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Do you know how many cups of coffee the Chinese drink on average?

Max 2017-02-20 14:46:59

Kevin McCabe is so excited about a new type of coffee he is selling in China that he hands me a packet to take home to try. The only problem is that I do not have an espresso machine. “Take one with you,” he says, grabbing a shiny new model from his company’s Leeds office lobby.

I explain the Financial Times’ strict rules on gifts and the machine is returned. But the episode goes some way to illustrating the Sheffield-born entrepreneur’s success around the world: charm, persistence and an impulsive drive to exploit the next opportunity.

Mr McCabe, 68, was one of the first British property developers in China. He travels there frequently and enthuses about his upmarket Espuma coffee house chain developed with the Novell family from Barcelona.

“Do you know how many cups of coffee the Chinese drink on average?” he asks, eyes lighting up. “Five a year. There are a billion of them, imagine how much you could sell!”

He admits there is competition from Starbucks and other multinationals but is undaunted. The three Espuma bars are more like restaurants and pitched upmarket with premium prices.

At a subsequent meeting at his office in Manchester — he has them dotted across the UK — he says he developed his business “by instinct”. “If I have an Achilles heel it’s probably always wanting to have a go at what’s put in front of me. Did I ever plan for the group to be as varied and as large as it is? No, not really. Things happen.”

His company, Scarborough Group International, encompasses property interests in continental Europe, Canada, Australia, Hong Kong and India and owns football clubs including Sheffield United, his home city club, and Ferencvaros i of Hungary.

United — known as “the Blades” after Sheffield’s steel industry — played a crucial part in the international reach of Mr McCabe’s business.

In 2002 a juice company called Desun from Xian in China made enquiries about sponsoring United’s shirts — the company did not retail in the UK but English football was shown on television in China. Negotiations had stalled. “I said I’d go and sort it out myself,” explains Mr McCabe.

Expecting a drab industrial city, he was astonished by the pace of development there and in Beijing. He clinched the shirt deal and set up an office for his Scarborough property business in Shenzhen, a southern city, and another in Hong Kong.

It lost a “bob or three” he says, before finding a suitable local partner in Top Spring, a developer that has worked on 21 projects across China including Hidden Valley, a complex of villas in Shenzhen.

“You need partners who really have contacts at government level, can put teams together,” he says.

Sheffield is twinned with the Chinese city of Chengdu and Scarborough Group owns the Chengdu Blades football club. Scarborough also has a joint venture with the state-owned Avic group, which operates more than 50 shops in China for Spanish retailer Cortefiel.

According to Mr McCabe, being treated as the token “white man” helped open doors in China. “You spend a long time in meetings just grinning while others talk.”

Networking is essential to operating in China and it could be several long meetings before any business is done. But he says it is best to avoid Maotai, the fiery grain liquor that is a staple of such events — one of his staff makes sure his glass is topped up with green tea instead: “I ain’t drinking that rubbish.”

So far, he has stuck to mainland China’s secondary cities rather than Beijing and Shanghai. Projects include a new suburban centre in Changzhou covering 5.6 sq km. It has a five-star hotel, large shopping centre, arts and cultural centre, youth recreation centre along with offices and apartment blocks. In Chengdu the group has built a new office district with 55,000 sq m of offices and 47,000 sq m of retail space.

Mr McCabe’s partners also include Metro, a listed Singapore developer. More recently he teamed up with Hualing Group, which is involved in controversial mining projects in the far northern province of Xinjiang, where human rights groups say the Muslim Uighur minority is persecuted and there have been violent clashes with police. George Osborne, the former UK chancellor, was criticised for going to Urumqi, the region’s capital, last year. Mr McCabe says he has seen no evidence of abuses. The city, he says, is affluent.

Hualing is now investing in housing in the north of England with Scarborough, as is Top Spring. “The pendulum has swung,” says Mr McCabe, with Chinese companies looking to diversify into UK investments.

This year Scarborough also formed a consortium with state-owned China National Electric Engineering for the EURO230m upgrade and extension of the Loznica gas-fired power station in Serbia.

It is a long way from Mr McCabe’s start in a property company in Teesside in north-east England, where he was a director by the age of 25. But, thinking that he could do better himself, in 1976 he borrowed £10,000 from the Bank of Scotland and began his own business refurbishing and selling on properties in Aberdeen and Edinburgh.

In 1980 he founded the Scarborough Group, naming it after the Yorkshire resort in which he lives. The group mainly worked for Bank of Scotland and the two businesses rose together, with Mr McCabe advising, or even taking over, property portfolios the bank had lent against when the group got into trouble.

The relationship became strained during the financial crisis in 2008 when Halifax Bank of Scotland, as it had then become, had to be rescued from collapse by a merger with Lloyds Bank.

Mr McCabe had sold some of Scarborough’s assets to Valad Property Group of Australia for £865m in 2007, picking up about £150m net profit.

But it still had to sell its London properties to pay off the bank. Mr McCabe would not say how much he owed except the bill was “more than Paul Pogba” the midfielder Manchester United has recently bought for £89m.

He has now sold 50 per cent of Sheffield United to Prince Abdullah al-Saud of Saudi Arabia. But he gets to most games, and such is his loathing of local rivals Sheffield Wednesday that he orders special diaries with the word removed from every week: “They have Tuesday A and Tuesday B. I hate Wednesdays.”

His two sons now work in the business. Simon handles property while Scott looks after the other interests. But he remains chairman and “chief pot and bottle washer”.

In accounts for the year to February 29 2016, the Scarborough Group made a pre-tax profit of £625,000 on turnover of £59.5m. In the same period last year it posted a pre-tax loss of £1.4m on turnover of £24.8m. He declines to put a value on the company, which he says may list in the next few years — but independent estimates begin at £90m.

Mr McCabe believes Chinese investors will continue to come to the UK even after it leaves the EU.

“One has to say the best country in Europe is the UK. We may have some problems but . . . I can only think of two strong nations in Europe, that’s ourselves and Germany.”

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