China Developer Lights Fire Under Managers for `Slow' Sales
(Bloomberg) -- China’s biggest developer is girding for a cooling property market, urging staff to quicken home sales while threatening fines or dismissal for managers who are too slow in getting their projects to market.
Country Garden Holdings Co.’s Chairman Yeung Kwok Keung told more than 4,000 employees on April 8 that sales turnover is “too slow,” according to a document seen by Bloomberg News. The builder will fire heads of residential projects if sales start more than seven months after a land purchase, according to the document, which cited “fierce” competition in the market.
Pressure may be mounting on the nation’s biggest developers, under scrutiny for their debt loads as government officials maintain a tight grip on the housing market. China is cracking down on property speculation in a campaign that began two years ago, with analysts predicting a slide in sales for the industry in 2018.
Country Garden project heads will incur a fine if sales start more than five months after a land purchase, while they’ll be entitled to a bonus of 200,000 yuan ($31,800) if sales start within three months. In another sign of the push for speed, Yeung said staff should submit project plans to local governments the day after successfully bidding for land.
President Mo Bin said the company was losing some its edge, according to the same document. The chairman said all staff needed to reflect on why turnover was too slow; there had to be some problems.
Faster sales for the firm that sold the most homes in China last year would mean less chance of being trapped by any abrupt shifts in home-buying rules, a feature of government efforts to control a runaway housing market.
While Chinese developers are facing headwinds, Country Garden has been regarded as undervalued by analysts at firms including JPMorgan Chase & Co. Fueled by a foray into smaller cities that largely escaped a government crackdown on property speculation, the builder beat all estimates for 2017 earnings. Its shares surged 243 percent last year.
The public relations department at Country Garden, which is controlled by China’s richest woman, Yang Huiyan, didn’t immediately reply to a request for comment. The document didn’t give exact details of how the briefing took place.
©2018 Bloomberg L.P.