Staff Reporter

The Great Mall of China.

That’s how local real estate veteran Harry Newman affectionately refers to his latest retail project a 760,000-square-foot U.S.-style power center he hopes to develop in Changping County about 15 miles north of downtown Beijing.

The project, if and when it’s built, will be a classic case of East meets West, combining western-style discount chains and department stores with a smattering of local Chinese retailers and restaurants.

The fast-growing Chinese economy has unleashed a flood of consumer demand in recent years that Chinese developers are looking to cash in on. What they lack are connections with big-name retail tenants and experience in building attractive, user-friendly retail complexes to draw in the masses.

That lack of expertise and connections has led many Chinese developers to look overseas especially to L.A. with its large Chinese community to seek help from foreign developers, architects and building managers like Newman.

Outside Newman’s recent project, a handful of L.A.-area companies have ongoing construction projects in China, including Jerde Partnership of Venice and the Santa Monica office of Hellmuth Obata & Kassabaum Inc.

Jerde is designing two mixed-use projects, including a $300 million, 2.4 million-square-foot office/retail/ apartment project in the city of Guangzhou (Canton).

HOK has three ongoing projects in China two mixed-use office/retail complexes in the cities of Harbin and Shanghai, and a golf club and resort in the city of Dujiangyan.

Local developer Koll Real Estate Group of Irvine is also providing building development and management services for companies with development projects in China.

Unlike the architecture firms and Koll, however, Newman’s company, Newman Properties, is one of the few L.A.-area developers to take a direct stake in building development and ownership in China.

Newman said his Long Beach-based company received verbal approval for the $64 million power center project last month from Chinese officials. Once the agreement is sealed, construction could begin by year-end and the mall could open as early as November 1998.

Newman is developing the 120-acre property through a joint venture with Heng Tong Beijing, a publicly-traded residential developer based in the Chinese capital.

He has yet to sign any pre-leases for the mall, though he expects to draw on big-name U.S. and Japanese retailers to fill the center’s three to four anchor slots. The short list of potential anchors includes: AMC Entertainment, operator of the AMC movie theater chain; Wal-Mart Stores; Swedish furniture retailer Ikea; Japanese discount retailers Seiyu Ltd. and Jusco Co.; and Makro, a supermarket chain based in the Netherlands.

Many of the mall’s smaller tenants will be local Chinese retailers, according to Newman.

Newman has developed numerous properties in the United States including the Mall of Orange in Orange and Pico Rivera Mall. That’s experience he must draw on to make the Changping mall succeed, according to Eddy Chao, another local developer who has built projects in China.

Chao’s company, Candet Properties of Alhambra, has developed residential projects in the Chinese provinces of Guizhou and Fujian.

Specifically, one of the mall’s biggest challenges will be finding retail tenants who can profit off a Chinese populace that is still relatively cash-poor, said Chao.

“If they cater to high-income people they could be successful. But if these are blue-collar workers making 500 to 1,000 renminbi (about $60 to $120) per month, they really can’t afford that kind of luxury,” he said.

Chao also predicted the mall could have trouble because of the relatively big distance between the center and metropolitan Beijing, where people rely mostly on bicycles and buses for transport.

“If you don’t have a car, how can you get there? If it takes two hours on the bus to go watch the movies I don’t know if people would be willing to do that,” he said.

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