The doors open

Sitting in the shadow of the skyscrapers in Beijing's central business district, the nine-floor Jianguo Hotel may not be an impressive building.

But when it opened in 1982 as the first American-funded hotel in China, it not only changed the capital city's skyline but also transformed China's accommodation industry.

The hotel's founder, Chen Xuanyuan, was an experienced Chinese American architect and hotel owner, but his decision to build the Jianguo was his entrepreneurial apex.

Skepticism about China's investment environment was common among most foreign business people in the early 1980s, but he devoted $10 million to building the 528-room hotel along Beijing's Chang'an Avenue.

The State-owned China International Travel Service (Beijing) also invested $10 million. Chen agreed to transfer his 49 percent shareholding to the Chinese side for $1 after the hotel had operated for 10 years.

Chen hired the Hong Kong Peninsular Hotels to run Jianguo, making it the first to import international expertise.

Chris Lu, who was employed by Jianguo in 1981 as deputy director of the food and beverage department, recalled that many local employees had a hard time adjusting to the strict training and management.

"Many believed it was humiliating to be pressured so much to keep smiling and standing straight all the time," he says in an interview.

But this ill-will evaporated as soon as the employees received their salaries, which were two or three times the city's average.

The hotel's profit reached $1.5 million in the first year and increased tenfold over the next four years. By 1986, the hotel had paid back the $20 million loan from the HSBC. By the 10th anniversary the profit earned by the hotel could have bought seven or eight hotels of the same scale.

China realized there was a huge demand for high-grade hotels when millions of foreign tourists flocked to the country 30 years ago. The year 1978 saw 1.8 million overseas sightseers, more than the total number in the past 20 years. In 1979 the number soared to 4.2 million, according to the National Tourism Administration (NTA).

The Jianguo sparked a trend; other internation chains set up in China and local hotels upgraded. According to the NTA, China had 298 five-star hotels and 13,378 star-rated hotels as of 2006.

(China Daily 12/15/2008 page6)