Dubai woes whack for Wenzhou merchants
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A worker fixes the fence of a new development project, Dar Wasl, in Dubai. There are around 150,000 Chinese citizens living in Dubai, and nearly 20,000 of them are merchants from Wenzhou. [CFP] |
The merchants of Wenzhou, who are usually regarded as the most active and eagle-eyed of businessmen in China, may take the hardest knock from Dubai World's default on its debt repayments.
"Wenzhou businessmen's investments in Dubai hover around 5 billion yuan, and their losses due to the debt crisis will probably exceed 1 billion yuan," Zhou Dewen, head of Wenzhou SME Business Development and Promotion Association, told China Daily yesterday.
The Dubai crisis erupted last week when the emirate said its investment arm, Dubai World, would not be able to meet payments on time on some of its $59 billion debt.
"Most Wenzhou businessmen in Dubai are choosing to adopt a wait-and-see attitude at the moment," said Zhou. "But the debt crisis, to some extent, does dent their investment enthusiasm."
There are around 150,000 Chinese citizens living in Dubai, and nearly 20,000 of them are merchants from Wenzhou, a vibrant city in east China's Zhejiang province.
Besides running small businesses there, most of the Wenzhou merchants also invest in real estate projects in Dubai.
Hu Bin, chairman of Shanghai Zhongzhou Group and a high-profile property developer from Wenzhou, is a typical case.
Hu came into the limelight in November 2007 when he bought the "Shanghai Island", an isle in Dubai's World Islands, a series of man-made islands shaped like a map of the Earth, for $28 million.
The World Islands is a multi-billion-dollar project built by Nakheel, a Dubai World unit.
"Hu Bin's investment in World Islands has been languishing for quite a long time after he remitted the initial down payment, which was 15 percent of the contract price, for the island," said Zhang Xijing, representative of the Gulf Area Office of the China Council for the Promotion of International Trade. Zhang had helped Hu with this investment in 2007.
Work on the project stopped earlier this year when Nakheel ran out of money.
Some Wenzhou investors, however, remain upbeat about Dubai's investment prospects.
Hu Jiajia, general manager of Wenzhou Lailisi Shoes Co Ltd, said the market value of the property purchases she had done during the fag end of 2007 has shrunk by between 20 percent and 30 percent due to the recent debt crisis. And, the construction of commercial properties, which she had purchased, has been suspended.
"However, I still believe this is the perfect time to make more real estate purchases in Dubai since the market will definitely revive after the downturn," said Hu. "But next time, I would prefer to buy completed apartments or offices."
