Vanke says the ‘golden age’ of China’s property is over as bellwether developer girds for hard times
- Chairman Yu Liang urges employees to lend a helping hand to ensure its survival amid an industry slump and cash crunch
- Vanke reported a 50 per cent year on year slide in contracted property sales in January to US$5.6 billion
The chairman of China Vanke, the country’s third-biggest home seller by sales, issued a clarion call to his staff, urging them to gear up for a bruising battle that may make or break the company this year.
“We are on our last legs, which means there are no other options,” said Yu Liang during the company’s annual staff meeting on January 9, according to an internal document seen by the Post titled ‘You will win, if you dare to fight’. “Many of us have not comprehensively understood the situation we find ourselves in.”
The Shenzhen-based company adopted the “survive” slogan during the annual staff meeting in 2019 and “survival is a real issue now” at its annual result briefing in March 2020.
Yu said the so-called golden age of the past two decades, when home prices only went up and developers made billions of yuan from selling homes, had come to an end, referring to the slowdown in China’s US$1.7 trillion housing market that has affected many industry players.
The collective sales value of China’s top 100 developers fell 41 per cent in January from last year to 526.6 billion yuan (US$8.3 billion), versus a 38 per cent contraction in December, according to the China Real Estate Information Corporation, which compiles industry data.
Vanke was also not immune to the industry’s diminishing fortunes. The company reported a 50 per cent drop in contracted sales of 35.6 billion yuan in January from a year earlier, according to a stock exchange filing on Monday.
“The company’s income this year will definitely drop significantly,” Yu said.
Moody’s expects home sales across the country to fall by 5 per cent to 10 per cent for the whole year.
Yu had warned in November that conditions in China’s property industry were expected to tighten further, just before companies like Fantasia Holdings and Modern Land (China) defaulted on their US dollar bonds.
He had then urged Vanke’s employees to hunker down as one would during a war to survive, asking them to “live frugally, spend small money and do big things”.
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During last month’s meeting, Yu more or less repeated what he has said in the past, asking employees to book cheap tickets and hotels when travelling and cut their spending on treats and gifts.
Yu said that he himself had asked his assistant to stop booking first class flight tickets for him and to only buy the cheapest available flight as he wanted to set an example for employees across the company.
“We must let everyone know that we are now fighting a war, and everything is not the same as before.”
