Edificio Espana Case

Introduction

The Chinese real estate entrepreneur Jianlin Wang, owner of Dalian Wanda Group Co Ltd. purchased Edificio España, a building the people from Madrid deemed historical. The building was in need of renovation; something that has been on the agenda for a while. However, the previous owner of the building experienced severe pushback due to the historical aspect of Edificio España. Initially, Wang received political support; the Local Historical Heritage Commission changed the listing status of the building from level 2 to level 3, which allowed for changes in the building’s interior. However, Wang was not allowed to alter the outside of the building, even though it had sustained damage. Wanda stated that to renovate the building, the exterior had to be disassembled. They made an official request to do so in September 2015, but the heritage commission declined.

Negotiations continued and in March 2016 both parties communicated their intentions to continue the renovations. Wanda proposed a plan that would protect the facade, which they were told was going to be approved. However, the plan was still not approved two months later. Wang stated that the building was not really historical because it had no more than 50 years of history and that he was considering to sell the building due to the difficulties he is experiencing. Wang also stated that Chinese companies should take the situation as an example of negotiating with foreign parties.

Analysis

Wang’s main challenge was dealing with many stakeholders in a fairly bureaucratic environment. According to Meyer (2014), Chinese people tend to lead in a top-down fashion. Decisions are made quickly and can be altered later in the process. Spanish leading style is more egalitarian. There are more people involved which can slow down the decision making process. Furthermore, according to Hofstede (1980) Spanish culture is relatively short-term oriented, where as Chinese culture is contrary. The Chinese are generally more pragmatic, which tends to speed up decision making.

Another cultural dimension described by Hofstede (1980), that could influence this case is the Uncertainty Avoidance. Wanda proposed a fair solution to the situation. It was concluded that the building required renovation, and Wanda proposed a plan that would satisfy all stakeholders in the end. The other parties, however, kept clinging to rules and regulations and were clearly uncomfortable with the situation. Perhaps, the Spanish were afraid of the backlash they might face, or whether the building would be properly reassembled.

Wang had good intentions. He wanted to renovate the building whilst respecting the sentiments around it. Moreover, one of the goals was economical improvement of the surrounding area. However, when looking at the statements made in the press, it seems that the decision making process is frustrating Mr Wang. Both parties have similar goals in mind, but the differences in culture are causing some friction between both parties.

Recommendations

Due to the complexity of the situation, it is difficult to give recommendations to Wang. It seems that there was not much that he could have done himself. There were simply too many forces at play in this situation, that he could not have influenced much. It would probably have been a good idea to set the stage and establish some hard deadlines. The facts should all have been on the table, so all parties know what is at stake for one another. That said, there could have been meetings with either the party leaders, or representatives. In these meetings, some hard deadlines could have been made, to prevent too much time going into decisions. Every stakeholder should get the chance to speak and all meetings should be scheduled fairly strictly. When dealing with multiple cultures, it is generally a good idea to be clear and to the point. This way, regardless of the culture, people know what they are getting, and what their responsibility is. While it is true that such directness may be perceived offensive, or may make some cultures uncomfortable, it prevents situations from becoming too ambiguous. Eventually, this is in the best interest of all parties involved. Furthermore, to ensure the meetings are fair and no single party is underrepresented, a non-biased party should also partake in the meetings. These meetings allow for deadlines to be set and points of actions to be determined.

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