Real estate developer with roots in China thrives on US market knowledge

Nestled at the crossroads of Irvine and Tustin, two bustling commercial hubs in Southern California, stands a two-story building that houses a co-working office business.

The property in Irvine is owned by Gemdale USA Corp, a Pasadena-based developer with roots in China and a strong US presence.

"As a Chinese real estate company, we have not only established a reputable presence but have also thrived in the industry. This success depends on our strategy and profound understanding of cultural differences between East and West," Wang Lei, executive vice-president of Gemdale USA, told China Daily.

Gemdale has developed 18 diverse projects across the country, amassing assets worth $3 billion since it was established in 2014.

Successful projects include the 350 Bush office building in downtown San Francisco and a high-end apartment complex in downtown New York City.

At its peak, the company had 80 employees, with 80 percent being Americans. Although the company has slowed its development pace and reduced its size amid the pandemic, it still maintains a workforce of 50 employees.

"In China, real estate development often focuses on the city centers of first-tier cities. However, in the US, first-tier cities like New York, San Francisco, Chicago and Los Angeles have city centers that are entirely different from those in China," Wang explained.

"City centers in China are bustling, safe and clean, but in these large American cities, they are often neither safe nor clean," he said. "Many people do not want to live in city centers because they are unsafe, unclean and inconvenient."

Due to a lack of understanding of the US business environment and real estate markets, some foreign companies bring concepts like "city center" from their home countries, he said.

However, those concepts don't always work in the US, which can result in many unfinished projects, Wang said.

Gemdale has avoided building high-rises in city centers, instead choosing affluent, clean and safe areas near city centers for rental industrial development, as well as developing projects in industry-focused areas.

Wang said the company's Chinese team followed American local culture and business and listened to input of its American team, selecting and evaluating project sites accordingly.

Suburban multifamily assets have continued to outperform in Southern California. In July 2022, Gemdale secured $94.3 million in financing for a 189-unit multi-housing development in the East Bay suburb of Pleasant Hill, the first new apartment complex in downtown Pleasant Hill in 30 years.

Life science deals are also mounting due to rising demand for lab space. In September 2022, Gemdale and Harbor Associates initiated a joint venture and acquired a 113,991-square-foot office and lab property in Los Angeles County for $29.7 million.

In July 2023, the company secured a $575 million construction loan for a life science campus project in San Diego that was fully preleased by an American listed company Neurocrine Biosciences for 12 years.

"These successes stem from two factors: correct decision-making by the head office and leveraging the American local team, developing projects based on American commercial operations and understanding. This is very important for Chinese companies to survive in the US market," Wang said.

"We won't be developing new office buildings unless there is a substantial market recovery. Instead, we will maintain our focus on investing in rental apartments, as they are less affected by cyclical adjustments," Wang said, adding that the company is also exploring other real estate sectors such as industrial and e-commerce planning.

As a Chinese American, Wang expressed gratitude as a beneficiary of China's reform and opening-up policy. "I believe this policy has been instrumental in my life," he said.

After graduating from Huazhong University of Science and Technology in China, Wang received a scholarship from the National University of Singapore, among the students to study there after the establishment of diplomatic relations between China and Singapore.

"The first half of my career was dedicated to assisting foreign companies in expanding within China, while the second half focused on facilitating the expansion of Chinese companies abroad," Wang said. "I have always had a 'Chinese heart' and hoped to bring the knowledge I gained back to China."

After working abroad and then returning to China for 10 years, Wang went to Northwestern University in Illinois in 1999 to study management. In 2001, he joined WSP, one of the world's leading engineering and professional services firms.

In 2008, WSP entered the Chinese market, prompting Wang to return to Shanghai to oversee business in the Greater China region.

In 2010, when Disney planned to establish a Disneyland in Shanghai, they invited Wang to join the team responsible for developing the project.

"I was very willing because this was about building Disneyland in China. I was the first development executive with the employee number 0001, and the team eventually grew to over 1,200 people," Wang recalled.

The biggest challenge for the Disney project was dealing with cultural and compliance issues when an American company entered China, he said.

Adjustments were needed in areas such as bidding processes, fire safety standards and infrastructure construction.

"Overall, through these efforts, we not only ensured the smooth progress of the project but also demonstrated a successful cooperation experience between Chinese and American enterprises," Wang said.

One significant challenge is the disparity in infrastructure development speed between China and the US.

In China, a project can go from land acquisition to groundbreaking in six months, whereas in the US, it may take two to three years.

"This speed difference can be very challenging for new companies," Wang said. "Without understanding this operational mode, companies will be very disappointed."

Communication between Chinese and American enterprises require more mutual understanding and in-depth knowledge, according to Wang.

"Many times, it is a matter of concepts. If the concepts are correct, fewer detours will be taken. If the concepts are incorrect, more detours will be encountered. Therefore, strengthening communication, whether between people or businesses, is very important," Wang added.