 Okay, we're back, we're live, it's one o'clock rock, here on Life in the Law, I'm Jay Fiedel and this is Michelle Chen. Hi Michelle. Hi, glad to be here and thank you for having me. Michelle is from Suzhou in China. She's west of Shanghai and she's an attorney with a firm and I'm going to tell you the name of the firm. The name of the firm is Heb Partners, I do that right? Heb Partners. This is a firm with about 70 lawyers and she's a partner and an attorney there practicing in real estate and construction. Yeah, construction law. And why are you here in Honolulu? Yeah, actually there's a great program between Suzhou Bar Association and Hawaii Bar Association. The program is about sending lawyers here to explore the way US lawyers practice legal practice here and actually I apply for the program and I get selected and then I come here for three months. So yeah, three months long and you get to meet a law firm, in this case it would be Cade, Shuddy, Fleming and Wright, one block away and you get embedded there and you actually practice law. Well, I shouldn't say practice, that's not permitted. But you do research and memos and you meet the partners and maybe the clients too and you get a chance to see what happens in an American law firm, that's really exciting. Yeah, that is correct. Actually you heard of how people practice here but once you actually get involved and you really get into it, it feels so different. Well, a big comparison for me, I mean I'm always comparing the US and China and you know frankly they get more and more the same as we go forward. Yeah, it looks deep deep deep inside, it actually is the same. But you know it's kind of still have a difference. Yeah, of course. So in the US and certainly in Hawaii we care a lot about real estate. We care a lot about real estate construction and development. You know we've been building this country for a long time and China now is in a phase where it is building at a rapid rate everywhere, everything, infrastructure and residences and office and building and government and the whole thing. And you're in the middle of that, huh? Yeah. Exciting, what's it like? It is, you know for the last 20 or 30 years actually the real estate market has become the most, that industry, that business is most profitable business in China I can tell. Really? It's, for example, the house price compared to 20 years ago, like 30 years ago is 10 times more than 10 times compared to the time. That's much greater than the increase here in Hawaii. Yeah, it's more than 10 times I think. And you know... You're worried about a bubble? You're worried that it might hit a bubble? Yeah, but I look through this. Of course everybody will worry about the bubble and the whole market is always like this. Everybody think it must be going down but sometimes I analysis the reason how the market is good. I think there is some reason to support the unbelievable high price in China. You know, first of all why this real estate market starts develop, I think the first reason is the change of the housing system because I don't know how many people know about this but 30 years ago China housing system is a distribution, a free distribution. It's like everybody go to find a job, find a job in the company. All the companies are state owned. So the house are built by every company. It's not a real estate develop company. It's ordinary company. They all have a certain department to buy buildings or build the house for their employees. If you find a job there, they will give you house to live for some. But do you buy it or do you rent it? Rent it, but in very low price, very, very low price. So in that time like if you find a job, the company will take care of everything of your life. It will provide food, it has canting and it will give you house to live in very low price. You don't feel it and they give you salary and take care of your children. You know, my parents are doctors and they work in the same hospital. I don't remember we ever cook before I was 15 because we're all eating the canting. They go to work all the time and they work really hard and I stay at home. By the time I have meal, I go to the canting and eat outside. And we live in the house the hospital give us. So people at that time maybe as rich as now, but I think they're much happier than now because they feel secure once they get to a job. For life. Yes, for life. People take care of everything of your life. Gee, that's wonderful. Yes, that's wonderful. That's a system. So it's changed? Then I think it starts from the 90s. It started in the 80s, but it really started in the 90s. The central government stopped this system. They encouraged the real estate company to start a house for sale. And the ordinary companies, they started to give money to the employees by house but instead to distribute accommodation. But you had to go get your own house. But that price is unbelievable low compared to now. And I think that is the change is the start of the real estate market developed. Because more people were out there in the market and spending. Yeah, and they come to a real estate company has come up. And also in the meantime, the land supply system has changed. And the real estate production has changed. So that is a start. I think the second reason for the real estate market is urbanization. Compared to 30 years ago, 30 years ago the urbanization rate in China is 18%, less than 18%, but now it's 52%. So the huge increase of the city population, of course, it's caused a huge demand of the house. And also, I think another reason is after the families get more income and they will want to get better house and to improve their living environment, that will bring the demand of the better quality and high price house. And also the most important reason now for keep the market going is I think this is the most practical marketing in China. Because everybody goes to the market to buy house. There's always a story to share. We always say that if 20 years ago, they will have two families. They both have, for example, for $500,000 to invest. R&B to invest. What's that worth in America? R&B $500,000? Maybe it's, I think, $80,000? Okay. Yeah. Just want to get a handle on that. Yeah. Like that. And at that time, if one family buy house and part of it use the cash and part buy loan from the bank, for example, it can buy 10 house. And another family invests the small business. If come to now, the first family is already on more than 20 million assets right now. But the second family could bankrupt it already. That is the... Lessons clear. Yeah. So this is the market is actually produce many legend stories. And also it creates a significant wealth gap between families. Make different decisions. And that takes me to comparison with that market that you've been describing and our new president, our president-elect. He's a magnate, right? He's made his money in real estate and he buys low and sells high and does all these convoluted deals, doesn't pay any taxes. Could Donald Trump exist? Does he exist in China? Are there people like that? They're quite Chinese, I think. It's a typical way for real estate business man to make money actually. It's quite familiar. You have clients like that? I think so. What do they think of Donald Trump in China? I mean, what do you think of Donald Trump? And what are your friends that you chat with? What do they think? Actually, I think I come at the right time because I arrived at 7th of October. So I've actually been watching TV every night. Oh, an exciting time. Exciting time. You have news every day. I've never seen an election. Not anywhere. Like this before. Yeah, it's so interesting, interesting to me. It's sign that they don't have election campaigns that last for a year and a half or two years, eh? No, no, we don't have it. But, you know, it surprised me actually. But still, till the end, I still think Hillary will win. Can I say it? Yeah. But, you know, it surprised me. It surprised me that how it's really already divided this much, like somebody is... I think they are ashamed to say that they support Trump, but they actually did. Yeah. I have the same reaction. It's so surprising to me actually as Trump when... So let me ask you, you know, the question everybody is asking, well, there's many questions, but you know what happened in that election? We thought, most of us thought, that Hillary Clinton was going to win. And then you look at the country and you're an observer, you're here as a student of the American experience. Yeah, yeah, yeah. What do you put in your mind? What is in your mind about why we had the change-up that way? You know, I actually, not only myself, I actually discussed this with some of my friend as well. Chinese friend. Chinese friend, yes. And we talk about this. One of the reasons that we think some secret Trump voter is hiding over there. They might be ashamed to say it, but they actually support it. I think they get tired of the current situation. They might not as satisfied as they think, you know, of the current situation. But Hillary was reprinted the current situation. So they want a change. And also, I think they might be attracted to the idea of American first, you know. Right, nationalism. Yeah, I think that's the word. So they want people, maybe, and also I think people are attracted to the Trump's background on business. Yeah. Maybe that's in case successful in business. They may be successful to support the economy of America. The second question is, you know, are you and your friends, are you confident that he'll be able to handle it? That he'll be able to, you know, fulfill the promises that he has been making? I doubt that he might not fulfill all his promise he made because he say anything he want because that is difficult. But I think he can do it because, you know, it's not only one person's system, I think. I hope. Yeah, it's actually, it's two parties over there. And there's a group of people supported. And I think there's a still interest group will get involved in the management. It's not only, you know, one resident to one president to run the country. It's not like that. So let me ask you one last question before we go to the break, Michelle. Yeah, yeah. Is this election, you know, both in the run up to it and the actual election and the surprise and the, you know, the interesting personality, if you will, of Donald Trump? Does it change your view of U.S. politics, of U.S. brand of democracy? Does it change your friends' view of it? Do you think differently of it now? How do you feel about what's going on here? Is it give you confidence or is it give you something else? Actually, it's not. We do doubt that diplomacy is whether it's really a very good idea for everything. We do doubt that. But not only to U.S. Actually, we have seen this this year on U.K. to quit the union, to, you know, to quit Europe. Because now you feel that surprise result happened all the time. Why? Because you can't say it's crazy and you don't believe it. They have their foundations of group of people. And the world may be divided than we expected. Yeah, and the world is changing so quickly. You know, Michelle is really sophisticated about this. She is a woman of the world. She has some very good intuition and analysis. I'm really impressed. We're going to take a short break. And when we come back, we're going to talk about how I make my real estate deal in Shanghai. You're going to tell me right here on the air. Okay, I'll try. Hi, I'm Stacy Hayashi and you can catch me on Mondays at 11 on Think Tech Hawaii. Stacy to the rescue. See you then. Join us at Think Tech of Hawaii. Our show is Azure in review. Our next program is on November 17. This is Johnson Choi, your host. Aloha everybody. My name is Mark Shklav. I'd like you to join me for my program, Law Across the Sea on ThinkTechHawaii.com. Aloha. Thank you for watching Think Tech. I'm Grace Chang, the new host for Global Connections. You can find me here live every Thursday at 1 p.m., where we'll be talking to people around the islands or visiting the islands who are connected in various aspects of global affairs. So please tune in and Aloha and thanks for watching. Bingo, we're back. We're back with Michelle Chen. She's a Chinese lawyer from Shanghai, not from Shanghai, from Suzhou, which is just to the west of Shanghai. We're the firm called Khe, I did that one. Khe Partners. Great. I can't read the rest, but there you have her card. She's a real estate and I guess contracting and development and building development lawyer, I guess, yeah. And Suzhou is a successful city. It has been a relatively affluent city all through the years. An industrial and crafts city where people attend to detail and like to build things. This changes, you know, this affects your mentality, I think. And she's lived most of her life in Suzhou. And she's made a couple of trips outside, one to UK for a Masters in Law. And here we have a trip to Hawaii where she's getting real interesting exposure to the... I know this because I know how the program works to the courts, you know, to the law firm, to the clients, to business here in Bishop Street, to everything, including academia too. So let's go to Suzhou. And I'm an investor from Hawaii. I'm an American investor. And I have some buddies and we're going to put some money in. We're going to put in, you know, I say, how about 10 million? 10 million American dollars. And we want to build a retail and industrial, rather a retail and office complex in a large block. We'll assemble some land out of an old neighborhood that we like somewhere in Suzhou. We're going to redevelop it. And we come to you, we come to her partners, and we, you know, we get you in a meeting and we tell you what you want, what we want. And your job is to tell us whether we can have that or not and how to get it. It is... Actually, the foreign investment in the real estate industry is limited because the price is already very high. It's limited from the start. So you're going to tell me it's hard to make money? No, it's hard for the foreign currency to come. Make the deal. To come. Because we only... the purpose for the real estate industry is to solve people's living problems. That's government policy. That's government policy. They don't want the foreign currency to come and to make more money and to raise the price of it. You know, that's so rational. That's what I'm thinking. And they can do it, can't they? So this is... You agree with that, don't you? I never doubted. I never think of doubting it. But, you know, it's forbidden to directly invest in that place. But, of course, you can work with a Chinese company. And make a joint venture now? Joint venture. And you can help me find one. You can find a joint venture partner. And I put money in and he puts expertise and connections, whatever. Okay, now we're together. And we're the... We're the joint venture. Okay. Great. And the procedure for the development is, first of all, you have to get the land, right? Every land now is sold in public right now. You have to bid for the land. Well, you'd buy it from the government. Yeah, you have to buy... Every land is sold by the government. Okay. Yeah, there's no individual land in the real estate market. Would you get a lease of... Was it 99 years or something? It depends on the use. You know, for business purposes, it's only 40 years, and for living it's 70 years, right? Right. But it's supposed to extend automatically after it's expired. But we don't know no land... So far it hasn't expired, hasn't it? Yeah, it hasn't expired. So people are concerned about it. But I think there will be a solution. And now everybody has to buy land from the government, and this has to be on public. And the government will have planned to which part of the land is to sell, and you can check for this. If you are satisfied with that and you can put on bid on the day they sell it, and it could risk to very high. Because the good land, the good location, the price could risk very high. You know, when I was in Shanghai, it was near Shintendi. Yeah. Shintendi. Yeah, very nice place. Upscale. Yeah. There was a big lot, huge big lot. You can't imagine how big things are in Shanghai. If you thought they were big in Texas, forget about it. They're really big in Shanghai. This was a huge project. There must have been, you know, a quarter mile across, and they're going to build one big thing. And there was a woman, okay, who lived in a house in an old neighborhood. And they had dug out the foundation down, down, down in only five, ten stories down and, you know, boxed it in for the construction, but she wouldn't leave. And so you had little, little pedestal of her house and her lot in the middle of this huge foundation and she wouldn't go, and the government couldn't get her out. And it was in the newspapers for weeks. They couldn't get her out. Finally, they prevailed on her. I think they paid her. Yeah. They threatened her, or both. I mean, they paid her. Remember this? Yeah. Yeah, this is the common situation. It happens. It happens because when the government collect all the land from the older user, they have to pay the user to leave, right? But some people are easily going and you just negotiate with the government. And the government used to pay, you know, quite good money. But some people just see this as the only chance in his life to make money. They want to double it. We have that here too. So it happened everywhere, you know. So this, but I see this in the good way. You know, it shows the respect from the government. Yeah. They didn't just take her off to jail or anything. Yeah, they don't want to drag her out. Yeah, they have respect. And if you want to stay, if we have not reached the final agreement yet, so you stay, right? It's amazing. So you have human rights, right? Yeah. I was very impressed with that. I thought that was very progressive, actually, that they respected her and they didn't do bad things to her. And ultimately, she was satisfied, you know. I think they talk to her. Actually, it's not convenience for her, right? It's all cut off. They don't have to. She had to climb down the pedestal, like five stories down. She must have used a rope ladder and then walk across, you know, the bottom of the foundation there and then come up on the side. It was terrible. It was terrible. And I think they finally talk to her through, I think. Okay, so I'm in the joint venture. I bring my money and it'd be okay then. My joint venture partner, you know, he tells me how the market is going and you tell me how the market is going. I make my bid. My joint venture buys the land. Okay, we're going to build this big, huge, big, and there's nobody there who's opposing us or who wants to have a pedestal in the middle of the project. And so we're now going to build, or hopefully we're going to get a permit to build our retail and, you know, a residential project. What is it like to get a permit? Do you specialize in that? Yeah. The whole procedure is like you buy the land. The land sold to you is all clear. There's nobody staying there. Be simple. Well, not be simple, but... Yeah, it's a simple type. Yeah, it won't leave the difficult problem to you. Yeah. And once you get the land and you apply for the permission, first of all, you get your drawing design. The design follows the rules. Zoning and all that. Yeah, zone. And they'll give you the certain standard. You have to build this way or you have to, you know, you put your drawing, apply for permission. Yeah. And they review it, they approve it, and then you can tell the public that you want her construction company to come in. And the construction company will come to bit, and they find the right one to work with you and you sign contract. And the construction come in and they apply for the permission for construction. It's like you have to have a qualified constructor and you have the drawing to be approved. You have to show you have the money to build? Yeah. You have to get financing, I guess? Yeah, they do, but in that part, you pay some deposit to pay the wages of the migrant workers. You make sure they're not be harmed. Otherwise, it depends on you. The government will not get into this deep. So the government will look through all the procedure. Is it time consuming? I mean, from the time I come in and I make my joint venture and we have a glass of champagne or whatever, okay, till the time I get my permit and the time I'm able to build and the time I finish building and my big project, how long will it take? The construction will take very fast. You know, every construction is going fast and as fast as they can. The construction company want to do it as long as you have money. Things like that move very quickly, don't they? Yeah, move very quickly. But the slowest part is to decide the drawing and you have to put your mind in that and that one, it could have to pass the government's examination. So that part could take very long. And you would represent me on that. You would help me with that? Yeah, of course. The whole procedure. The lawyer's work for the project is to get into the project from day one, from the day you prepare for the joint venture and talk to the venture. We can be all the way with you. Very exciting. Talking to you, I would have absolute confidence in you and I know I would come to you with my ten million dollars if I had ten million dollars and we would make a project together. Thank you and you will reach this huge success to be paid back in the very good market, actually. Thank you, Michelle. Michelle Chen, wonderful to talk to you.