Back in the day when I was in Singapore, Chinese delegations were visiting there to see how they did things. The Chinese subsequently based their development on the Singaporean model. Their approach of planning and building complete cities as one giant project is exactly what I saw in Singapore, albeit on a larger scale.
The Chinese land-use rights likewise appear to be modeled on the Singaporean system. The article from the Vanderbilt Journal of Transnational Law cited by @Mr.Lumin appears to be focused on residential land and possible renewal valuation scenarios. One thing they seem to overlook (I've only skip read it, so maybe the haven't) is that Chinese increasingly live in high-rise apartments. Australians are used to the land beneath their home being worth about half of the improved property value, but for someone living in a typical 20 storey apartment complex in China, it is only going to be a few percent. So for many Chinese the cost of land-use renewal is not going to be a big issue.
As for what is likely to happen in regard to commercial and Industrial land, here is an extract from the Vanderbilt article:
The take-home is that there is no right of renewal on the Nanjing properties. If renewal is ever granted (a big if, if Singapore is any guide), it will be on terms decided by the authorities. In coming to their decision they will take into account the building (it's state of repair, how dated it looks, and feasibility of refurbishment), plus the nature of the land use and how it fits with their regional plan. Any renewal period will likely be much shorter than the original term.
My working assumption is that the factories will return to the Nanjing municipality upon expiry of the land-use rights. However, as others have pointed out, on a forward discounted valuation basis, it makes no real difference to the current value of the company.
All IMO.
VMT Price at posting:
13.0¢ Sentiment: Hold Disclosure: Held
(20min delay)