Compared with many real estate companies that are deeply mired in funds such as selling assets and seeking debt rollovers, the leading real estate company camp, known for its stability, is also quietly promoting self-revolution.
As small as the recent annual meeting is simply held, "printing paper is used on both sides" and other behaviors to reduce expenditure, as large as organizational structure adjustment, talent incentive mechanism adjustment, digital construction process acceleration, from cost control to organizational momentum, the improvement of quality and efficiency is almost the same. It is the consistent behavior adopted by the current leading real estate companies.
The root cause is to fight against the downward trend of the industry.
Safety is more important than growth. Based on the core demand of 'stability', leading real estate companies have also been more cautious in mergers and acquisitions.
The head local tyrant who takes the initiative to frugal food
Compared with some real estate companies in the same city who are busy looking for debt rollovers, selling assets, and laying off employees... Huang Lin, a real estate person who has worked in a central enterprise in Shenzhen for more than ten years, has not been disrupted, and everything is business as usual.
However, there have also been many new changes within the company.
The newly held annual meeting has never been the same as in previous years. Booking a star-rated hotel for two or three days to celebrate, the sense of ceremony and atmosphere is full, and millions of yuan are spent at every turn.
It's just that a celebration ceremony was held in the large conference room of the company, which ended in a hurry in less than a day.
Compared with the lively situation in previous years, the company's annual meeting in 2021 can be regarded as the easiest and fastest year since she joined the company.
The company executives delivered a speech at the opening of the annual meeting. A core management person did not raise his arms and shouted his fighting spirit to encourage everyone to sprint for higher sales. He just said straight to the point, "I hope everyone can concentrate more on work in 2022. In terms of quality improvement, we will strive for stable and good performance.”
Simplifying the annual meeting is far more than this real estate company.
An old employee who has served in Longfor Group (00960.HK) for more than ten years said that the company is in a similar situation.
"You can save it if you can, and things that are optional and ceremonial will be simplified in the future."
This kind of austerity action to eliminate unnecessary expenses is being launched by many leading real estate companies.
An old employee of China Resources Land (01109.HK) said that recently, the company has also proposed measures such as "printing paper on both sides".
Since the second half of 2021, the company has also cancelled afternoon tea, etc.
The ritualistic items such as brand names and tea that were prepared for internal meetings in the past have now been cancelled.
China Overseas Properties (00688.HK), which has always been strict in cost control, recently mentioned measures such as "printing paper on both sides" and "no elevators within the third floor".
Vanke (000002.SZ/02202.HK) previously issued the “Proposal on “Saving Food and Living” and Creating a “Wartime Atmosphere” at the headquarters of Vanke Group (hereinafter referred to as the “Initiative”).
The "Initiative" puts forward seven main work requirements, including: changing the inertial thinking mode of the golden age, and running the business philosophy throughout work and decision-making; subtracting actions and expenses that do not produce value, and spending small money to do big things Wait.
The Initiative also mentions specific action programmes.
For example, be diligent and thrifty, and eliminate waste; book tickets in advance to reduce the cost of purchasing tickets; comprehensive price concessions and time slot selection; select accommodation hotels based on the principle of optimal cost performance.
For Huang Lin, who is accustomed to running funds in units of tens of thousands, the company is carefully calculating the administrative expenses that were previously overlooked.
And she also gradually realized that the management of Vanke has frequently mentioned in the past one or two years that "the company is not a choice for individual enterprises, such as Gree Electric Appliances (000651.SZ), Midea Group (000333.SZ) and other home appliance manufacturing enterprises". It is more like a foresight of the future situation of the industry.
Along with administrative expenses, marketing expenses, which are the bulk of the cost, are also seen as a link that needs to be further reduced by many real estate companies.
According to a number of real estate managers, channel expenses, which account for about 40% of marketing expenses, will become the focus of the company's pressure reduction.
According to an insider of China Overseas Real Estate, most of the company's projects are mainly self-sold, and the actual delivery effect of the channel will be further carefully evaluated in the future.
Another central SOE real estate manager in Beijing mentioned similar behavior.
"In the past, many of our real estates wanted to sell quickly, and they used channels to attract and bring customers, which accounted for 45% of the marketing cost. This year and beyond, we are also considering building our own marketing team, and planning to sell some properties with poor locations. Use channels, and try to sell others by yourself. At the same time, we may not plan to launch some channels that have a general effect on bringing customers this year.”
Promotional expenses such as advertising fees and activity fees other than channel fees are also the key areas for many leading real estate companies to reduce pressure.
The above-mentioned person from Longfor Group said that the company is considering spending on pressure reduction.
"In terms of promotion fees, the company is more inclined to invest in media with higher weight, and will pay more attention to the actual effect of delivery."
A person in the real estate industry in Shenzhen also said that in the current external financing environment, the space for reducing financing costs is relatively small and the controllability is not high, which is more affected by the wind direction of financing policies.
However, the pressure drop of marketing expenses and financial expenses is more feasible and feasible.
It is expected that more companies will start to reduce this cost expenditure in the future.
Expenditure plans are back and forth
Although the leading real estate companies have chosen to reduce costs, this does not mean that the real estate companies' spending plans have been fully contracted.
A number of leading real estate companies have introduced that the company will be bolder than before in terms of talent incentives and digital process transformation, and the investment will be greater, and the organizational structure will follow up to make dynamic adjustments.
An insider of China Overseas Real Estate said that the company has not issued a freeze plan of only going out and no entry, and will continue to introduce talents.
"We will select all kinds of talents with excellent business skills to join the company to improve management efficiency."
The other side of the rising demand for employment is the transparency and process of assessment, focusing on the full excavation of talent potential.
In terms of talent assessment, China Overseas Properties has also changed the traditional KPI performance assessment to "KPI+OKR" in the past two years, in order to better avoid the one-size-fits-all KPI assessment, and can greatly stimulate the initiative of employees.
China Merchants Shekou (001979.SZ) has also made adjustments in talent incentives recently.
According to an insider of China Merchants Shekou, at present, the incentive system of many real estate companies is based on the year.
This kind of incentive cycle is too long, lacks timeliness, and cannot effectively mobilize the enthusiasm of employees.
Considering that the company's attractiveness to talents and incentives are in place, on the basis of the original incentive system, the company has launched a new incentive tool called "investment to win".
The assessment indicators of city companies are divided into the whole process of each project development. Points are earned through the completion of each work item, and the level of points corresponds to rewards or penalties.
Points can be earned if the standard is exceeded, and points will be deducted if the standard is not met.
In this incentive mechanism, rewards are inclined to grass-roots employees, and punishments are inclined to management.
"With this incentive tool, various assessment indicators have been quantified, and the original result assessment has become a process assessment. Rewards and penalties can be realized in time, which can effectively mobilize the enthusiasm of the team." said a person from China Merchants Shekou.
While the vitality of tissue capillaries is constantly being stimulated, there are also real estate companies constantly reviewing the relationship between the headquarters and the front lines and adjusting the organizational structure.
On the whole, the ways in which various housing companies focus on organizational optimization are different, but they basically focus on the central point of better improving organizational efficiency.
For example, China Resources Land recently separated its overseas business unit and is responsible for its own profits and losses.
"It is no longer the same as the previous business unit structure, which is classified as a second-level subsidiary of the headquarters. Independently splitting business units and taking responsibility for their own profits and losses is also to allow each segment of the business segment to actively seek survival in the market and be more dynamic. , more effective.” said a person from China Resources Land.
In contrast, China Merchants Shekou focuses more on empowering the front line from its headquarters.
"The company requires the headquarters function to have the ability to help the front line solve problems, not just identify problems."
The latest round of Vanke's organizational restructuring has shifted from a strong front-line management and control model to a strong management and control of the department, and powers such as real estate development are concentrated in the development and operation headquarters.
Vanke has further explained the management and control ideas similar to "rights collection", saying that the industry is facing huge challenges, and it is necessary to give full play to the advantages of the group army to help the company develop healthily and steadily in the era of management dividends.
The company should strengthen the construction of a game of chess in the organizational structure, unify the will, reduce the cost of trial and error, form a joint force, and improve the management efficiency.
It has long been the consensus of all parties that the industry situation is different from the past.
The 2021 annual data released by a number of real estate research institutions such as Kerui show that the performance of the real estate industry is far worse than in previous years.
Crane's data shows that the average target completion rate of large-scale real estate companies in 2021 is less than 90%, which is in the lower range in recent years.
Among some large-scale housing companies that disclosed their performance targets for 2021, more than 80% of the housing companies failed to achieve their goals.
Many real estate companies are more cautious about their performance targets this year, and some real estate companies will face negative sales growth.
At the first extraordinary general meeting of shareholders in 2021 held in Shenzhen in November 2021, Vanke also mentioned that "for the time being, we cannot see the general trend of the real estate industry next year, but the company has lowered the minimum operating target for 2022 compared with 2021."
A manager of a private real estate company in Shenzhen who is in deep financial crisis and seeking to sell projects also said that despite the recent statement from the central bank and the China Banking and Insurance Regulatory Commission to do a good job in M&A financial services for key housing enterprise risk disposal projects, China Merchants Shekou, OCT A (000069.SZ) The successive trials of mergers and acquisitions of bonds have sparked speculation in the industry that state-owned enterprises and central enterprises may set off a small upsurge in negotiating project mergers and acquisitions with insurance companies.
However, a number of sources revealed that the industry's response was relatively dull, and the enthusiasm of active acquirers was not high.
"Perhaps it is generally believed that security is more important than growth, and there is a core demand for 'stability'. Even if the cost of financing is three or four points, the central enterprises with significant financial capital advantages have become more cautious and critical." The private Real estate executives said.