CHINA VANKE CO., LTD.
China Vanke Co., Ltd. (hereinafter “the Group” or “the Company”) was established in 1984. After 30 years of development, it has become a leading city and town developer and service provider in China. The Group focuses on the three most vibrant economic circles nationwide and key cities in Midwest China. The Group first appeared in the Fortune Global 500 list in 2016, ranking 356th. It has since remained on the league table for three consecutive years, ranking 307th, 332nd and 254th respectively.
In 2014, Vanke had expanded its positioning as a company offering “good houses, good services, good community” to an “integrated city service provider” in its fourth ten-year development plan. In 2018, Vanke further upgraded such positioning to “city and town developer and service provider” and specified it as four roles: to provide setting to a beautiful life, to contribute to the economy, to explore creative experimental fields and to construct a harmonious ecosystem.
In 2017, Shenzhen Metro Group Co., Ltd. (SZMC) became the largest shareholder of the Group. SZMC keenly supports Vanke’s mixed ownership structure, its integrated city ancillary service provider strategy and the business partner mechanism, and also supports the operation and management work undertaken by Vanke’s management team in accordance with pre-determined strategic objective as well as the deepening of the “Railway + Property” development model.
Vanke has been persistently providing good products and good services to the general public, satisfying people’s various demands for a good life with its best efforts. In 2018, the Group strategically positioned itself as a city and town developer and service provider, and the ecosystem it has been constructing is getting into shape. In the property area, Vanke has always upheld the vision of “building quality housing for ordinary people to live in”. While consolidating its existing advantages of residential property development and property service, the Group’s businesses have been expanded to areas such as commercial development, rental housing, logistics and warehousing services, ski resorts, and education. This has laid a solid foundation for the Group to better satisfy people’s needs for a good life and to achieve sustainable development. In the future, with “people’s needs for a good life” as the core and cash flow as the basis, the Group would continue to “follow the fundamental rules of the world and strive for the best as a team” while executing the strategy of “city and town developer and service provider”. The Group would constantly create more true value and strive to be a respectable enterprise in this great new era.
In 2018, the Group achieved a revenue of RMB297.68 billion, representing a year-on-year increase of 22.6%; and the net profit attributable to equity shareholders of the Company reached RMB33.77 billion, representing a year-on-year increase of 20.4%. Basic earnings per share amounted to RMB3.06, representing a year-on-year increase of 20.4%. Fully diluted return on equity was 21.68%, representing an increase of 0.54 percentage point as compared to that of the corresponding period in 2017.
In the property development business, the Group realized a sales area of 40.377 million sq.m. and a sales amount of RMB 606.95 billion, representing a year-on-year increase of 12.3% and 14.5% respectively. The Group’s share in the commodity housing market in China had risen to 4.05%, representing an increase of 0.95% percentage point as compared to that of the corresponding period in 2016. In 2018, Vanke topped the sales volume in 24 cities in China. Furthermore, the Company paid constant attention to investment opportunities in overseas markets. By the end of 2018, it had already entered eight cities overseas, namely New York, San Francisco, Los Angeles, Seattle, London, Moscow, Singapore, and Kuala Lumpur etc.
Vanke has been persistently “building quality housing for ordinary people to live in”. The main products of the Group’s property development business are residential properties and commercial auxiliary facilities. Among the products sold in 2018, residential properties, retail and office properties, and other auxiliary facilities accounted for 84.9%, 11.5% and 3.6% respectively. The residential products were mainly small and medium-sized units, focusing on the actual housing needs of the mainstream customers. Of all the residential products sold in 2018, the small and medium-sized units under 144 sq.m. accounted for 91.4% of the total. And this figure has exceeded 90% every year in each of the past 6 years.
After years of relentless efforts, Vanke has honed its competitive edge in the housing industry: Vanke became the first Famous Chinese Trademark in the real-estate industry, owning brands such as “Four Seasons Flower City”, “City Garden”, “Golden Home”, “Golden Home International” that are highly popular among customers all over China; its “House with Layers of Scenic Balconies” was the first patented product and invention patent in China’s real-estate industry; its property service business was the first to be ISO9002-certified in China; the Vanke Club was the first customer relations organization that has ever been created in the real-estate industry. The Company launched the world’s first open forum for customer complaints. It is also the first Chinese real-estate company that hired a third-party institution to conduct a 360-degree customer satisfaction survey. The Company also put forward the “6+2 steps” for customer services and got a patent for it. In the future, the Group will continue to deepen the “good housing, good services, good community” product concept and satisfy the real household demands of mainstream customers.
The mission of Vanke Property Service is to “allow more users to experience the charm of property services” and its strategy is “simultaneous development of residential property services, commercial property and facility management services”. In 2018, the property service business of the Group achieved a revenue of RMB 9.80 billion, representing a year-on-year increase of 33.0%. By the end of 2018, Vanke Property Service had tapped into 83 medium and large cities in China with 2482 contracted projects, including 1971 for residential properties and 511 for commercial properties. The contracted area has exceeded 530 million square meters, with over 80,000 staff servicing 4.8 million households of over 15.84 million people. As the lead runner in the property management industry in China, Vanke Property Services focuses on all-life circle service to retain and increase the property values for property owners, and endeavors to have more users experience the quality property services. Its business scope covers six main areas, namely residential property service, commercial property service, developer’s pre-service, community asset service, digital technology service and community life service. For the 10th year, Vanke has won the award of “TOP1 of China’s Top 100 Property Service Providers”, and topped the list of “Favorite Property Service Brand Chosen by China’s Top 500 Property Developers”, and also won the honorary title of “Leading Enterprise of Featured Property Services in China – Enterprise Headquarter” for three years in a roll.
In the field of commercial properties, there were a total of over 210 commercial projects under the Company’s management, with a total gross floor area of more than 13 million sq.m. by the end of 2018. The Group uses SCPG as the management platform, and insists on a user-centered approach. It continues to promote business service innovation, inventory asset management and digital construction, and optimize urban space experience to facilitate cities’ urban upgrade process. At the same time, it actively explores the business operation model for the community. Up to now, the total scale of area managed by SCPG ranks second in the industry.
In the area of logistics and warehousing service, the Group launched its independent logistics brand “VX Logistic Properties” in 2016, which has become a leading logistics service provider in China. VX Logistics Properties focuses on high-standard warehouse and has formed a national high-standard warehouse network in the core logistics cities in China. VX provides clients with high-standard warehouse facilities and diverse cold-chain logistics service. VX Logistics Properties has entered 45 cities and the GFA of leasable properties has exceeded 10 million sq. m., including 10 professional cold-chain logistics industrial parks. VX acquired the Swire cold-chain logistics platform in 2018 and expanded its business scope. In 2017, a consortium made up of Vanke, Hillhouse Capital, HOPU Investments, an affiliate of Bank of China and SMG jointly participated in the privatization of the leading global modern logistics facility provider GLP.
In the rental housing field, The Group launched its main product line for long-term rental apartment “Port Apartments”. After three years’ development, Port Apartments has become a leading brand in China, with its business focusing on key economic cities in China, dedicated to providing rental space with quality and warmth for 18 to 40-year-old young urban population. Currently its business has entered 37 cities in China, with a total of over 73,000 units in operation.Furthermore, the Group aims to further develop in line with its key customers and the core cities and continues to actively explore businesses such as ski resorts and education.
? For the ski resort business, the Group continues to improve quality and create the best ski holiday destinations. During the snow season from 2018-2019, the total number of visitors to Jilin Vanke Songhua Lake resort and Beijing Shijinglong ski resort exceeded 645,000 people, representing a year-on-year increase of 14%. The operation capability of Vanke Songhua Lake Resort has been recognized by the industry and therefore won the “2017 Best Ski Resort in China” title in the World Ski Awards competition for two consecutive years. In 2017, the Company entered into strategic collaboration with Singapore Banyan Tree Group to jointly grow hotel and related businesses, building on the strengths of both parties. Vanke also signed a strategic cooperation framework agreement with Chinese Culture Group Co., Ltd., aiming to leverage the resources and advantages of the latter and its partners to provide more diverse products and services for cities and customers.
In the education field, the Group has explored the K12 full-time teaching system through various modes including innovative public schools, PPP and private internationalized schools. At the same time, the Company actively expands its quality education bases, including city camps, community camps, and outdoor camps, and has realized all-rounded integration and upgrade of online educational resources, making use of Meisha education online platform. At present, the Group has participated in the operation of over 10 schools nationwide. In terms of camp education, Meisha Outdoor Camp has been providing quality education services to more than 100,000 young people since its establishment in 2015.
In terms of product and project management, the Group always upholds the idea of safety and quality first. Through the various project evaluation processes, such as underground evaluation, quarterly evaluation, delivery evaluation and customer inspection guidelines, product quality is guaranteed and constantly enhanced in all three aspects from process monitoring, results examination to customer perspectives. The performance and quality of the products purchased were guaranteed through the “Skynet Action”. The Company continues to promote the development of green buildings and has been leading the sustainable development in the industry by maximizing the conservation of resources, protecting the environment and reducing pollution. In 2018, the area of projects labelled as green buildings completed by the Group was 35.016 million sq.m. Since the promotion of green buildings in 2009, the area of green building in the Group reached a total of 147 million sq.m. The Group actively promotes the application of residential industrialization technologies, to explore a leading architectural industrialization pathway that both meets the market demands and is in line with the development of the industry by intensive research in areas of standardization, industrialization and production. In 2018, Vanke continues to perfect its “5+2” construction system in order to realize Vanke’s dream of quality in the new era, and to improve quality, efficiency, and to reduce consumption and emission, and reliance on handwork. It has been actively and stably promoting industrialization by compiling the “2018-2021 Vanke industrialized system promotion methods” based on the previous practice of industrialized construction methods and China’s standard for assessment of prefabricated building. In 2018 the floor area that started construction with an industrialized method accounted for 77% of the floor area that started construction. The Company also uses advanced technology to enable better project management and operation. The Company continues to promote the application of BIM (Building Information Modeling), a construction information technology to manage projects, in order to enhance quality of blueprint drawing and reduce the modification to construction work on site. Furthermore, the Company promotes application of resources management system on business projects, and collects real-time data of operation status and energy consumption level of various energy-using equipment. It undertakes more efficient energy-saving work based on data, in order to realize actual green and energy-saving operation.
At present, the company is pushing forward business partnership scheme in depth, the current business partnership scheme is based on the principles of “consensus, co-creation, joint assumption and sharing”. By organically combining capital, knowledge labor and entrepreneurship, enthusiasm of employees is better motivated through system innovation. The business partners are devoted to creating real value of longer term for the maximum number of stakeholders and providing practical samples for the innovation and upgrading of the modern enterprise systems. In 2017, the Group explored and came up with the theoretical base, core mechanism and basic guideline that inform Vanke’s business partnership model through collaborative work of the teams, and at the same time, it has actively started the practical execution of the business partner model.
In 2017, the Group entered into a strategic cooperation agreement with Banyan Tree Singapore to expand hotel and relevant businesses in mutual by celebrating advantages from both sides. The Group also entered into a strategic cooperation framework agreement with the Chinese Culture Group Co., Limited so as to leverage on the resources and advantages of Chinese Culture Group Co., Limited and its partners in the culture field and bring more diverse products and services to the cities and its customers.
While achieving growth in performance, the Group also responded positively to the call of the Central Committee of the Communist Party of China and the State Council in succeeding poverty alleviation. By leveraging on its own advantages, the Group worked on projects in culture, education, poverty alleviation by relocation, and village revitalization, contributing to the process of synchronized well-off of Chinese people. The Company also continues to carry out charitable activities in areas such as environmental protection, education development, children’s diseases, and protection of ancient buildings.
Vanke Charity Foundation was officially founded in 2008, approved by China’s Ministry of Civil Affairs. Up to now, the Foundation has spent RMB 523 million on projects of targeted poverty alleviation, education development, child healthcare, emergency relief, community development, garbage classification, climate conference and environment protection, etc.
Vanke continues to carry out the work of targeted poverty alleviation. The Group and Shenzhen Municipal Government jointly endowed the Tibet Intangible Cultural Heritage Museum and officially delivered the project in June 2018. Vanke endowed and constructed the Tuheman School in Xinjiang in September 2016, which did not get any damage from the earthquake in the county in 2017, and guaranteed the safety of the teachers and students. Vanke endowed and delivered the first phase buildings of the Shouning East District Middle School in Fujian Province, which include facilities of teaching buildings, comprehensive buildings, labs, and sports ground, providing good learning environment and advanced hardware facilities for more children. In Zundao of Sichuan Province, Vanke has been persistently supporting the education development of the Sundao School for ten years now. In the past ten years, students’ performance in the high school entrance exams has constantly improved and over a hundred graduates have entered university. In addition, Vanke donated to and supported the basic education of five counties in Guizhou and Gansu, to improve the facilities in kindergartens and primary school in poor countryside. Apart from that, Vanke Charity Foundation collaborated with the Beijing Lead Foundation to support the “Teach for China” program and recruit good teachers for the countryside. It has also worked with the Green and Shine Foundation to recruit teachers to improve the basic education environment and education level of the countryside schools in Zhenfeng County of Guizhou Province.
As the city and town developer and service provider, responding to the arrangement by the Guangdong Provincial Government for the city of Shenzhen to support the development of Heyuan and Shanwei cities, Vanke has started village revitalization work in these two cities. It aims to improve the outlook of villages, promote the Red Culture, and perfect the basic infrastructure, as well as to heighten the village’s cultural and hygienic level, and encourage young villagers to return to hometown to start businesses and improve the well-off of villagers.
? For many years, Vanke has joined hands with all walks of life, and carried out specific salvation and support programs to help children grow up healthily and happily. Vanke has been actively following climate change and exercising its green responsibility. Since 2009, Vanke has participated in the United Nations Climate Change Conference for many years and hosted the China Pavilion Enterprise Conference in order to promote international cooperation and communication on climate change. Furthermore, Vanke has been vigorously promoting public welfare projects like garbage classification, wetland conservation, biodiversity conservation and protection of historical buildings.
? In the area of environmental protection and sustainable development, Vanke designed, constructed and operated the Vanke Botanic Pavilion, which is one of the four core venues of International Horticultural Exhibition in Beijing. The theme of the pavilion is “Incredible Wisdom of Plants” and it uses “the rising horizon” as its architectural design concept. There are over 1000 species of plants in the Pavilion, showcasing the wisdom of plant evolution.
Looking ahead, the Group would continue to “follow the fundamental rules of the world and strive for the best as a team” while executing the strategy of being “a city and town developer and service provider”. It would insist on the idea of striving for the best together to meet people’s increasing demand for a better life, to constantly create more true value and realize quality development.
Honors and rewards:
In 1991, Vanke became the second listed company on the Shenzhen Stock Exchange and has earned wide recognition from investors through its constantly growing performance as well as its standardized and transparent corporate governance structure. The Company has been enlisted in the Forbes league tables at different stages of its history as “200 Best Small Companies”, “Asia’s 200 Best Under a Million”, and “Asia’s 50 Best Big Public Companies”. It has been awarded for best corporate government, best investor relations many times by well-known international media such as “Investor Relations”. Vanke has been voted by Fortune China for nine consecutive times as “China’s Most Admired Company”. It has also won the title of “Most Respected Company in China” awarded jointly by the Economic Observer and the Peking University Management Case Study Centre.