After failed attempts to sell Evergrande-branded cooking oil and bottled water, Chinese property tycoon Xu Jiayin has fixed on AI and quantum physics as the newest business opportunities for the country’s second-ranked home builder by contracted sales.
Xu’s Evergrande Group announced Monday that it had signed an agreement with the Chinese Academy of Sciences (CAS) to invest RMB 100 billion ($16 billion) over the next ten years in developing a trio of high-tech bases dedicated to fostering initiatives in life sciences, aviation, quantum technology, new energy, artificial intelligence, robotics and modern agriculture.
Evergrande Turns to Technology
“This comprehensive cooperation between Evergrande and the Chinese Academy of Sciences will form a strong synergy of technology innovation, which can create a vast number of world-leading cutting-edge scientific and technological achievements,” Xu said in a statement.
Evergrande did not provide locations for the planned industry hubs or other details on the high tech initiatives. The Chinese Academy of Sciences is a national academy of sciences belonging to China’s State Council with over 130 state key laboratories and some 68,000 researchers.
At the signing ceremony, Xu compared his diversifying group to a dragon, with property as the foundation, health and cultural tourism as the wings, and technology as the head of the mythical beast. Hong Kong-listed Evergrande Health has established a hospital in Hainan province in cooperation with Harvard University’s Brigham and Women’s Hospital, and Evergrande Group last year announced plans to build 15 mainland theme parks.
Evergrande’s plan to branch out into technology comes after Xu announced at the company’s annual earnings report last month that the group had set the goal of breaking into world’s top 100 companies by revenue in three years.
Tech Investments Follow Consumer Product Adventures
Evergrande’s decision to put $16 billion into new technologies follows earlier attempts by the developer to diversify into a range of seemingly unrelated businesses, including since abandoned ventures in drinking water, cooking oil and dairy production.
In early 2014, Xu unveiled Evergrande’s bottled water brand Evergrande Spring with a plan to sell RMB 10 billion of bottled water that year. The property tycoon further diversified his company’s portfolio by investing RMB 100 billion in the newly-established grain and vegetable oil, dairy, and animal husbandry arms in the same year.
However, in 2016 Evergrande decided to offload its money-losing agribusiness, dairy and spring water divisions for RMB 2.7 billion ($404 million) after two years of losses and a failed attempt to list the bottled water company on the Shenzhen’s small-cap Third Board stock exchange.
Despite these earlier misadventures, the Guangzhou company appears determined to once again stray from its core property business. In July, Xu Jiayin announced plans to expand Evergrande’s tourism portfolio to include 15 “Children’s World” theme parks across the country over the coming two to five years, in addition to the existing project in the city of Changsha.
China’s National Development and Reform Commission (NDRC) on Monday issued a statement criticising “blind” development of theme parks in the country, and pointed to potential default risks from a tourism bubble.