Why Asia's Richest Man Is Investing $10 Billion In America

author: Liyan Chen

              Forbes  Staff

On a chilly afternoon in New York City in late March, Wang Jianlin steps out of his limousine on bustling 42nd street near Times Square and is immediately surrounded by an entourage. For the first time, the 103-year-old AMC Empire Theatre will meet its new Chinese owner, now Asia’s richest man with $37.5 billion.

As Wang, dressed in a simple dark brown raincoat, walks inside, an associate informs him that this is one of the highest grossing theaters in the world. Stopping in the elaborate domed lobby, Wang starts doing the math out loud. “It may be the highest grossing in total, but definitely not per movie screen,” he declares. “Our sales per screen in Wujiaochang (in Shanghai) must be higher.”

Buying AMC for $2.6 billion in 2012 is how Wang first made his name known to the world. That stake in the United States’ largest cinema chain, now worth $2.2 billion, along with two recent initial public offerings of his extensive assets back home, has elevated Wang’s status from largely anonymous Chinese businessman to the 13th richest billionaire in the world, surpassing Mark Zuckerberg, Sheldon Adelson, and Li Ka-shing (Asia’s previous longtime richest man). Thanks to a successful $3.7 billion IPO last December, his flagship Dalian Wanda Commercial Properties also debuted at No. 234 on the FORBES Global 2000 List for the first time.

While Wang has become the wealthiest and one of the most influential tycoons in China, he is not satisfied with only being number one there. He has bigger, bolder goals for his Dalian Wanda conglomerate and himself – that by 2020, Wanda Group’s sales will reach $100 billion (up from $40 billion currently), with at least one-fifth coming from overseas. Wang is trying to transform Wanda into a truly global company, one that can be mentioned in the same sentence as Google GOOGL +2.29% and IBM IBM +0.69%. To that end, he has spent $10 billion in overseas investments and acquisitions in the past five years, half in the U.S., including AMC and real estate investments in Chicago and Beverly Hills.

On a Tuesday afternoon in a suite overlooking Fifth Avenue at the St. Regis Hotel, Wang sat down with FORBES to talk about his global ambition. His short stay in the U.S. was packed with high-level meetings: after stopping in D.C. and meeting personally with President Obama, he would visit New York Mayor Bill De Blasio and then head to Albany for Governor Andrew Cuomo. But when asked about his overseas expansion, the 60-year-old Wang, in a dark suit and light blue tie, was surprisingly energized by his tight travel schedule.

“We have very clear targets in overseas expansion: entertainment and sports,” Wang told me in Chinese as he leaned forward in his armchair. He explained that in China, entertainment and sports are considered the same family: “grand culture.” These are not high-growth industries, he admits, but can create tremendous value once re-packaged for China’s burgeoning middle class.

Take skiing as an example. “Right now China has only a few million skiers, almost negligible,” he says. “But once China wins the bid for the [2022] Winter Olympics, we will be talking about hundreds of millions.” The same principle applies to soccer teams and other opportunities in that “grand culture” arena.

“To China, population meant burden when we were poor,” Wang says proudly. “When we grow richer, that huge population means a huge market.”

The second piece of Wanda’s overseas expansion puzzle is a luxury real estate empire – going back to Wang’s business roots. A former army soldier and government employee who earned his first bucket of gold in real estate, Wang now owns more than 430 department stores, shopping plazas, movie theaters, and luxury hotels in China. In the past year, he listed his two crown jewels: Dalian Wanda Commercial Properties and Wanda Cinema Line. Thanks to a strong rally in China’s market, both stocks soared 48% and 131% respectively over the past two months, sending Wang’s fortune up $13 billion to retake China’s richest man title from solar energy tycoon Li Hejun.

“I want to use the next ten years to build a true Chinese brand that’s the best in the world,” Wang boasts, claiming that his Wanda-branded hotel chain will be even more luxurious than Shangri-La, Asia’s premier hotel brand owned by Malaysian billionaire Robert Kwok. With his $2 billion investment in Chicago and Beverly Hills already and more to follow in New York and San Francisco, Wang hopes to have Wanda hotels in thirty major cities in the world, from London to Sydney, by 2025.

Going global has been on Wang’s mind for more than 10 years, but he admits that he was afraid to take the first step. “Because we were so successful in China, if we decided to go global and failed, we would be laughed at and lose face,” Wang says. The failures of other Chinese companies, such as telecom giant Huawei, to go overseas also scared him off.

Fast forward to 2010, when Wang says he began to change his mind. The AMC deal was key. “We internally reached a consensus that no matter we stumble or not, we have to take the first step,” Wang recalls. And it wasn’t a blind leap. “We did our math. It was cheaper per movie screen than doing the same deals in China.”

But wooing management and shareholders was difficult. “We were worried at the time that if we bought the company and management left, ok, then you’re screwed,” Wang says. To incent them to stay, he promised to share future profits with AMC executives if they signed five-year contracts.

The acquisition appears to be a successful turnaround story. Within the first year, AMC posted its first net profits since 2010 (Wang said the terms of the deal left room for a net loss for the first two years). In December 2013, AMC listed on New York Stock Exchange with a $332 million IPO, and stock has risen 57% since. Sitting inside AMC Empire’s amphitheater, Wang graded himself a generous 95 out of 100 for the deal. (Despite owning more cinemas than any one else in the world, Wang says he only watches two to three movies a year.)

Wang does not hide his further ambition for Hollywood. And like many Chinese, he values size and status above all. For instance, Wang is investing $8 billion to build the world’s largest movie production studio in Qingdao, and he flew in stars like Nicole Kidman and Leonardo DiCaprio to its red carpet ground breaking. Indie films are not invited. Only movies with production budgets greater than $50 million will be welcome at the Qingdao Oriental Movie Metropolis.

When it comes to other overseas purchases, he prefers opportunities in the range of 5 billion to 10 billion yuan ($800 million to $1.6 billion). Even though Wanda is no longer in talks to buy movie studios Lionsgate and MGM, he is still hunting. “In the next few years, you will see a series of Wanda acquisitions,” Wang promises. “We have a big appetite.”

As much as size matters to Wang, speed is also crucial. “Our overseas expansion has to rely heavily on these acquisitions,” he says. “It doesn’t mean that we can’t do it ourselves, but that would just be too slow.” By looking for name brands and established businesses, Wanda follows other Chinese companies like Lenovo , which purchased IBM’s ThinkPad unit in 2005 to gain instant access to the American market.

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Wang’s favorite aspect of investing in the U.S. will not surprise those familiar with China’s relationship-driven business culture. “My favorite is its certainty, transparency, and fairness,” he says. “When you do business in the U.S., you wouldn’t think of asking for help from some governors or mayors, because it’s useless even if you do.”

Of course, Wang then reflected on his recent meeting with President Obama at the U.S.Department of Commerce ’s SelectUSA Conference. In his speech, Obama told attendees that the foreign investment program, which he created in 2011, will continue no matter whether Democrats or the Republicans hold the White House. “America’s policy is not going to change based on the political party. That’s why I love investing in the U.S.,” Wang says.

Still, Wang’s praise for America’s transparency may come as a shock to keen Chinese observers. The billionaire’s spectacular rise in China has long attracted media scrutiny, including a recent hard-hitting New York Times investigation that exposed Wanda’s ties with senior Communist Party leaders and their relatives. To Wang, a homegrown Chinese entrepreneur who understands the importance of connections, or guanxi, his appreciation for America’s fairness belies a savvy political operator.

The biggest change in the soft-spoken Wang over the last five years is confidence. “I didn’t dare to touch big deals, but now I’m not interested in the small ones,” he says with a knowing smile. As Asia’s richest man, he feels more respected too, noting that only he and Warren Buffett were selected to give keynote video addresses at SelectUSA.

Wang’s growing self-assurance on the world stage and his outspoken patriotism as a Chinese entrepreneur make him an ideal candidate to carry the banner of China’s growing economic soft power abroad. As China and its political leaders try to reinvent the country’s global image from a manufacturing and export-driven economy, Wang’s quest overseas from Hollywood to luxury real estate puts him in the spotlight and wins him even more praise at home. “Wanda has always exceeded our targets since we started,” he says. “We will accomplish the $100 billion (sales) goal no matter what.”