Speech by Professor Xu Jiayin, chairman of board of directors, at the working conference of Evergrande Group on May 9, 2009
As the saying goes, “running water is never stale and a door-hinge is never worm-eaten”. Movement is the driving force of the development of everything. Advancing with times during movement is the inevitability and necessity of scientific development. Let’s review the work of Evergrande in the past two years. In 2007, the Company was busy making preparation for listing. In 2008, listing was postponed due to the impact of the global financial crisis. We shifted the focus of work onto overcoming difficulties and passing the “two cold winters”, and we had no time, energy or condition to strengthen our internal movements, to review our work and to arrange the internal affairs.
Therefore, it is not possible to effectively and systematically arrange and facilitate a series of important management work, such as improving the internal management level, improving the professional qualification of staff, purifying the staff teams and carrying forward the advanced culture of Evergrande in the large-scale movements.
At present, all the work of Evergrande is being carried out in an orderly and efficient way according to our set plan. Sales are very good and tend to flourish. Of course, the high-speed development and overall expansion also cause unbalance among regional branches. Some regional branches lag behind in terms of the management level improvement and do not meet the overall requirements of the group. At this crucial moment, it will be helpful to review ourselves from the international aspect and from the group aspect and carry out the Four Major Movements, i.e. strictly enforce discipline, renovate human affairs management, compulsively implement the professional management system for the project bidding, and thoroughly eliminate three types of people in order to correct our improper behavior, solidify our foundation, tighten management, purify our teams, carry forward the spirit of Evergrande, inherit the culture of Evergrande and promote the management of Evergrande. We can say that such vigorous Four Major Movements concern the long-term development of the Company as well as the success or failure of our undertaking, and are very essential, timely and important!
I. Content of Four Major Movements
The specific content of each movement in the Four Major Movements is clearly described in the five classified documents of the group. Here, I only stress some important points.
1.Movement of “strictly enforce discipline”
The movement of “strictly enforce discipline" is mainly carried out in three aspects. The first aspect is the labor discipline. The Company is developing rapidly at present. For most regional branches, the management over labor discipline is very standard and strict. However, there are development unbalance and management level difference among different branches. In some branches, management is loose, staff have little sense of labor discipline and are undisciplined, which have a negative impact on the corporate image and development. Therefore, labor discipline must be tightened constantly.
The second aspect is the working discipline. The corporate culture construction is an important magic weapon for the stable and rapid development of Evergrande. Since its establishment, Evergrande has formed the excellent corporate culture and good working atmosphere. At present, with the rapid expansion of the Company, some regional branches fail to inherit and carry on the corporate culture of Evergrande. Some department heads and staff fail to discipline themselves according to the moral behavior criteria of Evergrande and violate the working discipline. Some of them even practise fraud and cheat the Company, start a rumour and slander to attack the Company, disclose the secrets of the Company and occupy the interests of the Company, which have a direct impact on the working atmosphere of the Company. Therefore, discipline management must be strengthened and bad practices must be stopped immediately in order to improve the working style construction and spirit of the staff and teams in an all-round way.
The third aspect is the organization discipline. The implementation capacity is the internal driving source of the rapid development of modern enterprises. In the face of the fierce external market competition and numerous and jumbled internal system management, an enterprise which lacks a strong implementation capacity will accomplish nothing, while an enterprise which has a strong implementation capacity will become stronger. Evergrande is committed to building up a team with good fighting capacity and strong implementation capacity, and advocates a harmonious, enterprising, aggressive and devoted interpersonal atmosphere. However, there are still some staff who do not obey their superiors and severely neglect their duty in work. Therefore, we shall never ignore the organization discipline within the organization and must strengthen it comprehensively and constantly. Only in this way can we ensure the good implementation capacity of our entire system and the strong fighting capacity of our teams.
2.Movement of “renovate the human affairs management”
Good personnel management is the foundation that forms the good working atmosphere in the Company. In the “36 rules on moral behavior” of Evergrande, the reason why I require leaders to follow the principle of “be fair and impartial, seek truth from facts, adhere to principles and appoint people on their merit” is that all these are the foundation on which good working atmosphere is formed, and are necessary in order to avoid and eliminate “appointing people by favoritism, giving promotion in breach of regulations, setting salary in breach of regulations, conducting reprisals and forming cliques”. Therefore, we must “screen” every staff member carefully in the human affairs management and strictly prevent appointing people by favoritism.
3.Movement of “compulsively implement the professional management system for the project bidding”
Each staff of Evergrande works in different branches and at different posts. The professional management system related to professional skills and technologies of each post is established. Therefore, we must compulsively implement the professional management system, which is very essential. The content of the professional management system relates to such aspects of real estate development, marketing planning and property management. Each post has its own speciality, which requires that each staff must be well qualified and learn from those able persons to become specialized in a certain field.
4.Movement of “thoroughly eliminate three types of people”
The concept of "three types of people" was summarized and mentioned by me many years ago. Such people must be eliminated from Evergrande: first, those who talk only without doing anything or those who are overstaffed; second, those who are not capable and not enterprising; third, those who sneak into Evergrande and want to reap profit. These three types of people must be thoroughly eliminated. This movement is an important measure to improve the overall qualification of the teams and to purify the teams of the Company.
II. Purpose of Four Major Movements
We have released five documents concerning the Four Major Movements, with clear content and strict requirements. Why do we make so many efforts to launch the Four Major Movements? What is our purpose?
1. Purify teams and improve the overall quality and fighting capacity of teams
The launch of the Four Major Movements further optimizes the structure of human resources, strengthens the evaluation on duty and post, thoroughly investigate such behaviors as neglecting duty, failure to perform duty, lack of sense of responsibility, corruption, bribery, behavior of abusing power for personal gain etc., purifies the corporate atmosphere and the staff teams, fundamentally implements the employing system of “ability first, selecting the superior and eliminating the inferior", improves the overall qualification of staff teams, thus improves the fighting capacity of the teams and forms a good working atmosphere of “compare, learn, catch up and help".
2.Standardize management, be proficient and prevent defects
Through the development construction and experience accumulation of the group for more than ten years, we have summarized a lot of perfect regulations and systems. In professional fields, in particular, we have summarized a lot of practical professional management systems. Such systems are the important measures to ensure that we standardize management, prevent defects and improve the professional level of the staff.
One important purpose of the launch of Four Major Movements, especially the ultimate purpose of studying each system, is to let every staff be proficient in their fields. Only when the staff are proficient, can we prevent defects, formulate better regulations and systems, technical processes and achieve standardized and procedural management. Therefore, the Four Major Movements are the important measure to standardize management.
3.Carry forward the spirit and style of Evergrande, inherit the culture of Evergrande and create an atmosphere of Evergrande
The Company developed very fast in the past few years. Unbalance exists among some regional branches and subordinated companies in terms of management and inheritance of Evergrande culture. Further improvement needs to be made among different companies. How can we carry forward and enhance the corporate spirit and work style of Evergrande? How can we promote the culture of Evergrande to each company? How can we create the working atmosphere of Evergrande in each regional branch and each corner? All these are the purposes and motives of the launch of Four Major Movements.
The requirements of Four Major Movements are very strict and the tone is very serious, which we can see from the released documents. In recent years, the Company spent most of its time in business and listing and was busy dealing with the impact caused by the financial crisis. It had no time to focus on management and prevent defects, which disabled the Company to do sufficient work in terms of corporate management and cultural inheritance. Therefore, we have to "make up a missed lesson " now and enable each regional branch to achieve the same standardized management in each aspect like the head office and to keep carrying forward and enhancing the culture of Evergrande.
III. Significance of Four Major Movements
After the content and purpose of the Four Major Movements are explained, I would like to talk about the significance of launching the Four Major Movements under the current situations.
1.Importance of launching Four Major Movements
Each of the Four Major Movements is realistic and specifically-targeted, with clear purposes and closely connected steps, which is very important.
The purpose of launching the movement of "strictly enforce discipline" is to further enhance the discipline management, to immediately stop bad practices and to correct the working style. Each unit shall make it a priority to strictly enforce discipline and to carry forward the working style of Evergrande in order to improve the working style construction and mental attitude of the staff in an all-round way. The purpose of launching the movement of "renovate human affairs management" is to enhance the supervision over the human affairs management of the regional branches and subordinated companies and to prevent any defects in the human affairs management. Every unit must strengthen the system construction, perfect the employing mechanism, create a good corporate operation environment in order to solidify the human affairs management and drive the construction of talent teams. The purpose of launching the movement of "compulsively implement the professional management system for the project bidding” is to eliminate all kinds of working behaviors that do not comply with the regulations and systems, to improve the management level of each field of the group in an all-round way and to ensure that the strategy of creating excellent works is implemented in each step of the project development and construction. The purpose of launching the movement of "thoroughly eliminate three types of people” is to thoroughly investigate such behaviors as neglecting duty, failure to perform duty, lack of sense of responsibility, no desire to make progress, corruption, bribery, behavior of abusing power for personal gain etc., to purify the corporate atmosphere and the staff teams to form a good working atmosphere.
2.Necessity of launching Four Major Movements
The development of an enterprise shall comply with the law of the development of things. Over-rapid development of the enterprise will tend to cause management to be out of control. While we developed rapidly and achieved a big leap, we did not have much time to stop and think, and some problems were actually accumulating. Therefore, no we have to squeeze time to make the corporate management orderly and focus on team construction during the leap to meet the new undertaking peak.
The Four Major Movements are the important measures in making the corporate management orderly and focusing on team construction and are very necessary. At present, there is unbalance among some regional branches and subordinated companies, and problems exist. Such problems have become common in a small number of branches. Some of the problems have affected the normal operation and corporate development. Therefore, it is necessary to carry out all sorts of physical exercises as preventive measures to improve health and strengthen the body.
3.Urgency of launching Four Major Movements
We must be aware that with the stabilization of the global economy and with China’s economy getting recovered first, the tasks of real estate development for the Company will be heavier, time will be more pressing and pressure will be heavier. In the past year, we successfully leaped over two big “severe winters”. Now the development of various fields of the Company moves towards the right path progressively. The next step for real estate development is to produce benefits and achievements. Therefore, we must realize that we have heavy burdens on our shoulders, and the tasks of project construction and marketing are very heavy. We achieved the record-breaking sales volume 4.603 billion yuan in March and April this year. We are trying to achieve the sales target of 11 billion yuan for the first half of the year. In the second half of the year, we have 11 new buildings to be sold. At present, we have 23 buildings. Totally we have 34 new buildings to be sold for the whole year. Therefore, the sales target for the second half of the year is between 19 billion yuan and 20 billion yuan. We are trying to achieve the grand sales target of 30 billion yuan for the entire year.
Compared with the sales target of 23.8 billion yuan which was set originally, we now hope to set a higher target. This is the target plan of Evergrande. In the face of new arduous plan and target, our teams are like the troops that are about to go to the battlefield. Without strict discipline and proficiency, we can not win the battle. May and June are the first phase of "get going and go all out” and are extremely urgent. Therefore, the launch of Four Major Movements is also extremely urgent.
4.Reality of launching Four Major Movements
In the present phase, the launch of Four Major Movements is of important and realistic significance in carrying forward the corporate spirit and working style of Evergrande, creating an “iron-army team” of Evergrande, keeping solidifying the management base, constantly driving and strengthening the “intensive grouping management mode”, further enhancing the group’s supervision over regional branches and subordinated companies, creating good working atmosphere and corporate operation environment, correcting working style fundamentally, solidifying the base, tighten the management discipline, purifying teams and ensuring the successful achievement of the overall strategy of the group, and is of historical and realistic significance for both the future and past of Evergrande.
5.Seriousness of launching Four Major Movements
In this regard, I think you must have seen the five serious documents, each of which has clearly specified the requirements and time node for each movement. I hope that each leader present can conscientiously study, convey and implement these documents. In the past, after documents were released, some leaders were too busy to read them and convey them to employees. This situation lasted over a long period and became one of the factor that causes management problem. The spirit and culture of Evergrande are not implemented and carried forward, not to mention the standardization of the management of the Company.
In a word, we hope that through such large-scale movements, everybody will become active and serious to greatly push forward each of our tasks. This is the important significance of launching the Four Major Movements.
IV. Relation between Four Major Movements and Evergrande strategy
Speaking of the Four Major Movements, I have to talk about the Evergrande strategy, as there is a solid and important dialectical materialism relation between the two. Here, I would like to explain such relation.
1.Implication of Evergrande strategy
The implication and extension of Evergrande include the contents in a number of fields. In terms of corporate development, there are three main aspects of Evergrande strategy.
(1). Development strategy of Evergrande
The development strategy is determined by the development mode which was selected since the birth of Evergrande, and evolves and improves with the development of the market and itself. Since the establishment of Evergrande, the development strategy can be divided into three phases. The first phase is before 2004, when victory was achieve through large scale. The second phase is 2004-2007, when the development strategy of Evergrande transited to “scale + brand”. The third phase is after 2007, when Evergrande officially stepped into the strategic development phase of “scale + brand”. At present, we have already implemented the strategic development model of " scale + brand " in an all-round way. We say that this development strategy is a long-term and strategic one.
(2). Management strategy of Evergrande
Today, Evergrande has finished its overall deployment all over the country and formed the intensified “intensive grouping management mode” that meets the development need of a modern enterprise. Our management structure and mode are modern, scientific and correct and have been fixed. What we do next is to push forward and enhance such management system. We may say proudly that under the guidance of such management strategy, everyone can't help but to speak highly of the implementation capacity, the efficiency and the strict management of Evergrande, including each good detail.
The implementation of the "intensive grouping management mode" is to realize three "guarantees". First, guarantee that every infant regional company does not detour, thus reducing risks. Second, guarantee that the cost is lowered. Third, guarantee that the fine works strategy can be carried out unswervingly in every regional company and every project, realizing Evergrande's leading status in terms of product quality throughout the country.
(3). Purpose strategy of Evergrande
Evergrande's target is very clear: to achieve three "first-class", i.e. first-class scale, first-class brand and first-class teams. This target is also proposed as a long-term and strategic one of Evergrande, which must be adhered to for a long time.
2.Dialectical relation between Four Major Movements and Evergrande strategy
What is the relation between the Four Major Movements and Evergrande strategy? According to the ancients, this is a scientific and dialectical relation with good interaction and harmonious development, and is an integrity which complements and boosts each other.
According to the Art of War by Sunzi, “Strategy is the soul of measure, and measure is the body of strategy. Strategy dominates measure, and measure supports strategy. "This also applies to the development of our course. We need both strategy and measure. Only the combination of both strategy and measure can make us invincible. If Evergrande does not have a clear guiding theory, i.e. the strategy, then its tactics is surely accidental and aleatory. On the other hand, if Evergrande does not have a series of effective measures to ensure the implementation of the strategy, then its strategy is only a day dream and in vain, and can not be realized.
(1). Four Major Movements is the important measure to implement Evergrande strategy
The Evergrande strategy is a long-term development strategy that must be adhered to for a long time. Realization of the Evergrande strategy requires constant efforts, hard work and struggle.
Four Major Movements is the important measure to implement Evergrande strategy. Such measures as “strictly enforce discipline, renovate human affairs management and thoroughly eliminate three types of people” are the specific measures to improve the overall quality of the teams and are also the guarantee to create the first-class teams in Evergrande’s strategy of realization of “three first-class”. The first-class brand and first-class scale have to be achieved by highly qualified and proficient staff teams. Highly qualified staff teams, especially highly proficient professional talents, must keep studying the professional management system and integrate the system requirements into the find works project. “Compulsively implement the professional management system for the project bidding” is an important measure in this regard. Therefore, only by launching the Four Major Movements, can we thoroughly prevent defects, create fine works, reduce costs, improve benefits, train teams, enhance management and ensure the implementation of the Evergrande strategy.
(2). Four Major Movements is the important guarantee to implement Evergrande strategy
As we mentioned in the document concerning "strictly enforce discipline”, to create an iron army of Evergrande, the iron discipline is required. Therefore, we shall first focus on movements and discipline, and carry out the work in several major aspects on a grand scale by means of movements.
We have formed the mature talent reserve mechanism. Human-orientation is the talent concept that we have been actively advocating. The features of modern enterprises determine that it is quality of people, instead of quantity of people, that counts. We must adhere to the employing mechanism with healthy competition to improves the comprehensive quality of the staff. Therefore, three out of the Four Major Movements concern people. This is actually a process of Great Waves Wash Away the Sand and an experience of “genuine gold comes out of raging fire”.
We often say that the most competitive factor of Evergrande is not the largest scale of reserved land. Of course, a large scale of reserved land is an important competitive force. You can not imagine a real estate enterprise without reserved land, it is just like making bread without flour. However, for Evergrande, the large scale of reserved land is not the largest competitive force. Comparatively, the more competitive factor is the fine works quality of Evergrande. We may say that quality is our most powerful weapon in the horizontal competition. However, product quality is not the most competitive factor for Evergrande. Then what is the most competitive factor? The team of Evergrande. We have a capable and competent team which is loyal to the Company and devoted to their duty, works hard and has strong fighting strength.
After all, we have to return to “people” and team construction when we talk about our strategy. The launch of the Four Major Movements is the important guarantee of implementing the strategy of Evergrande. That is to say, Evergrande has a proficient iron team, which is the important guarantee of achieving the “scale + brand” development strategy, the important guarantee of implementing the management strategy of Evergrande and the important guarantee of realizing the target strategy of Evergrande.
(3). Implementing Evergrande strategy is the motive force of launching the Four Major Movements
Reviewing the development process of Evergrande, we can see that whether in the arduous pioneering period, the rapid-development period, or in the nation-wide expansion period and winter-passing period, Evergrande has never made any severe mistake in terms of selection of important strategy and important decision-making. This shall attribute to the long-term strict implementation of the “strategy first” development plan by Evergrande. With the farsighted, definite, clear and correct strategy, each specific task of Evergrande is supported by continuous motive force.
At present, the Company has implemented the "scale + brand" development strategy, the "intensive grouping” management strategy and the "three first-class " target strategy. Realization of these Evergrande strategies require the long-term and constant efforts, hard work and struggle of all staff. This year is the starting year of the fifth Three-year Plan of the group. All staff are working hard and full of new fighting will and motive force for the implementation of the Evergrande strategies. At this key moment, the Four Major Movements are like a timely spring rain which come at the right moment. The launch of such movements will surely be supported and pushed forward by the Evergrande strategy, greatly push forward the Company to take a new step and facilitate the successful implementation of the Evergrande strategies. Therefore, we say that the source of the launch of Four Major Movements is the Evergrande strategies, i.e., implementation of the Evergrande strategies is the fundamental motive force of launching Four Major Movements.
(4). Implementing Evergrande strategy is the final purpose of launching the Four Major Movements
Modern enterprises should pay close attention not only to the system and culture of the enterprise, but also to the competition and development strategies of the enterprise. Why must enterprises pay close attention to strategies? Because strategies serve to achieve unity of thinking and action of everyone. The unity of thinking and action of everyone will reduce the operation cost of the enterprise and improve the fighting strength of the enterprise.
In this starting year of the fifth Three-year Plan, the gradual implementation of the Evergrande strategies is more important than in any other time and is the ambitious goal of the group. Achieving a series of our grand goals depend on the joint efforts of all staff and on carrying forward the tradition and solidifying the foundation by all staff. Only in this way, can we ensure that the Company develops steadily and rapidly, that the Evergrande strategies are steadily pushed forward, can we ensure that the corporate management, culture and development are always in the correct and rapid path, can we ensure that each regional branch and subordinated company are still healthy after a high-speed travel, can we build up a century-old shop. The grand Four Major Movements we carry out this time are just based on such purpose, where movements are used to seek development, to make achievement of higher level and to achieve great success, in order to provide strong support for the final implementation of the Evergrande strategies.
V. Requirements of Four Major Movements
The following are the basic requirements of the “Four Major Movements”.
1.Solidness
During the “Four Major Movements”, all regional companies, subsidiaries and competent departments should bring all work to a new step by means of comprehensive, thorough and complete “Four Major Movements”. The work should be conducted in a down-to-earth manner and nobody should treat them "as a mere formality" or practice any formalism.
There is no rigid index or task of enforce discipline, renovating personnel management and completely ruling out three kinds of persons. We do want raging waters to wash away sands, eliminating those persons who fall short of the Company’s requirements and Evergrande’s requirements, and cannot adapt to the Company’s work and Evergrande’s development.
From a perspective of management, the team construction of any enterprise is a process of unceasing eliminating of those incompetent and unfit. In recent years, various regional companies recruit new staff members in succession to meet the requirements of the Group to spread the whole country. There spring up many talents; however, it’s not that every person can completely meet the Group’s requirements. In recent years, some companies “only recruit without hiring” personnel, so their contingents are more and more overstaffed, while the overall quality falls increasingly, which is not in conformity with the Company’s overall requirements. According to our past experience, of ten newly-recruited employees, there would be two or three outstanding backbones; two or three could basically conform to the Company’s development and gradually become outstanding employees after the Company’s cultivation, education, training and cultural and management influence of Evergrande; naturally, there would be 20%-30% who could not meet Evergrande’s requirements and be eliminated. Therefore, the elimination process of unceasing eliminating of those incompetent and unfit and the unceasing process of absorption of fresh blood are not contradictory. In fact, they are complementary each other. In fact, the Company can only achieve motive force for its development by means of eliminating those falling short of the Company’s requirements on one hand while recruiting persons meeting the Company’s development requirement on the other hand.
We should purify our contingent, improve the overall quality of the contingent and improve our fighting capacity through the “Four Major Movements”. Therefore, we must do solid work, abide by discipline and stress sense of organizational discipline sense of organizational discipline and obedience of the subordinate to the superior in our work. Practicing faction, self-departmentalism and egoism will do harm to reunion and influence the work and should be cleared up. Here, we will give special emphasis to organizational discipline and reunion. Leading cadres should set a good example by their conduct to form a long-term, kind and highly disciplined atmosphere. In addition, some persons play card, speculate in shares, play games or do other things irrelevant to their work on duty, which violate the labor discipline and should be seriously punished.
2.Conscientiousness
Every employee must implement their everyday work and fulfill the movements to every detail of every link of every job conscientiously in accordance with every requirement of the “Four Major Movements”.
Every movement of “Four Major Movements” has one procedure: the staff reflect the bad phenomena relevant to the movements or bad phenomena of other departments with their signature or without their signature. We think that the movements is a long-term process and the employees would reflect the problems practically without any feeling of pressure. Though this does not mean that every thing would be investigated and handled, we would seriously investigate and prosecute some severe problems according to the handling conditions of various regional companies and subsidiaries.
The conduction of “Four Major Movements” is an unusually careful job. For example, the implementation of the Company’s specialty management system and the three tests during the study aim to make every employee have a good command of his/her duty and put an end to omissions. By doing these, we live up to the hardest letters in the world - conscientiousness and our movements are effectual and resolve both principal and secondary aspect of problems.
3.Remarkable results
Every regional company, subsidiary and competent department must improve remarkably its work through the “Four Major Movements”, for the objective of our conducting the “Four Major Movements” is implementation strategy which requires remarkable results and will be embodied in remarkable achievements finally. For example, we will issue a document on commendation of advanced construction units and punishment of units with poor achievements in project construction of May and June right now for the purpose of and smoothly implementing the afterward development strategy and strengthening the Company’s recent key work and major work again according to the current development strategy of the company. “Four Major Movements” should be embodied in work and achievements, management, the mental outlook of employees and working atmosphere and achieve remarkable results in the lump finally.
4.Realization of objectives
Relevant documents have already specified the measures and requirements of “Four Major Movements” and made arrangement of content. Each regional company, subsidiary and department should prescribe the concrete objectives of the company or department during the period of “Four Major Movements” according to the concrete conditions of the company or department and their specialties. This means to suit measures to local conditions, company conditions and situation. With the Group’s “Four Major Movements” objective, each unit must formulate its own feasible objective and achieve harmonious intergrowth and common realization with the general objective.
In a word, “Four Major Movements” is an important means to strengthen Evergrande’s basic management and an important guarantee to realize Evergrande’s strategies as well as a cardinal matter at present. I wish that through the mobilization meeting today the leaders at various levels of the Group company, of various regional companies, subsidiaries and various offices and units of the Group Company who participate in today’s meeting will pay much attention to the “Four Major Movements” in an attitude of responsibility for themselves, for their jobs and for the enterprises, conscientiously conduct the movements in a down-to-earth manner, clean up their bodies and minds by means of the movements with remarkable results, go all out to bring the work of their units and departments to a new step and make their own contribution to realize the Group’s fifth “Three-year Plan” and realize the grand objective of ‘three first-grade” of Evergrande finally. (arranged according to the speech of Chairman Xu)