Recently, Vanke has completed a major organizational structure adjustment.
On September 17th, Vanke Group updated the information about its organizational structure and management team on its official website, indicating that the most significant organizational reform in Vanke's history, which had been in the works for nearly a year, has been implemented.
01 The Largest Organizational Reform in History Comes to Fruition
In the new organizational structure, the group headquarters is divided into the Board of Directors Office, the Group Office/Party Mass Work Department, and 11 centers. All previous regional levels have been abolished, and 16 city-level companies have been established. Eight business units, including property management, commercial operations, and long-term rental apartments, remain unchanged.
After the change:
Image source: Vanke's official website
Before the change:
Image source: Vanke's official website
Meanwhile, management personnel related to the development business have also taken their positions.
At the group level, Chairman Xin Jie, Labor Union Chairman Jie Dong, Executive Vice Presidents Yu Liang, Li Feng, and Hua Cui, Executive Vice President and Chief Financial Officer Han Huihua, Board Secretary Tian Jun, and others, as well as Zhu Baoquan and Sun Jia, who are in charge of the property management, commercial, and hotel business units respectively, remain in their positions.
Group Executive Vice President Li Gang has concurrently taken on the position of General Manager of the Beijing Company. Zhang Hai, the former General Manager of the Development and Operation Business Group, has taken on new roles as the Group's Chief Product Officer and General Manager of the Group's Product Design Center. Li Wei, the former Chief Partner/General Manager of the Southwest Regional Management Department, has been appointed General Manager of the Group's Investment and Development Center. Wu Di, the former Chief Partner/General Manager of the East China Regional Management Department, has taken on the new position of Group Chief Marketing Officer. Bu Lingqiu has been appointed Group Chief Financial Officer.
At the level of each city company, Vanke's internal work system has also been updated according to the new organizational structure.
The heads of the 16 city companies are as follows:
Beijing Company: Li Gang
Zhejiang Company: Chen Hao
Guangfo Company: Zhou Yiqun
Central China Company: Yi Ping'an
Tianjin-Hebei Company: Wang Yichuan
Jiangsu-Anhui Company: Ren Pengfei
Dongguan-Zhuhai Company: Zhou Rong
Southwest Company: Liu Weidong
Shandong Company: Zhang Qiang
South Jiangsu Company: Tan Wei
Fujian Company: Bian Wenjun
Northeast Company: Zeng Wei
Shanghai Company: Geng Bing
Shenzhen Company: Tang Jiyang
Yunnan-Guizhou Company: Liang Yong
Northwest Company: Jin Yabin
This adjustment is Vanke's second large-scale change this year.
On January 27th this year, Vanke announced a major personnel adjustment in the core positions of the company's management. Board Chairman Yu Liang, President Zhu Jiusheng, and Board Secretary Zhu Xu collectively resigned. Yu Liang's position changed to Group Executive Vice President, Zhu Jiusheng no longer holds any position at Vanke, and Zhu Xu has joined the long-term rental apartment business unit.
Xin Jie succeeded Yu Liang as the new Chairman of Vanke Group's Board of Directors. Yu Liang, Li Feng, Hua Cui, and Li Gang were appointed Group Executive Vice Presidents, and Tian Jun took over as Board Secretary. Shenzhen Metro Group fully took over Vanke. After that, the latest organizational structure reform, which has now been implemented, began to be planned.
02 Shenzhen Metro Is Determined to Support Vanke
While the new organizational structure was being implemented, on the evening of September 16th, Vanke announced that the company's largest shareholder, Shenzhen Metro Group Co., Ltd. (hereinafter referred to as "Shenzhen Metro Group"), would provide the company with a loan of up to 2.064 billion yuan. The loan term is no more than 3 years, and the loan interest rate is the 1-year Loan Prime Rate (LPR) minus 66 basis points, that is, 2.34%.
Since Shenzhen Metro Group took over Vanke, it has provided a total of 25.941 billion yuan in loans to Vanke. It can be said that Vanke has been able to avoid default in the public bond market this year thanks to the full support of Shenzhen Metro Group with real money.
There are mainly three reasons why Shenzhen Metro Group is determined to support Vanke:
First, Vanke has transformed from a de facto private enterprise into Shenzhen Metro Group's "own child."
Currently, Shenzhen Metro Group not only holds 27.18% of Vanke's equity and is the company's largest shareholder but also has a management team led by "Shenzhen Metro people" to fully take over Vanke's operations, obtaining the management rights of personnel, finances, and affairs.
After the latest organizational structure reform, as Vanke's regional companies were abolished and the investment and financial rights of the development business were centralized to the group, the actual authority of the management team with a Shenzhen Metro background has penetrated from the group to the front line.
It can be said that Vanke is now essentially a subsidiary of Shenzhen Metro Group.
Second, although Vanke is currently facing its largest loss in history and its financial accounts are in a mess, Vanke's asset portfolio contains a large number of high-quality assets. This is the biggest difference between Vanke and companies like Evergrande.
The assets of Vanke's property management, logistics, commercial, and long-term rental apartment businesses are of good quality. These assets have been nurtured by the development business over the past many years and are now generating a large amount of positive cash flow.
The root cause of Vanke's losses is that it made wrong decisions after 2018, stockpiling a large amount of land in lower-tier cities, having too high inventory of commercial and office assets, and getting involved in urban renewal projects that require a large amount of capital, which has dragged down the company's financial statements. However, there are still many projects in first- and second-tier cities that are fine.
"Vanke's development business is large in scale. During the process of rapid development in recent years, it has accumulated some resources that are difficult to monetize in the short term," the new management said. The problems are due to historical reasons and not fundamental problems with Vanke.
After Shenzhen Metro's timely intervention, Vanke's brand and credit still remain. According to information released by Vanke at an investor relations event on August 22nd, the first-phase projects of Vanke's subsidiaries have all fulfilled their investment commitments in the first half of the year. Among them, several inventory revitalization projects such as Wenzhou Pushi Yunzhou, Chengdu Duohui Jiadi, Chengdu Jinshang Yanghua, and Tianjin Donglu achieved a subscription and sales rate of over 90% in their first openings. The returns of more than 70 new projects actively acquired by Vanke since 2022 have significantly improved, and the gross profit margin of the sold part is about 16%.
Therefore, Shenzhen Metro Group believes that Vanke will recover once it sheds its burdens.
Finally, saving Vanke is a political task. From the perspective of the real estate industry, three out of the top five real estate companies in 2021 have defaulted. The corporate credit in the real estate industry has just shown signs of bottoming out and rebounding, and another giant cannot be allowed to drag down the industry.
From the perspective of Shenzhen, Vanke is a company that has grown up with the reform and opening up. It has been a typical case in corporate governance models, the capital market, and urban construction and has a good image. Moreover, Shenzhen's GDP is only second to Shanghai and Beijing, and its growth rate is the fastest among first-tier cities. Shenzhen has the ability to save Vanke.
In addition, as central and state-owned enterprises are becoming the main force in the real estate industry, the role of state-owned enterprises in urban development is becoming increasingly important. In the future, Shenzhen also needs a state-owned enterprise with influence to lead the real estate industry in Shenzhen, and the combination of "Shenzhen Metro + subway" happens to meet this requirement.
This article is from the WeChat official account "Future Habitat", author: Xiaowu Jiandawu. It is published by 36Kr with permission.