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Tycoon slams Iceland's land sale snub
Global Times | November 28, 2011 00:29
By Zhu Shanshan
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Huang Nubo Photo: CFP

A Chinese tycoon on Sunday criticized Iceland's rejection of his land purchase bid as prejudiced and warned of growing trade protectionism and invisible trade barriers in the West against China.

"I was shocked when they denied my purchase, and their reason for rejecting it was absurd because we were told something totally different before making the application," Huang Nubo, the chairman of the Zhongkun Investment Group, told the Global Times.

On Friday, authorities in Reykjavik turned down Huang's application to purchase the 300-square-kilometer Grimsstadir farm in northeast Iceland for about one billion Iceland krona ($8.3 million).

Iceland's Interior Ministry said that the deal did not meet legal requirements for land sales to companies outside the European Economic Area, including one that required company directors to be Icelandic citizens or permanent residents for at least five years, and that 80 percent of shares in purchasing firms should be held by Icelandic citizens.

Icelandic law "imposes strict conditions on corporations wishing to acquire ownership or the right to use Icelandic properties and it is clear that the company in question doesn't fulfill any of the requirements," the ministry said.

"The question is not how can we turn down direct foreign investment of this magnitude, but rather how can one nation do anything else but comply with the laws it has passed for itself?" Minister of the Interior Ogmundur Jonasson said by phone to Bloomberg.

"It would have been easy to circumvent these laws by establishing an Icelandic limited liability company. That reminds us of the necessity to reconsider these laws from top to bottom," Jonasson said.

However, Huang told the Global Times that Icelandic officials had not raised such requirements during their initial contacts.

"They only told us that we had to have a company registered in Iceland, and at least two-thirds of the company's employees have to be Icelandic citizens," Huang said.

"Apparently, Iceland does not have clear and concrete rules on land sales. If I had known that we were not qualified, I wouldn't have wasted so much time and money on the case."

Huang's plan was to turn the 300-square-kilometer farm into a high-end resort including a hotel, golf course and racecourse by investing a total of $200 million. He lodged his application with the Icelandic government in August.

The case later stirred controversy as some Western media said the acquisition of the farm, equivalent to 0.3 percent of Iceland's total land area, would give China a strategic foothold in the Arctic, where a number of countries, including the US and Russia, have been competing for land, resources and the future control of shipping routes.

Huang's background of working for the Publicity Department of the Communist Party of China Central Committee and the Ministry of Construction in the 1980s and early 1990s also led to speculation that the Chinese government may be behind the purchase.

Reiterating that his investment bore no political intention and was purely a commercial purchase, Huang said that the failure of his attempt showed the injustice and prejudice private Chinese investors face when trying to make international acquisitions.

"The rejection sent a message to Chinese investors that you are welcome to emigrate, or to buy properties and luxury goods, but if you want to engage in anything related with natural resources, you're not welcome here," Huang said.

"We always hear some Western countries urging China to be more open, but at the same time, they set up trade barriers and guard against Chinese investors and companies. This is what we call double standard," Huang added.

He also attributed his failure to Iceland's internal struggles between various political parties and advised other Chinese entrepreneurs to carry out more research before jumping into the market.

"It was a hard lesson for me and my fellow Chinese investors. Never jump into an investment without sound knowledge of the country and the case," Huang noted.

Liu Baocheng, director of the Center for International Business Ethics at the University of International Business and Economics, told the Global Times that for successful overseas investment, Chinese companies must learn to be modest, carefully study local laws, political systems and cultural values and maintain effective communication with the locals.

"You have to know what others want in order to form a strategic alignment," Liu added.

Xu Tianran and agencies contributed to this story

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