Evergrande launches creative sales campaign amid virus outbreak

Ko Tin-yau February 17, 2020 16:46

In just three days, Chinese property developer China Evergrande Group (03333.HK) said it has received 58 billion yuan (US$8.31 billion) worth of orders in its online sales campaign.

The property giant is said to have "sold" 47,500 units since it launched the online sales campaign on Feb. 13. Compared with its average monthly sales of 50 billion yuan, the result of its online push has been more than amazing.

If we take a closer look, it’s not difficult to understand why Evergrande customers are willing to make such commitments when the country is grappling with the Covid-19 outbreak. The answer lies in the terms Evergrande is offering, which are generous and somewhat unusual.

First of all, all buyers only need to make a deposit of 5,000 yuan, which will be fully refunded if they change their mind before May 10.

If buyers decide to go ahead and buy the flat, they will get a discount of 20,000 yuan.

If a buyer decides not to buy but is able to find another buyer, they will get a 1 percent commission.

Even if there is no property transaction at all, a buyer who has placed an order and successfully recommended someone to visit the show flats would get 100 yuan for each potential buyer.

In other words, no matter how the situation might turn out, buyers simply can’t lose, especially as the developer is offering a discount of 15 to 25 percent for over 600 projects across the country.

If the epidemic is contained and the property market returns to normal by May, buyers get to lock up a bargain price. If things do not recover and property prices head south, they can just walk away and still get a 100 percent refund.

If buyers find someone else to take up the flat, or just find some potential clients for Evergrande, they get a commission or referral fee.

Evergrande's ingenious sales pitch might have been inspired by the business model of Chinese e-commerce upstart Pinduoduo, which integrates social components into the traditional online shopping process.

By sharing Pinduoduo’s product information on social networks such as WeChat and QQ, users can invite their contacts to form a shopping team to get a lower price for their purchase.

Essentially, Evergrande is doing something similar, which is motivating clients to promote its properties among their friends and relatives.

The move may also draw attention away from projects of Evergrande’s rivals, thereby killing two birds with one stone.

Evergrande is just one example of how Chinese firms are quickly adapting to unprecedented challenges.

Perhaps the bright side of China’s coronavirus outbreak is that it is speeding up the development and adoption of new, innovative approaches.

Other possible sectors that may get a boost could include technologies enabling remote working and remote education, and logistics technologies such as drones and robotics.

This article appeared in the Hong Kong Economic Journal on Feb 17

Translation by Julie Zhu

[Chinese version 中文版]

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RT/CG

Ko Tin-yau

Hong Kong Economic Journal columnist