The high-stakes battle for control of China Vanke took another strange turn Thursday, with the largest and second-largest shareholders offering different views on the boardroom tussle but conceding that the company was direly in need of stable management. Privately held Baoneng Group and state-owned China Resources Holding are the two top shareholders in Vanke. The statements have eased some of the pressure that has been building up in Vanke ever since Baoneng called for a special shareholder meeting to oust chairman and founder Wang Shi and his fellow board members. The prolonged dispute has also wrecked havoc on the daily operation of the world’s largest residential property company. In a reply to the Shenzhen Stock Exchange, China Resources Holding said it was not “acting in concert” with Baoneng Group. It said it had “disagreements” over Baoneng’s proposal and would consider the board reshuffle issue from the perspective of the well-being of Vanke. In its reply, Baoneng seemed to have toned down its aggressive stance. While proposing to oust 10 directors, including three within Vanke’s core management, it said “removing directors does not necessarily mean removing core management”, implying the current president Yu Liang could retain his role even if he and Wang were ousted from the board. The conciliatory stance comes on the heels of reports that the regulator was keeping a close watch on the developments and would not hesitate to step in if things got messier. The state-asset regulator, which oversees China Resources, said it had deep reservations about the company’s behaviour, the Post reported on Tuesday. Adding to the drama, Vanke employees staged a street protest in Shenzhen yesterday. Vanke employees in masks and banners held the protest in front of the Shenzhen local government office, according to pictures published on major internet portals. Hours after the protest in the morning, China Resources issued a brief statement saying that it had “disagreements” over Baoneng’s proposal to oust the whole management, in a signal that the fight was far from being over. “It’s a case that is very interesting to watch, and nobody knows how it will end,” Wang Xiaoguang, a property researcher at the Chinese Academy of Governance in Beijing, said. “The whole Vanke control fight offers a good example to analyse how professional managers should act in China and how power and money is playing out in China.” Liu Shuwei, an influential financial researcher at the Central University of Finance and Economics, wrote in an article published yesterday that the Vanke fight “is now a landmark incident that could set the tone for China’s stock market”. The result of the Vanke fight will “either lead China’s stock market on a path of rule by law and healthy development, or push the China stock market into a pit of chaos, disorder and failure,” Liu wrote. Yan Yuejin, an analyst with E-house China R&D Institute, said “the core value of Vanke is that its core management has been instrumental in its growth. China Resources knows that”. “If Yu Liang stays, the market will accept it’s ‘still Vanke’. Otherwise it will not,” Yan said.
