If we look at the value-added of real estate, our location is indeed more valuable, but we have also done a “wedding dress” for others.

Editor’s note: This article is from daily News , author: Chenmeng Yu , authorized reprint

IKEA has been in China for 21 years.

The project’s value-added space is more than 50%, and the commercial volume radiates regional land price and even increases by more than 100%. It is a commercial real estate job, but the president of the Ingka Shopping Center Group (hereinafter referred to as Ingka) China Ding Hui He doesn’t like this role tag, he prefers to use the positioning of real estate business companies.

In these 21 years, Ding Hui is an indispensable existence. Before joining IKEA, Ding Hui’s resume was dazzling enough, for example, Pepsi Food China Financial Director, American Standard Ware China CFO. Before 2008, he was the vice president and CFO of IKEA (China) Investment Co., Ltd.

Wuxi, Beijing, Wuhan, is the first city to take the lead in Ding Hui. In Wuxi’s first project, IKEA and Huiju Shopping Center are two separate buildings, connected by bridges only, and the purpose of home shopping for shopping centers is self-evident.

Ding Hui changed this relationship. In the projects in Beijing and Wuhan, we saw a one-piece building and a commercial form of mutual drainage. “IKEA homes follow us and can go to a better position.” This is Ding Hui’s confidence.

Public information shows that IKEA has been developing shopping centers around the world since 1970. In 2001, it established the shopping center group (ie the then IKEA Shopping Center Group), and the Internet IKEA and IKEA Group held 51% and 49% respectively. . In 2009, Intel IKEA entered China. In 2014, IKEA Group acquired the remaining 51% of the shares and established the IKEA Shopping Group. In 2019, the IKEA Group changed its name to the Ingka Group, and the IKEA Shopping Center was renamed the Ingka Shopping Center.

At that time, a 30-minute PPT speech changed Ding Hui and even the entire IKEA development track in China.

Ingka, also known as the IKEA Shopping Centre, wanted to enter China. Its global president led a group of executives to understand the Chinese market. As a CFO of IKEA China, Ding Hui was responsible for introducing some land acquisition and financial financing. And other information. “I remember that I did a very long and awkward PPT, and the amount involved was about 10 billion yuan. But when I talked about it, I still picked it. The total time is about 30 minutes. After two meetings, the president will go withI found my boss (let me be the president of China), and later I ate a canteen meal together, but I only had half a day to consider the time. Ding Hui said, “Although I am a financial person, I also want to try to do business. I think that a Chinese doing this business may be more helpful to the development of the IKEA Group in China.

After taking office, Ding Hui received a meeting ceremony to build 3 shopping centers in China with 10 billion yuan.

“At the time my boss gave me 100 billion, but at the time the entire investment in IKEA in China did not reach this number. For a foreign company, such a large investment, China’s financial risks, legal risks, Including unfair competition in some markets, they will be their concerns. So at this time, I need to use my profession to enable foreign shareholders and our board of directors to believe in the Chinese market and eliminate concerns.” Ding Hui said.

Under the leadership of Ding Hui, IKEA won three plots of land in Wuxi, Beijing and Wuhan, with a total area of ​​over 700,000 square meters, far exceeding the total land area purchased by IKEA in China before 2010. .

According to the media reports at the time, in July 2009, IKEA took the land for the second phase of the Xihongmen Commercial Complex in Daxing District, Beijing with a reserve price of 790 million yuan. After 1 year, the land price of the third and fourth phases of the project was 131% and 172% higher than the second phase purchased by IKEA. Judging from the land transaction information of the Beijing Municipal Commission of Regulations, in 2010, Beijing Xingchuang Land Investment Co., Ltd. won the total price of the third and fourth phase plots in the surrounding area, which has exceeded 2.4 billion yuan.

The following is an interview record:

NBD: You have said on many occasions that IKEA does not pursue real estate value, positioning itself and the team as “real estate business”, and as a representative foreign-funded enterprise, what experience can be shared in business operation management?

Ding Hui: The starting point of real estate commercial and commercial real estate is different. Because Ingka is from IKEA, we will pay great attention to the needs of consumers. We don’t think of ourselves as a B2B company, but a B2B+B2C company.

Our profit model is different from many competitors. Some companies use the shopping center as an auxiliary product. The lower the return is lower, and the subsidy for selling the house can be used as a starting point. Therefore, the focus is not on the shopping center. We are different, the shopping center is my main product. After billions of investments, it is really profitable, and there must be financial returns, so it is necessary to study passenger flow, research brands, and research customer needs. This is the starting point.

Therefore, the degree of management refinement and focus of the two will be different. That is why I said that we are not a real estate company. We are more of a real estate business company than a commercial real estate company. At the same time, we are non-listed companies, and we attach great importance to long-term development.

In addition, we will make a list of cities when we choose a site, and then doA hierarchical analysis. We are basically entering the top 20 economic development centers in China, but IKEA may go to more cities, such as the top 30 or even the top 35 cities.

NBD: An undeniable fact, the value-added space for commercial real estate in IKEA and shopping malls is much higher than that of pure retail. There is no pressure on the pool of funds. Many cities even use IKEA as a benchmark for investment promotion. Does this value-added ratio exceed 50%?

Ding Hui: This data is quite accurate. At present, the overall rise of the three domestic shopping centers is indeed more than 50%. In other words, if you sell these shopping malls now, it really exceeds 150 billion.

If we look at the value-added property, our location is indeed more valuable, but we also made a “wedding dress” for others. For example, in the land of Beijing, in fact, we had the opportunity to take all six pieces of land at that time, but at that time we felt that we only wanted to be a shopping center, a professional player, and did not want to be separated. On the other hand, our volume of commercial presence is also beneficial to the property appreciation of surrounding partners and local government revenue.

Our business philosophy is real estate business company, but in fact it is also a heavy asset company. We have big buildings, big plots, right?

Some competitors will adopt a fund model to achieve value added on the balance sheet. But in essence, we are holding property for a long time, so the appreciation of real estate is not so important to us. We have no urgency and strong will to realize it.

NBD: You mentioned that Ingka is a heavy asset company. In the current industry background, have you considered the transformation of light assets in the next step?

Ding Hui: We are now letting go of this door. We can consider the transition from a heavy asset model that originally purchased a large-scale shopping mall to a light asset model that leases properties and builds a small experience store.

For example, we are also looking at this opportunity to buy some small shopping centers and then make renovations. Of course, if others have land resources and are willing to cooperate with us, we will also consider and even do light assets, so the door is open, but we need to explore step by step, what is a better sustainable development model? .

At present, we are slowly allocating a considerable amount of resources to support IKEA. For the time being, there are no plans to go to any city to invest another few hundred million to do large-scale projects. There is no such thing as “going to a more expensive place.” Take a bigger place.” The team’s current task is to support IKEA homes to do some space on the basis of operating existing shopping centers, focusing on existing projects to improve sales efficiency.

As for development planning, the entire Ingeka is currently undergoing transformation, which is reflected in several aspects: more urbanization, more digital, and more efficient existing stores, we will temporarily focus on these 3 In all respects, the total investment is about 16 billion yuan.

We want to develop complexes, such as IKEA-style shared offices, hotels, etc., and also develop small-scale shopping centers. To a large extent, we are also helping IKEA to create better business development opportunities and bring more passengers. Of course, this is also the group’s requirements and tasks for us.

NBD: It is now in the fourth quarter of 2019. What is the completion of this year’s performance target? What is the most satisfactory job highlight of the individual?

Ding Hui: Basically completed. In the past three years, the bonuses of our China team have probably been envied by other partners around the world. However, our bonus has a capping mechanism, that is, if the performance meets or exceeds the target, the bonus ratio is 130%. In fact, in the past three years, our bonus ratio is basically close to the top, at the level of 127% and 128%.

But this year’s performance began to follow the world. If you follow us in China as before, the bonus may have to be capped. Now that the world is going, the ratio is around 115%, but this year’s global performance is also good.

I think the biggest highlight of this year’s work is that we are communicating with the board and convincing them to let us try new formats in China.

The current progress is that the Group basically supports us as a hotel, as well as some IKEA-specific SOHO products, and we are also helping B2B business for IKEA, and plans to develop IKEA shared office. Although it is only the beginning of the envisioning stage, it is still very happy to have a breakthrough.

NBD: What do you think of the development trend of the pan-home industry?

Ding Hui: From my observation, customization has become more and more important, which is a trend.

On the other hand, it is the digitization of the industry. The Internet has changed a lot of formats, including many fund companies and venture capital firms, and has also changed the retail industry. However, in the home retail industry, there is no such a disruptive Internet company, so many home furnishing companies are now doing this thinking and transformation. From the perspective of IKEA, furniture display and online customization for customers require further digital solutions.

The world is changing, and companies should also be transformed. If you don’t make a transition, you will lose more and more market and consumers. But when it comes to transformation, there are all kinds of challenges. Our role as a manager is to support and understand the company as much as possible.

NBD: For many years, have you had any anxiety about this job?

Ding Hui: There will be anxiety.

Now the company is in transition, there are many ideas at the group level that are different from my ideas and cannot be identical. The company is now more and more biased towards centralized management, but it is specific to how to make some changes in each region, to make some creations, and how to make each country, each project, and various shopping centers have more autonomy. This aspect also needs to be explored. of.

For me, I know my role is a professional manager. Any resolution of the company can have different opinions during the discussion stage. You can have ideas and expressions, but once the company makes a decision, we should do our utmost to implement it according to the decision of the board of directors.

The impact on businesses and individuals during the transition is there. I have been at IKEA for 16 years. I can say that a large part of my career is at IKEA. I have feelings for this company. I hope it will get better and better.