No doubt you’ve shopped in a Simon-owned mall — it is the biggest owner, developer, and manager of retail real estate in the U.S. However, SZITIC CP is less well known; it is the retail property subsidiary of the Chinese state-owned trust and investment firm, Shenzhen International Trust & Investment Co., Ltd. And Arkansas-based Wal-Mart, of course, is the world’s largest retailer. These companies have come together to bring the joys of U.S.-style malls to Chinese consumers. Well, not exactly. Wal-Mart doesn’t regularly show up as a mall tenant.

Construction of the first mall will start in Hangzhou (6 million residents) this October, with completion in spring 2007. The partners have laid out plans for 12 projects totaling 750,000 square meters (8 million square feet).

Big stores aren’t new to China — about 20% of China’s retail already is conducted in big stores and shopping centers (cocktail party fact: that’s versus 3% of retail in India). So why is this deal so noteworthy? Wal-Mart China’s VP of Development summed up the benefit to the Chinese partners — “the joint venture will add an entirely new level of mall development and management expertise to the China retail landscape.” Wal-Mart, not usually the anchor store in U.S. malls, will take on a new role (Mall-Mart?) in Simon’s Chinese properties. And in a classic understatement, Simon’s CEO noted the benefit to his company in saying that “we are very excited about the retail development opportunities in China.” Economic growth in China will top 8% in 2005 — that’s more than twice U.K. growth and 4 times what the rest of Western Europe will experience.

Simon has an interest in 52 European shopping centers (France, Italy, Poland, and Portugal), 5 in Japan, 1 each in Mexico and Canada, and now China. It faces all of the attendant organizational, regulatory, management, and marketing issues of being a real world enterprise spanning three continents — but hasn’t yet created a global website to hawk its brand. Meanwhile, the Chinese partners will follow a best practice established by many companies before them as they quick-start their efforts with the experience of a foreign partner.