China’s New Tenants Won’t Buy Excuses

When city officials went on the road several years ago seeking investors for massive “luxury” apartment complexes they were building here in the capital, they probably never imagined that their trip would lead to one of the country’s first organized tenants movements.

The Beijing officials, headed by then-Vice Mayor Zhang Baifa, traveled in 1993 to Hong Kong and other cities with large and affluent populations of ethnic Chinese. Promising full government support for the projects, the officials delivered “patriotic” appeals to the overseas Chinese to buy upscale apartments in high-rise complexes with grandiose names like Famous People Plaza, Sunshine Plaza and Roman Gardens.

Moved by the high-level official sales pitches and attracted by model apartments that featured imported peacock-green marble and American plumbing fixtures, many answered the call to invest in the “motherland.”

Another attractive aspect of the deal was that these apartments, unlike public housing in China, were inheritable and could be passed from generation to generation.

According to one lawyer’s estimate, as much as $110 million in foreign cash was sunk into the three projects, built under joint-venture agreements between municipal construction departments and Hong Kong development firms.

Since then, most of the money has disappeared.

Construction crews halted work on one of the newer projects for several months because they were not paid. According to sources, the projects--some of the first luxury housing in China aimed at foreign investors--figure prominently in a major, ongoing corruption scandal here.

“We can’t ignore the possibility of corruption among individual officials,” said the lawyer, who asked not to be identified. “It is unavoidable in the complex process of getting government approval for a huge project like this that a lot of people were treated to meals and given gifts.”

What the city officials never anticipated was that once the apartment investment started to go sour, it would lead to a small but militant tenants movement of both Chinese citizens and the foreign investors. This put an unexpected spotlight--including an investigative report aired by local television--on the conflict between China’s grand economic ambitions and its still immature legal system.

Along with their money, it seems, the overseas investors, mostly ethnic Chinese, brought a sense of entitlement, consumer rights and tenant advocacy that they had picked up in their new homelands.

The result is something unprecedented for China, where most people still live in dreary subsidized housing provided by their work units and where private home ownership only recently became possible under economic reforms that began in the 1980s.

It’s Roman Gardens in Name Only

The developers and apartment management company found themselves confronted by a group of aggressive and practically fearless apartment owners drafting petitions, waging legal battles in the courts and staging demonstrations to demand compensation for what they claim is false advertising, violation of contracts and shoddy workmanship in apartments they bought for an average of more than $300,000.

“We were among the first to come and invest in foreign housing here,” said Liu Ying, a wealthy, fashionably dressed Hong Kong resident who founded the tenants association. “We’ve been cheated, and we hope that people who come here in the future will not fall for the same thing.”

Liu and her husband, a Hong Kong technology consultant with important clients in China, bought a three-bedroom apartment on the 12th floor of the Roman Gardens apartment building in April 1994 for $270,000 in cash. Like other investors, she said, she was swayed by sales pitches from high-ranking Beijing officials who visited Hong Kong and by the luxuriously appointed model apartment they were shown on an earlier trip to Beijing.

But when they came to take possession of their new apartment in March 1996, Liu was sorely disappointed.

Cracked white ceramic tiles had been substituted for the promised green marble. Windows did not fit their frames. The promised American Standard plumbing turned out to be a fake local product. She said the exhaust from her kitchen range spewed smoke and grime into her bedroom.

Consulting with her neighbors, Liu found that many had similar problems.

After complaints to the management, a division of the Beijing Urban and Rural Construction Committee, failed to bring results, the residents formed a tenants committee in December 1996. A petition demanding the return of some of their investment in compensation for contract violations and substandard construction was signed by 200 residents of Roman Gardens.

Most of the petition signers held foreign passports but some were local Chinese, including one man who bought eight apartments.

As soon as their group was formed, the organizers said, they were subjected to harassment by the management, the apartment security agents and officers of the Beijing Police Department.

One of the more militant tenants, Japanese citizen Hitomi Ikeda, who along with her husband owns a factory in neighboring Hebei province, said that last July municipal officials cut off her water and power for five days. The services were restored after the tenants association staged a protest march to City Hall.

Other tenants said they had received anonymous phone calls threatening the safety of their children and, in one case, demanding “protection payments.”

The group filed a complaint to the police, who arrested one member of the development’s security staff.

Undeterred by the threats, the tenants sued the developers in a local court. The first lawsuit was decided in favor of a tenant but was ignored by the apartment management company. A second lawsuit was dismissed last week.

Higher Authorities Start Paying Attention

Contacted by a Times reporter, officials of the Beijing Golden Horse Real Estate Construction Co., which manages the Sunshine Plaza Apartments, at first agreed to an interview, then abruptly canceled, claiming that local police had instructed them not to talk with foreign reporters.

But by using protest tactics more common in the United States or Hong Kong than in mainland China, the tenants group has managed to attract the attention of higher authorities.

For example, when Liu, the association leader, unsuccessfully tried to lead her group into a recent meeting of the National People’s Congress at the Great Hall of the People, her effort caught the attention of Luo Gan, the secretary-general of the State Council, who promised to look into the matter.

The tenants also telephoned local media, prompting visits from journalists. A Beijing newspaper with an internal Communist Party readership published a straightforward account of the tenants’ complaints.

And when Wong Siu Kuk, a 57-year-old China-born resident of France, staged a wailing sit-in demonstration in the lobby of her Sunshine Plaza apartment building, a Beijing Television crew showed up to film the scene.

“I’ve been duped. I’ve been tricked. Why am I so miserable as to have invested here in China?” Wong shouted between sobs as she squatted on the lobby floor.

Wong, a native of Harbin in northeastern China, said she also has investments in Hong Kong and Hanoi, but nothing has brought her as much grief as the apartment investment in her native China.

“If someone like me with money and contacts here can’t get justice here, who can?” she asked.

When Beijing police officials blocked the TV crew and a handful of foreign reporters--alerted by the tenants group--from interviewing Wong and other activists at the apartment building, the group used a battery of cell phones to convene an impromptu news conference at a nearby tea shop.

In a significant advance for press freedoms here, Beijing Television’s investigative report, containing the testimony of several of the tenants, aired last week. Included were segments depicting security agents blocking the crew’s access.

“The attitude of the developers and the sales agents is very clear,” the report concluded. “They can give the investors housing that is not fit to live in and not reimburse them. They can give them housing late and not reimburse them. They can allow quality problems and not reimburse them. But if the investors pay one day late, they will be fined. A contract printed in black and white is sacred to the investors, but to the developers it is an empty piece of paper.”

Chinese Television Interviews an American

The Beijing Television reporters also interviewed American Wei Retzer, a restaurant owner from Abilene, Texas, who contracted to buy a three-bedroom apartment in the Sunshine Plaza development for $360,000.

After developers told her that the apartment was ready, five months after the contract deadline, Retzer, a native of Beijing married to an American university professor, showed up to take possession.

“When I got to Sunshine Plaza, it was still a construction site,” Retzer said. “I couldn’t go in. There was nobody there. The guard said, ‘What are you doing here?’ I said, ‘I’ve come to get my apartment.’ He said: ‘Who told you to come? The construction workers have all gone home for the Chinese New Year holiday.’ ”

Contacted by telephone at her Cathay China restaurant in Abilene, Retzer said her biggest disappointment is that the government, after promoting the project to foreign investors like her, has so far been unwilling to help her or other investors recover their money.

“We all thought we had the protection of the government. I go to the government offices, and they are all nice to me. But at this point, it looks like nobody is in charge,” Retzer said.

In addition to offering an unusual portrayal of consumers demanding their rights, the controversy has also illuminated the massive corruption that has characterized management of the Chinese capital since economic reforms began here in the 1980s.

The focus of the tenants’ outrage is former Vice Mayor Zhang, since retired under a cloud, who led the campaign to attract foreign money to the apartment developments.

“Even a 3-year-old child can figure out what happened here,” said a lawyer representing some of the tenants.

Retzer concluded: “I just hope I can get my money back and this nightmare will be over.”