Yang Guoqiang, the founder of Chinese property developer Country Garden Holdings (02007.HK), received little formal education, but he is known to be a keen learner and a strong person when it comes to executing plans.
Yang is also known for his never-ending quest for higher efficiency in project implementation.
In a recent internal memo that leaked out, Yang, who is now 64, is seen requesting his people to try to finish project design the same day when a land plot is purchased. Those who meet the deadline get handsome bonus, those who fail will get punished.
From the acquisition of land to the completion of project design, it usually takes three months. In projects with standard features, the time can be shortened to 40 days. Yang’s same-day completion target is therefore unheard of.
The reason why Yang is so obsessed with development speed is this: quick turnover holds key to profitability and risk control.
Rival Vanke (02202.HK) was the first major developer that adopted the quick turnover model, a trick it learned from Hong Kong developers
Quick turnover means capital can be recycled faster, helping keep financing cost low. It also means a developer does not need to take excessive risk from sitting on too big a land bank; this is particularly crucial for a developer to weather market downturns.
With this strategy, Vanke posted staggering sales growth in last decade and became a national developer. At that time, Country Garden was still a second-tier regional player.
But Yang soon learned the trick and perfected it to the extreme.
The Guangdong-based property developer has shown explosive growth in recent years. Its annual contracted sales value zoomed to more than 550 billion yuan last year, from 140 billion yuan in 2015.
According to industry sources, it takes about five months for Country Garden to launch a project after a land plot is bought. Yang wants to shorten the period to three months. If he manages to reach this new target, that would only be one third the average life cycle for his peers.
Yang once admitted to be a person who does not like to follow standard practice, and said he will “never let the company be restrained by anything apart from the law.” He would often request his executives to try whatever possible to speed up the project development, as long as it is legal.
There is also another reason why Yang is so obsessed with speed. Due to stringent policies in big cities, smaller cities would probably be driving the sales this year. This is precisely the focus of Country Garden, and Yang wants to make the most of the opportunity.
The tycoon also wants to make sure he is the first to have the projects ready for sale before other developers step up their efforts to tap the market segment.
This article appeared in the Hong Kong Economic Journal on April 18
Translation by Julie Zhu
[Chinese version 中文版]
– Contact us at [email protected]