Speech by Professor Xu Jiayin, chairman of board of directors at the working conference of Evergrande Group
(arranged according to the speech of Chairman Xu)
Since its establishment, Evergrande Real Estate Group works out a “three-year plan” every three years, which guarantees that our enterprise development is not shortsighted and blind while with strategy and objective. Today, I will report the completion of the fourth "three-year plan" for the past three years to you and make systematic arrangement of the Group’s fifth “three-year plan”.
Part I: Review of the Fourth “Three-year Plan”
The fourth “three-year plan” will definitely compute a glorious chapter in the development history of Evergrande. Looking back to April 30, 2006, at a meeting for cadres at middle level when we talked about the fourth “three-year plan” in 2006-2008, the guiding theory was “to march internationally and cross over development”. When we look forward to the future in that way: Evergrande after three years would grow into ten “Evergrandes” even twenty “Evergrandes” from one “Evergrande”. Now, three years have passed and we have realized the glorious blueprint of that year. No matter the land reserve, commencement area or number of cities with layout has increased at several times or a dozen of times, which is rare in China. We have achieved the grand development conception in line with the fixed steps.
Evergrande was established in 1996, started operation in 1997 and worked out the first “three-year plan” in 1997 when we put forward the guiding theory of “pioneering an enterprise with painstaking efforts to achieve high-speed growth” and all work developed greatly. In the second “three-year plan” of 2000-2002, considering that a rapid development of enterprises often led to backward management, the Company put forward the guiding theory of “practicing internal strength hard to lay a solid foundation” after experienced a stage of high-speed growth and all work entered a check and summary stage - the stage had many similarities with the fifth “three-year plan” that we will mention today. In the third “three-year plan” of 2003-2005, we put forward the objective of “engineering undertaking for the second time to develop the whole country” and in 2004 the Company began to dispatch the first batch of 58 employees to look for land projects and land information in secondary-level citifies, taking a first step of marching the whole country.
During the fourth “three-year plan”, the Company signed a cooperation agreement with the largest investment bank in the world Goldmen Bank on listing overseas of the Company in April, which signified the first step of Evergrande’s exploiting international market. Considering that the Company accumulated talents, land and capital in the first three “three-year plans” and achieved glorious results in the fourth “three-year plan”, which was a miracle, I summarize as follows:
1. The Company realizes unconventional and leap-type development.
In the fourth “three-year plan”, our land reserve increased from 3,100,000 square meters in the initial stage of 2006 to nearly 44,000,000 square meters in 2008, 14 times of growth in three years. I remembered that the project area under construction was over 700,000 square meters at that time, while the quantities under construction were 7,350,000 square meters in 2008, a dozen of times of growth. In terms of cities exploited, at that time we just developed in 2 cities Guangzhou and Foshan and now 23 cities. The growth of a dozen of times is a sign of development, which needs an outstanding team, abundant land quantity and scientific and strict enterprise administration etc.
In terms of a high-quality employee contingent, in 2006 the Company had a staff about 3000 while now this number is 7000, of which the project technique management personnel increased to 5000 from 2000. We have an outstanding team with high overall quality. The average age of the Group Company’s leaders is 42, which is the prime of life, and they have average working experience in real estate industry of 15 years. Of them, there is 1 professor, 3 doctors and 4 masters. In terms of construction of Group employee contingent, we have specified from the establishment of Evergrande that all employees joining the Company must have an academic degree of and above bachelor, over five years of working experience for common posts and over eight years for technical posts. Now except those engaged in estate management, employees with a degree of and above bachelor account for 92% of all staff members of Evergrande. One cannot find another enterprise with such a high proportion of staff members with a degree of and above bachelor throughout the country, no matter the state-owned enterprises, private enterprises or fully foreign-owned enterprises.
This is a main economic index of the Company in terms of high-speed development and leap-type development and it is quantized. The above is the first point of what I want to say.
2. To build fine works and realize quality leap
Teal realization of quality leap of Evergrande is in the fourth “three-year plan”. However, Rome is not built in one day. It takes us ten years to prepare for quality leap. Since 2004, the staff of the Company witnessed our smashing the first center garden and suffering a loss of seven or eight million yuan in Splendor Century Garden. What we got by doing this is the staff’s quality consciousness and fine works consciousness. Henceforth, the Company issued successive “fine works standards” involving each link of development construction. To guarantee that the fine works standard will be fully implemented, the Company set up a supervision mechanism of “quality hammer”. In the process of planning and design, building design, garden view, environment supporting, interior decoration, material and equipment as well as estate management, all products, no matter high-end products, middle-end products, or tourism estate products, apply to the “fine works standard”.
To realize quality leap of products, we should have fine works consciousness from the very beginning of obtaining the land. Evergrande considers the science of project scale and exploitability of landscape resources synthetically, cooperate with domestic and foreign organizations that are most famous in terms of building planning and landscape design to guarantee that all projects are fine works from the very beginning. Moreover, Evergrande collaborate with the leading domestic and foreign enterprises of al industries in all links of fine works, including main body construction, garden construction, materials and equipment, decoration to realize the fine works strategy of whole process.
For this purpose, the Company incorporated resources in large scale from 2004 and collaborated with leading domestic and foreign enterprises in industries relevant to real estate, including collaboration units with respect to planning design, main body construction, gardens construction. Even the selection of material equipment, such as outer wall bricks, aluminum alloy doors and windows, cleaners and polishes, locks, hinge, even the concealed materials that the owners cannot see, such as electric wire, water pipe, valve are all of the best foreign brands, really realize the exquisite products of famous brands. In terms of project planning, Evergrande collaborates with world famous planning design organizations such as Sairui and International Green View; in terms of main body construction, Evergrande collaborates with the most outstanding domestic construction units such as China State Construction and China Railway Construction; in terms of interior fitting, Evergrande collaborates with China top ten fitting enterprises such as Gold Mantis and Shenzhen Decoration; in terms of material equipment, Evergrande adopts domestic or international well-known brands such as Otis and TOTO.
3. Initiate a modern and scientific “Evergrande management mode”
To development from a regional company into a national large-scale real estate enterprise is a large challenge to the management mode of Evergrande. One enterprise will have no core competitiveness and cannot succeed without sufficient management. An enterprise’s management is not blind and unordered. It needs a full set of train of thought. After careful consideration, the management sets a future management mode for Evergrande: an intensified “intensive grouping management mode” conforming to development of modern enterprises.
The objective of setting up the “intensive grouping management mode” is to realize three “guarantees”. The first guarantee is to guarantee that every infant regional company does not detour, thus reducing risks. The second one is to guarantee that the fine works standard applies to the whole country and the fine works strategy can be carried out unswervingly in every regional company and every project, realizing Evergrande’s leading status in terms of products quality throughout the country. The last one is to guarantee that the corporate culture can be successfully passed on to every regional company and the employees throughout the country can adhere to Evergrande style.
Intensive grouping management mode is a pioneering work in the Evergrande’s management history with science and innovation, starting a new era of national layout. Particularly, the first characteristic of this management mode is intensiveness other than looseness as the Group headquarter and regional companies are a whole as dependent on each other as lips and teeth other than contracting. The intensiveness needs the full play of intensiveness function of human resources. The nearly thousand persons in Group headquarter conduct no concrete services while management, including design institute, purchase and delivery. Strict management and powerful professional technique strength make the Group headquarter has close relation with regional companies, guaranteeing the whole Group operates normally while not detour.
In terms of management system, the another characteristic of this management mode is the strict obedience between the superior and the subordinate. For example, if there is an unexpected real estate project, we can set up a contingent within two hours that can be dispatched to operate without major faults and mistakes The reason is that this intensive management determines that the enterprise has strong risk resistance capability in the process of growth.
We should comb the development flow of whole real estate and ponder over the significance and science of the “Evergrande management mode”. From the very beginning of looking for land, the Group planning research institute, marketing center, regional companies and intermediary agent companies issue a market survey report “back-to-back”, report it to the Group for study and finally report to the chairman of board of directors for examination and approval. As we have dealt with real estate projects for several dozens of years, so we can judge how much a stretch of land values and how much it can be sold in the future only upon looking at the map, hearing the neighborhood conditions and urban planning. This kind of management mode guarantee the decisions faultless. This is one aspect.
In the second aspect, in terms of planning design, we have our first-rate designing institute. Our design is for the buyers and we have taken the maximization of buyers’ interests and the use of natural resources into our consideration. In planning design, we notice that if every regional company entrust the outside designing institutes for designing, which may not dispatch good designers, then our work will be in disorder if every regional company does in this way Therefore, no matter how rapid the development speed of the Company, our planning will has no problem with more than 200 designers employed with high salary of the Group engrossed in planning.
Free from problems in land purchase and planning means that the real estate decision-making will also have any problem. Then go into the construction stage and bidding stage. We will set a threshold for bidding, then review the qualifications, whether they are China first-rate enterprises, whether they are state-run enterprises, whether they are top Chinese enterprises. If they are such enterprises, they can participate in our bidding, thus guaranteeing the construction speed and product quality without problems such as late building delivery, bad quality and quality problems. This is guaranteed by the current management mode.
Unified purchase and delivery of materials is a measure the Group carries out unswervingly, about which I have elaborated on much at the previous meetings. To build our fine works, we must have long-term strategic cooperation partners supplying top materials because supply of materials is a basic problems concerning product quality. If the materials are fake and forged, we cannot make fine works. This is the prerequisite and necessary condition for building fine works. Unified purchase guarantees not only the material quality but also our cost control. This article of management measure is where the key to building fine works lies. This article is hard to be realized and not all enterprises can do this, but we will advance despite difficulties with firm steps however hard it may be. I have mentioned before that material suppliers are not like construction units as there are several dozens of thousand of construction units from which we can choose, but there are two or three material brands we need.
Therefore, the Company prescribes that the material expenses for the last month should be paid up to the material suppliers on the 25th day every month, or relevant persons in charge would be investigated and prosecuted due to dereliction of duty. Evergrande is ready to pay the bill to material suppliers every time. What the material suppliers fear are two things: one is no expense is paid after delivery of materials and they will not collaborate with you after several times like this; the second is disordered supply, and one material supplier has to cope with several dozens of building sites. Therefore, unified purchase and on-time payment are where the key to our good collaboration with famous brand material suppliers lies as well as our decision made from the perspective of long-term brand strategy.
We should also embody the “Evergrande management mode” in terms of marketing planning. Before July 1 last year, we could not even design a satisfying plane advertisement over 3 months. What the cause? Each regional company does things in its own way and has great ambition but little talent. Therefore we made out a whole set of marketing advertisement planning template within half a month in July last year to specify the first and second things, how to design the advertisement after a project was raised, and issued several documents. With so many buildings, I have to examine and approve all the advertisements every day. After the standardization, we can sign up them within half an hour. This is improvement of productivity incurred by standardization. This management mode will prevent the regional companies from detouring in marketing planning. We will not allow the occurrence of such conditions as every regional company has to discuss and fumble, costs a number of advertising expenses and time while the buildings have not be sold out to occur. In last October, we realized a sales volume of nearly RMB 5 billion yuan. In addition to good product quality, scientific and reasonable pricing and a competitive cost performance, we owe this to our good marketing planning process and every detail is specified in the marketing planning documents, including arrangement of building sales office. This is the embodiment of Evergrande’s “intensive grouping management mode”.
It naturally includes financial administration, a management mode that every enterprise has, which the Group manage in unification. In addition, management for seals of the Group. Though it seems a petty thing, in fact it represents the complete implementation of the intensive management and management systems of the Group Company and regional companies. Evergrande’s regional companies have authorities in every aspect. For example, there is a clear-cut authority limitation for amount of bidding, contract management and payment. If the limit needs to be exceeded, you must report to the Group Company in accordance with stipulations. The Company’s seals cannot be affixed if you have not reported accurately and obtain the permission. Such measures guarantee the strictness and effectiveness of interior management and unified standard of outside commercial activities. It is also embodiment of Evergrande’ “intensive grouping management mode”.
To realize Evergrande’s speed and guarantee the fine works quality of our products, we can only rely on such a management mode as initiated by ourselves. However, it does not mean that such management mode denies the difficulty of management and subjective initiative such as final operation of regional companies. The final and actual execution is conducted by the regional companies themselves. What the Group does is just management, instruction and service to guarantee that every project can be developed smoothly and our project products are real fine works.
4. The strategy of Evergrande internalization was realized and international strategy investors were successfully introduced
At 2006 middle-level system meeting, we decided it as foremost to first introduce international strategic investors to internationalize Evergrande. That year, we first introduced the first batch of strategic investors, including Merrill Lynch Bank, Deutsche Bank and Temasek Fund, all of which invested 0.4 billion US dollars in total, laying a capital foundation for the Company's development and the Company’s several times and tens of times rapid increase in the 4th “Three-year Plan”. Following that we received another international financing with about 0.4 billion US dollars provided. Later on, when we encountered the first severe winter last year after Evergrande was prevented from being listed, we increased share capital by offering 15% of shares and thus introduced several strategic investors, raising 0.506 billion US dollars in addition to the cooperation on some other projects. During this gradual internationalization process, our strategic investment partners consisted of highly pluralistic members. They included Mr. Cheng Yu-tung from Hong Kong, European companies such as Deutsche Bank, U.S. companies such as Merrill Lynch and Asian Temasek Fund. Evergrande’s shareholders are from all over the world so that Evergrande becomes a real world-class excellent company.
Evergrande’s current operation is basically based on the operation of an internationalized enterprise. The Company’s monthly figures, statements, cash flow management and financial operation, etc. are all based on the operation of an internationalized enterprise, for instance, our financial statements are prepared by PricewaterhouseCoopers (PWC) among the world's top four accounting firms. Now the Company takes cash flow management to implement the Company's strategic planning, for instance, how much cash will be needed at the end of the year and how to develop the enterprise are both important signs of internationalized operation, which was our great success in the 4th “Three-year Plan”.
5. The most severe period arising from the Company’s being prevented from being listed was overcome
At the beginning of 2008 during the 4th “Three-year Plan”, when Evergrande was in process of roadshow for overseas listing, an once-in-one-hundred-year economic crisis for international capital market broke out. USA subprime crisis occurred and Bear Stearns, the world's fifth largest investment bank, collapsed because of that, which together consternate all major USA financial investment institutions then. In this case,Evergrande made a prompt decision to suspend its listing, thus avoiding heavy losses. However, the financing amount of 12 billion to 15 billion yuan in the original plan couldn’t be realized temporarily, so the Company’s development also faced temporary difficulty needless to say. It might be called the first extremely severe winter Evergrande had encountered. Compared with all other enterprises in the world, that’s one more severe winter Evergrande spent in advance. At that time, there were three choices on how to solve the capital issue and how to develop better.
The first was to open and sell the Company’s property complexes immediately. Then Evergrande had residential quarters of 2.80 million square meters meeting pre-sale standards and provided with pre-sale certificates. But they were in those cities Evergrande just entered, and according to the “dual-brand” strategy of Evergrande established in 2004, Evergrande would put both its product brand and corporate brand into operation in every city. It would seriously impact Evergrande’s brand image and cause heavy economic losses to introduce the image of a construction site to house buyers while lots of details such as planning, gardens, support facilities and property management were not ready, which contradicted and damaged Evergrande’s long-term development goal.
The second was to seek project cooperation. That’s the fastest growing source of funds and also the most convenient way. In recent years, China’s real estate market has been always a top investment project in international capital markets. From 2004 when Evergrande started to enter second-tier cities to expand throughout China to now, Evergrande has accumulated dozens of good-quality projects. And according to the estimate, if Evergrande totally depended on project cooperation, that is, selling its projects, based on its then scale, it might need 30%-50% of its projects to be used for cooperation to solve its cash flow. For a developer, good-quality projects were its base and room for its future development and it would be unfavorable to its long-term development and damage its brand to use nearly a half of projects for cooperation.
The third was to increase share capital. This way could attract a number of experienced international top-level institutional investors and enhance the Company's internationalization, standardization level and ability to resist risks was conducive to the Company's brand, interests and long-term development. If you would like to say the negative aspect, it was that my personal equity was further diluted. However, the Company could develop soundly and healthily, which was the most important.
Thus the Group’s leadership chose the third method after careful resolution. We ultimately successfully introduced such international top large investors as Merrill Lynch, Deutsche Bank, Temasek, Kuwait Investment Authority and Mr. Cheng Yu-tung from Hong Kong to become shareholders of Evergrande through tough negotiations in the capital market and relying on the understanding and trust of international investment banks in Evergrande, which was realized as large sums of financing when the international capital market was volatile, the Chinese real estate market remained in the doldrums and Evergrande suspended its listing and thus could be deemed to be hard-won under objectively adverse circumstances and also better proved Evergrande was determined, confident, certain, able and have the conditions in terms of overcoming difficulties, all invincible things and all insurmountable things.
In the international market, Evergrande’s financing results were deeply admired by global investment banks because such a number of financing was then equivalent to 4 times the listing financing scale of a similar enterprise. At present, Evergrande’s funds are first-class. As a non-listed company, excluding loans, Evergrande has accumulatively raised 1.8 billion US dollars so far. Possessing such size of funds, Evergrande surely would further develop rapidly and soundly.
In the face of the severe winter, Evergrande’s employees didn’t hesitate but worked together and did their respective work solidly to spend the severe winter. In the five months when the Company prepared to be listed, I did not stay at the headquarters, so all the work need be specifically operated by regional companies. The operation of the Company was so normal that no major adverse circumstances appeared. What I am proud of was that in the face of so much difficulty, none of Evergrande’s leaders at middle level and above, including professional technical backbones, left the Company, which is always Evergrande’s fortune as the spirit of sharing weal and woe.
During the "winter" period, the Company strengthened its capital planning and management, adjusted the authority to examine and approve the funds by requiring large capital expenditure to be carried out by the Group’s Board of Directors and constantly improved each company’s financial management and financing levels, and each company rapidly implemented the Group’s strategy by improve their awareness of financial management, enriching the financing channels and effectively dealing with the cold weather in the financial market, achieved the goal of "working hard without thought burden for high-speed development" based on high output with low input and brought life to the Company’s development by effectively reducing the Group's overall capital pressure.
In terms of project development and construction, based on the ensured sales and house delivery plan, the Company controlled the project construction speed very reasonably by taking the strategic policies of "combination of rush and ease" and combination of guarantee and pressure to reasonably arrange the development and construction plans, to control the cash expenditures, to maximize the increase in sales revenue and to ensure sufficient cash, and focused the investment on the garden environment, decoration of model rooms and sales support so as to realize pre-sale as soon as possible and to achieve large-scale cash return; at the same time, the Company arranged its project construction plans in accordance with the duration of 18 months or above from the pre-sale to the house delivery to realize the goal of "early availability and late expenditure as well as more availability than expenditure" for the funds.
6. The severe winter in 2008 caused by the global economic crisis and the very depressed real estate market was smoothly spent
In 2008, the global economic crisis broke out and the Chinese economy was affected so that China's property market remained in the doldrums. For Evergrande, that’s its second severe winter. In this situation, the Company still steadfastly implemented our "dual brand" strategy which was the Company's long-term development strategy and important foundation - Evergrande's "golden brand" could not be outshone because of any temporary difficulties. As I mentioned above, when our listing was hindered in March last year, we had 2.8 million square meters of residential areas reaching the pre-sale standards and provided with pre-sale permits, but we did not hurry to sell them because we put “dual brands”, including our product brand and corporate brand, into operation in the second-tier cities by selling them after making the environment, landscape, support facilities and clubs of the whole community ready. That also shows that despite our great difficulties, but we had a pretty good idea and continued working in accordance with the established "dual - brand" strategy and implementing various strategies based on listing standards.
In response to the global economic crisis and the slump of the real estate market, Evergrande decisively took the business philosophy "with cash as the king" and the "high cost-effective" marketing mode. The idea "with cash as the king" guided our pricing based on market conditions, marketing margins and effective cost-effective upgrading of products so that we achieved sales of nearly 5 billion in the Golden Week in October. We fought this battle so well that Evergrande suddenly overcome the severe winter of China's real estate industry caused by the global economic crisis and real estate downturn. Next, by the end of last year and early this year, a key pre-New Year period, Evergrande basically paid all its project moneys so that all site workers went home happily for New Year. Under these circumstances, one of our regional companies paid a lump sum of bank loans up to 0.6 billion yuan.
In January of this year when the national real estate situation had not been fully recovered, we once sold more than 0.8 billion; during the Chinese New Year holiday period, we had 20 days off so that we worked for only 8 days that month, but we sold more than 0.5 billion. In March which just passed, we sold more than 2.001 billion and our first quarter sales exceeded 3.26 billion yuan, thus we successfully achieved the sales target.
Dear comrades, what our current one month of sales mean? They are equal to one year of sales sometime before the fourth "Three-year Plan". That means that today's Evergrande has successfully achieved the “leap-forward development” mentioned in the fourth "Three-year Plan".
7. The corporate brand was enhanced to rank among the internationally renowned companies
During the fourth "Three-year Plan" period, Evergrande’s brand strategy developed from regions to the whole country. From 2004 on, Evergrande continued implementing its masterpiece strategy and successfully set up the image of high-quality products in major cities so that the property buyers highly thought of the added value of Evergrande’s brands and a powerful marketing advantage was formed. When market transactions in the real estate market was in process of downturn, Evergrande’s hot selling to contrary showed Evergrande’s products cultivated for many years and excellent product quality were accepted by all the national house buyers.
In the international market, Evergrande’s financing results make the Company reputed and strong in the offshore financial and economic sector and caused major domestic and foreign investors to become interested in them so that many foreign investors and well-known financial institutions deemed the future development prospect of Evergrande to be excellent and "Evergrande Tornado" momentarily stroke international capital markets.
In recent years, Evergrande’s outstanding contributions to charities make its corporate image nation-famous. The State Council, the Ministry of Civil Affairs, the provincial government and China Entrepreneurs Association, China Real Estate Association, the World Chinese Association and the mainstream media respectively granted Evergrande over 100 awards and honors.
8. Evergrande’s corporate culture was transmitted across China
Evergrande originated a "mode of corporate culture" at the beginning of its establishment, covering corporate purpose, entrepreneurial spirit, work style, management characteristics and work environment, etc.. Institutionalized management, standardized operation and reformed process form our characteristic system and culture and self-criteria for employees, code of conduct for employees and code of conduct for employee positions become act culture guiding our progress. At present, Evergrande’s corporate culture has been deep into the body of the enterprise and well integrated. During the fourth "Three-year Plan" period, above entrepreneurial spirit, work style, management characteristics and work atmosphere peculiar to Evergrande were spread across China, effectively promoting the smooth development of the Company’s work.
Evergrande’s entrepreneurship of "Hard carving out, selfless dedication, hard work and pioneering spirit" was decided a the beginning of its establishment and are further improved and sublimated during corporate development, so they will never become obsolete.
"Hard caring-out" requires us to establish a sense of crisis at all times and get rid of blind optimism and the old idea of feeling satisfied with the status quo to make progress and move forward courageously; "selfless dedication" requires us all to devote ourselves to work. Currently the Company develops rapidly. Without devotion to work, no one may realize true success, especially for the employees to be assigned to other regional companies as their heads in the future who start all from scratch, devotion to work is a prerequisite because it is impossible to succeed without devotion to work.
"Hard work, and pioneering spirit" require us to have the awareness of innovation and constantly advance with the times by abandoning old-fashioned, backward and corrupt ideas because we can not lack aggressiveness and aspirations or be keen to remain unchanged instead of carving out. If we are satisfied with information transmission in the work, follow others, act passively instead of acting actively, and some even beat about the bush in the old concept, relying on old methods and old experience of treatment of new things, treat new things with old methods and old experience and lack the courage of exploring new ways and indomitable courage, the result will be to hinder both the work and the growth of their own.
Evergrande's work style includes "good planning, paying close attention to the implementation and acting efficiently", which is not only what Evergrande best differs from its counterparts, but also the secret of the rapid development of Evergrande and a major feature of Evergrande’s management mode. As long as our team really does in accordance with the guidelines, it will take Evergrande to complete its work within one year which otherwise requires decades of efforts. Based on the original plan management model, we have further detailed the target plan system recently, make our work efficiency highly enhanced. Evergrande’s work atmosphere is also spread across the country and every regional company has formed a very good hardworking atmosphere from top management to the bottom employees. Everyone is a spontaneous workaholic irrespective of pay and conditions, which is very good.
At present, the Group achieves its national expansion and the expansion of the management chain challenges the project development and management mode. To comply with this change, the Group reformed its original function-based mode, gradually established a group-based management mode and ensured its science and rationality and national replication of Evergrande’s management culture; this management system was well tested through the adaptation and practice in 2007. At present, 23 companies are functioning well and has created one after another commendable performance: In 2008, Guangdong Company, Xi'an Company, Shenyang Company and Chongqing Company kept pace with financing, development and reported building, project construction and brand marketing, etc.; Changsha Company, Wuhan Company, Hefei Company and Baotou Company often made good achievements in terms of project building; Taiyuan Company, Nanjing Company and Erzhou Company effectively promoted its development and reported building; Baotou Company often made good achievements in terms of project building; Guangdong Company, Chengdu Company, Taiyuan Company, Tianjin Company, Kunming Company and Changsha Company made great achievements in marketing and effectively increase the sales and brand reputation.
It can be said that Evergrande’s cultural heritage silently occurred in the fourth "Three-year Plan", resulting in a significant and positive impact. The Group assigned to regional companies chairmen and general managers and leadership, including managers of major departments, most of whom were outstanding backbones working for the Group for years, and they completely transmitted Evergrande’s corporate culture to every regional company. Regardless of any regional company, the spirit, work style and work atmosphere as well as efficient business management mode of our team have been passed. Evergrande’s team is praised by everyone as its most valuable asset.
Part II: Mission and Objective of the Fifth "Three-year Plan"
In process of the Company;s fifth "Three-year Plan", all the guiding ideologies, action aims and codes of conduct closely focus on the theme of "sound operation to scale new heights again".
Any enterprise should respect the laws of nature in its development. After experiencing high-speed lead-forward development, a wise enterprise should be left with a consolidation period, a summarization period and renovation period because blind progress will bring management lagging only, which is not allowed by us. Therefore, we propose "sound operation", which is an essential requirement for the normal management of the enterprise’s development. And in terms of the whole financial situation and the international capital markets, the impact of the international financial crisis on the global economy as a whole, including the Chinese economy, also objectively need our sound operation.
The so-called “to scale new heights again” is in consideration of what we talk about is “Three-year Plan”. The company's long-term development is the last word. Without any development, it’s not suitable to an enterprise which can not always remain stagnant. For example, up to now there are basically one and a half years when the company has not purchased land. However, even if we do not buy this year, it does not mean we will not buy next year. For the Company to develop, it still need make active efforts to reach higher level.
1. Annual Economic Indicators of the Fifth "Three-year Plan"
The first important indicator is the Company's annual sales. This year our planned sales are 23.8 billion yuan. We set a sales target of 35 billion yuan by 2010. We set a sales target of 50 billion yuan by 2011.
This year the Company wants to achieve sales of 23.8 billion yuan, so we should continue our sales efforts and fighting spirit in the past 3 months. We set sales of 2.6 billion yuan for April and our goal for next two months is respectively 3 billion yuan s month, so the sales in the first half of the year will exceed 11 billion yuan. At the same time, our cash balance is also significantly increasing and cash flow is really going up step by step. During the Spring Festival of this year, we set a management and development strategy to reasonably control the project construction progress by focusing on project marketing at the meeting of all the officers. According to this strategy and plan, the company’s external expenditure this year will be prepared to be controlled within around 8 billion yuan, so we will have more than 15 billion yuan of cash at the the end of the year. It’s difficult for the Company to pass a severe last year but the Company managed to do so, and this year Evergrande has paid up all its external funds payable and the deserved construction works have been built up, so it’s time for us to "harvest fruits ".
The second indicator is the company's land bank, which is the most down-to-earth indicator. For a real estate enterprise, land reserve is the top priority of an enterprise because no land bank is like a man who wants to cook food but has no adequate food and only enough food reserve is necessary for winning.
At present, our land reserves are more than 4400 million square meters of land construction area. If we do not to increase our land reserves this year and the sales target of 23.8 billion yuan is smoothly realized, we expect more than 4.5 million square meters of floor area will be used so that we our land reserve indicator at the end of this year should be 40 million square meters of floor area or so. In 2010, we should be have a plan to obtain land and then estimate after part of the land is offset because the Company's land reserve should reach 45 million square meters of construction area. In 2011, our land reserves should reach 48 million square meters of construction area. I think it will be scientific and reasonable to control our land reserve within 45 million square meters and 50 million square meters of the floor area for a super-large real estate group.
2.Further improvement and strengthening of the enterprise’s internal management
Everyone praises Evergrande’s executive force, efficiency and rigorous management, including every detail, because our management structure and mode are modern and scientific. In the previous development of Evergrande, our bodies are constantly changing because this change will change after change, Why? This is the advance with the times and adaptation to the market, which is our flexible management. Evergrande today has become a nationwide pattern, forming an intensified "close-type group-based management mode" suitable the development needs of a modern enterprise adapted to the development needs of a modern enterprise, that is, this mode has been stereotyped, and the next will be to better promote and strengthen this management system.
Reasonably proceeding from the angle of an international and modernized internationalized to examine the Company’s management status quo, we find some problems. Usually we find and solve a number of minor problems, but this solution is only temporary and partial and cannot be complete cured. That’s particularly evident in the management of some regional companies. Many regional companies are in the beginning stage of their respective establishment, so some details cannot be handled and the problems of one kind or another still exist. Therefore, during the fifth "Three-year Plan" period, we must further improve and strengthen the internal management of the enterprise to create a good environment for business operators.
First of all, we need further strengthen the group-based, intensive and flattened management with emphasis on strengthening the vertical management of all regional companies by the entire Group, including human resources, capital and finance affairs, project construction, cost control, contract compliance, project marketing and other real estate development and construction chains, and copy Evergrande’s successful experience in "building masterpieces" to the whole country so as to check on the growth, development, management strategies and business strategies of the regional companies and to avoid single work of regional companies and large quantity with bad quality good. At the beginning of this year, we fully streamline the body and implement flattened management, thus further improving the efficiency and enhancing our executive force.
The second is to promote the standardized building comprehensively. Standard management lies in the implementation, so we should take great efforts to make standardization efforts because standardization building is an important step for an enterprise’s standardized management to form a good management mode and corporate culture.
The third is to strive to promote the building of the system. Nothings can be achieved without norms and standards, which is very important. Under the new situation of more intense competition in the industry, it’s key to promote the masterpiece strategy to formulate regulatory framework.
The fourth is to establish an effective workflow and a supervision and control mechanism. We have to strengthen the national inspection in order to achieve the goal of "zero defect" product management in the means of "management and supervision".
The final point is to further strengthen the basic management of the enterprise. We should pay attention to the basic work of business management, including plan management, target management, financial management, bid invitation and tendering management, cost control management, project management and procurement distribution management.
3. Make every effort to promote Evergrande as an international brand
Evergrande is now a truly international company and we are in the fifth "Three-year Plan" period, so we should make further efforts to build our Company’s world-famous brand.
First of all, we must unswervingly implement the masterpiece strategy to create absolutely first-class product quality. That needs no further explanation. Such a remark represents our determination and confidence in terms of making masterpieces, implementing the masterpiece strategy and create first-class product quality as well as our purpose, determination and target in the fifth of our "Three-year Plan".
Secondly, we must unwaveringly carry out the good faith strategy to shape a corporate image famous at home and abroad. Evergrande has been committed to building its corporate culture with good faith as the core by clearly proposing the purpose of "establishing brands with quality and making great achievements with good faith" since its establishment. Good faith is not only the foundation of Evergrande, but also our winning weapon for long-term success in the market competition. Good faith is inseparable from and interrelated with economic strength, environment and development. In today's Evergrande, we must hold high this banner. If an enterprise wants to develop and expand, it need build high-quality products and establish its good faith brand. Only by doing so, can an enterprise become invincible and create a century-old company.
The good faith strategy will run through every corner, every aspect and every job. When we deeply build a "good faith Evergrande" Today, we need make a number of specific measures and management systems and deal with partners in good faith in addition to deep understanding. Once the good faith of a real estate enterprise is defective, the construction units and partners will take an uncooperative attitude and even delay the construction period and jerry-build the project so that quality problems finally occur. In this case, the final victim is the corporate brand.
The first is to pay close attention to "key links" such as sales, project construction, settlement, contract compliance and property management by taking preventive measures, to conduct a comprehensive inspection and to supervise the implementation of the concept of good faith. Each unit and each department must find "key links" involved in good faith, work out effective measures to create "good faith Evergrande" and conduct strict assessment as well as seriously punish such phenomena and acts as impact Evergrande’s brands. Especially in terms of the engineering building, the Company has perfected the system and the next step is to strictly conduct an assessment. In terms of project examination and approval, the members from the Engineering Department to the Financial Department and Department of Contract Compliance, including supervision engineers, the manager of the Engineering Department, should complete their respective examination and approval according to the time node based on the stipulated duration.
The secondly is to create a good corporate atmosphere for good faith. High-quality products are the best good faith for customers, so product quality is directly related to the good faith of an enterprise for consumers. An enterprise also should take a good faith attitude to its employees and vice versa. Evergrande’s employees should be loyal to the enterprise and to the cause, be highly professional and enterprising, comply with various company rules and regulations and strive to become good employees by making large contributions to the Company. The employees should also take a good faith attitude towards each other. Evergrande people seek relaxed and harmonious interpersonal relationships because only if people trust each other and care for each other and everyone feels harmonious and comfortable at work, can Evergrande be built into a strongly unified, cohesive and happy family . For those who are not honest, Evergrande offers them only two options: One is to change, and the other is to be removed. Building corporate good faith should start with every employee and every detail. Everyone's behavior should be consistent with the Company's core values, principles and provisions because only in this way can a good-faith enterprise be created.
We must not forget anyone and any enterprise that have helped us when we were in the most difficult times and remember to help them when they are in hard times. Since they support us in our most difficult times, in turn we should support them if necessary. If an enterprise hopes to become a century-old company, it should look higher.
4. Speed up the process of internationalization and strive to list the Company overseas during the fifth "Three-year Plan" period
According to goal I have just mentioned, the Company will make great progress in the land reserve and the amount of sales in 2011, especially the increase of sales from 23.8 billion yuan to 35 billion yuan and then to 50 billion yuan, which is a big leap forward, so the task is very difficult. If we successfully list Evergrande during the fifth "Three-year Plan" period, then we will achieve a bigger leap forward. At that time, the Company's scale, strength and image will be enhanced excitingly and fully.
In short, we need focus on the achievement of Evergrande’s fifth "Three-year Plan" and our ambitious goal of "first-class scale, first-class brand and first-class team" and work hard together to build a truly international real estate carrier and to create permanent Evergrande.
I believe that we are certain to be able to achieve our grand goal!