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Chinese Blueprints

Western architects and developers once had an easy run at bidding for big Chinese building projects. These days, however, they’re finding themselves without contracts as Chinese firms take advantage of their country’s building boom.

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Chaoyangmen SOHO
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On a trip last fall to China, Jack Portman, a veteran U.S. property developer with projects across Asia, was startled by something he hadn’t seen in the 20 years he’s been doing business in the People’s Republic: stiff competition from Chinese developers.

“The landscape today is primarily Chinese,” says Portman, vice chairman and chief executive officer of John Portman & Associates, Inc., a global architecture and development firm based in Atlanta. The company has landmark structures across China, including a luxury hotel in Shanghai, the Portman Ritz-Carlton, and a planned 151-story skyscraper just outside Seoul in South Korea. (Click here for interactive on the race to build the world's tallest building.)

“Chinese developers are better than they were 10 years ago, and if you’re not already there then forget it,” says Portman, whose firm announced January 25 it was going to design a new five-star, 550-room hotel across from the U.S. Embassy in Beijing’s Chaoyang District.

No longer happy to be pushed aside by bigger, more experienced developers from the United States and Europe, a growing cadre of Chinese builders is increasingly beating out Western firms and grabbing glossy new projects in their homeland. From navigating China’s notoriously tricky political landscape to wooing Western-style architects to map out modern design schemes, today’s Chinese builders are testing U.S. developer’s foothold in the mainland.

China Central Properties Ltd., a subsidiary of Shui On Construction and Materials Limited, recently beat out several big-name Western developers to build the Creative Concepts Center, a 925,000-square-foot office, luxury-apartment, and retail complex in the middle of the fast-growing central Chinese city of Chongqing. The company has landed at least a dozen big real estate projects in the past year totaling about $700 million.

SOHO China Ltd. was recently awarded a contract to build a $792.3 million complex in central Beijing. The 485,000-square-meter project, to be named Chaoyangmen SOHO, will run along the Chinese capital's highly trafficked Second Ring Road. It’s SOHO China's third major project since last October. (The company recently paid about $360 million to a Morgan Stanley real estate fund for a 52-story office and retail tower on the edge of one of Shanghai's main business districts.)

And blue-chip developer Hang Lung Properties Ltd. was tapped earlier this year to develop two projects in the mainland worth a total of about $733 million.

“The Chinese have essentially learned from the Americans just how to be aggressive in winning lucrative projects,” says Mei Jianping, a professor of finance and a real estate specialist at the Cheung Kong Graduate School of Business in Beijing. “Builders here have also learned the ways of dealing with Chinese government bureaucracy, and that’s helping them to better compete with foreign firms.”

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