughan sums up his difficulties into one point, has not yet found the key opens the lock of the “Chinese society”
“Understand one language is not enough, in a society, there are many subtle languages. For example, how to use the most appropriate language to express yourself at the most appropriate time at the same time understanding what the other side wants, for a foreigner is not so easy. China is not too yet suitable for the development of small and medium-sized foreign companies”
Officials are the most difficult to deal with
Jerome Vaughan’s personal experience is that officials are the most difficult to deal with in China.
As a result of engaging in real estate Jerome has more opportunity to get in touch with many officials of the business than other industries. 4 years ago he was commissioned by a multinational company in the city to find a large office in a convenient location also can reflect ones personality. After looking around, he found a 3,500 square meters place on a famous street, with a large courtyard garden. When asked, the owner is a government department. So Jerome contacted the official of the department, official was very happy and asked rent price was 4.5 yuan per square meter. Customer was very satisfied after looking at the house, only to ask in accordance with their own ideas about renovation and with their own cost.
Jerome was very excited thinks the owner can make some money from the renovation the lease should be no problem. But it was far beyond his expectation that the official cannot accept that. Why? “We want to do our own decoration, in accordance with international standards.” the official answered. But I have found you an international customer, the other party is willing to do out-of-pocket decoration. Jerome said. The strange thing is, no matter how you say it that the official insisted on their own renovation, or they will not rent the place. Jerome was baffled, totally did not understand the official’s logic. Of course, the deal did not go through.
Shortly afterwards, he noticed the yard was indeed decorated “in accordance with international standards”. They spent two million yuan, and the place has become a “resplendent baroque palace” which was unrented for long time. Another time, he heard that the renovation work was done by the official’s relatives.
“Sometimes these people seem to want to make money, sometimes afraid to make mistakes, often make decisions base on personal preferences, decision of uncertainty, it is most difficult to deal with.” Jerome summed up.
Set sights on second-tier cities and the environmental protection industry
With regard to the future, Jerome has a bold idea, introduce a “virtual intermediary system” to Chinese market which is already very popular in Europe.
The main reason is that he felt that Shanghai has a highly developed market, competitions is too intense, may be limited space for expansion. Companies with the size like his, if you want to further develop, the only way is to set sights on cities around Shanghai and other second-tier cities in China.
“Virtual intermediary system” is that putting city’s real estate related information into database, and then clients contact through the internet or telephone, and then in make local arrangements for accompanied showings intermediary. “This model will be vary suitable for the development of China at this state, may even be good to run it into Southeast Asia.” Jerome Vaughan analyzes.
He feels that the current top priority is to find a reliable Chinese person responsible for smooth communication between the message and taking care of their daily affairs, so that he can free up time and energy to do strategic planning.
As a more long-term future, Jerome wants to do some environment –friendly businesses, such as green lighting, energy –saving battery. For this he has been in contact with partners in China preparing to start.
The real “melting pot”
Jerome Vaughan’s business life in China is known as the “swimming-style”: that is, start from the grass-roots, veteran, had an ordinary Chinese person’s lives. He said that the reason he chooses this way is not to be like majority of his compatriots, as always “looking down China from the plane”.
He said that over the past 6 years spent in Shanghai was “extremely lucky”, “The city changes so fast, so much energy has attracted people from all over inner China also throughout the world. It is a true ‘melting pot’”. His assessment of Chinese opponents are “persistent, ruthless pragmatists, they are fearful opponents.” He would like to know Deng Xiaoping, the Chinese leader of “modern China”.
The only thing makes him frustrated is that supermarket sales in some cases still do not understand his Chinese. In addition, Shanghai is apparently too “city like” – not like London, drive 30 minutes in any direction there will be villages, which makes people feel “tired”. “But apart from that, I have no complaints about Shanghai, where the general spirit of optimism, very similar to United States in 1930’s.”