Date
25 September 2017
Greentown founder Song Weiping (left) is giving way to the more ambitious Sun Hongbin. Photo: NetEase
Greentown founder Song Weiping (left) is giving way to the more ambitious Sun Hongbin. Photo: NetEase

A different Greentown under Sunac’s Sun

If Greentown China (03900.HK) founder Song Weiping is a pioneer in the country’s luxury housing market, then Sunac China (01918.HK) chief Sun Hongbin, who will succeed him as Greentown boss following a takeover in May, is an out and out capitalist.

Song is known for his obsession with product quality, but Sun is much more return-oriented.

With Sun’s aggressive land purchases and speedy destocking strategies, hopes are high that Sunac can take full advantage of Greentown’s high quality image by boosting sales and margins, and taking the scale of the group to a new level.

Over the past three months, Sunac shares have gained more than 80 percent.

A source close to Sun told National Business Daily that the merger could be wrapped up before December. Despite rumors that the tie-up may lead to disputes at the top, the paper reveals that Sunac’s management team has been put in place across Greentown’s divisions and subsidiaries.

The first notable change Sun has brought to Greentown is in pricing strategy.

Song focused on building great homes, but his track record in handling market turbulence is not too remarkable. 

During property downturns, Greentown repeatedly ran into cashflow problems, partly because Song was reluctant to cut prices even in a weak market. Failure to turn inventories into cash pushed the firm to the brink in 2002.

Under Sun, a price cut is acceptable if that is what it takes to beat rivals in a tough market.

Since May, sales of Greentown projects in Shanghai, Suzhou, Nanjing and Wuxi have reached new highs after the company adopted a flexible pricing policy.

When Greentown lowered the average unit price to the level of nearby competing developments, buyers flocked to its sales centers as with almost the same amount of money, they were able to secure homes of higher quality.

On top of its nimble pricing approach, Greentown is also more aggressive in tapping its old clientele, devising marketing campaigns to attract them to buy new projects.

To unleash the full potential of Greentown’s premium quality, Song focused on bigger cities, where middle-class families have strong aspirations — as well as the resources — to acquire bigger and better homes. 

Song will remain as Greentown co-chairman until his retirement in 2015, reassuring buyers and investors that, despite the takeover, his dedication to premium quality will still be the company’s core value.

Currently Greentown commands a substantial share of the market for villas, townhouses and furnished condominium units in Shanghai.

Beijing, Guangzhou, Shenzhen and Nanjing will be its next targets.

– Contact the writer at [email protected]

CG

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