China Vanke undergoes major transformation as organizational restructuring finalizes.

The long-rumored organizational restructuring at China Vanke Co.,Ltd. has finally been settled.

On August 25, China Vanke convened its mid-2025 work conference and announced a new round of organizational restructuring: all five regional company platforms were abolished and replaced with 16 regional companies nationwide. The group headquarters established 13 major management centers to directly oversee regional companies, fully entering a strong group secondary control system.

This represents the largest organizational and personnel transformation since Shenzhen Metro Group's entry, and marks a major structural change in China Vanke's over 30-year history.

According to media reports, in internal communications released by China Vanke, newly appointed management executives were required to "reverse operational decline with a spirit of redemption, shoulder mission responsibilities with gratitude, revitalize production and operations with determination, and adhere to bottom lines with reverence, never crossing red lines."

It is evident that after receiving frequent financing support and assistance from major shareholders, China Vanke's revival carries high expectations.

**Strong Headquarters Control**

Specifically, at the group level, the Development and Operations Division was cancelled and merged into China Vanke Group headquarters, which established 13 major centers: Board Office, General Office, Human Resources, Finance Operations, Legal Compliance, Investment, Cost Procurement, Audit, Safety, Digitalization, Marketing, Engineering, and Product.

Key personnel appointments include:

Product Management Center head Zhang Hai (former chief partner of Development and Operations Division); Investment Development Center general manager Li Wei (former head of China Vanke Southwest Region); Engineering Management Center head Cao Jiangwei (former head of China Vanke Beijing Region); Cost Procurement Center head Wang Yun (former employee representative director, Development and Operations Division partner, and general manager of Architecture Research Center); Digital Technology Center head Hu Bo (veteran returning); Brand Marketing Center head Ding Ning (former general manager of Ningbo China Vanke); Safety and Petitions Center head Li Yao (former partner of China Vanke Group Hotel and Resort Business Division); China Vanke Group Chief Marketing Officer Wu Di (former head of China Vanke East China Region).

At the regional level, all five regional company platforms were abolished and replaced with 16 regional companies with their respective leaders:

Beijing Company general manager Li Gang (deputy general manager: Wang Zhiyu); Shanghai Company general manager Geng Bing; Guangzhou-Foshan Company general manager Zhou Yiqun; Shenzhen Company general manager Tang Jiyang; Dongguan-Zhuhai Company general manager Zhou Rong; Zhejiang Company general manager Chen Hao; Jiangsu-Anhui Company general manager Ren Pengfei; Southern Jiangsu Company general manager Tan Wei; Northeast Company general manager Zeng Wei; Tianjin-Hebei Company general manager Wang Yichuan; Shandong Company general manager Zhang Qiang; Northwest Company general manager Jin Yabin; Central China Company general manager Yi Ping'an; Fujian Company general manager Bian Wenjun; Southwest Company general manager Liu Weidong; Yunnan-Guangxi Company general manager Liang Yong.

Notably, Beijing Company's general manager Li Gang and executive deputy general manager Wang Zhiyu both come from major shareholder Shenzhen Metro Group, having been parachuted into China Vanke earlier this year. The remaining 15 regional company general managers include both veteran China Vanke employees and returning elites, with most being long-time China Vanke personnel who previously served as leaders in their respective city companies or regions.

This organizational restructuring directly aims to improve group coordination efficiency and compress decision-making chains. During the industry downturn, leading real estate companies have been promoting "strong headquarters control + streamlined regional operations" models. China Vanke's move responds to industry trends toward refined control, but whether the centralized secondary control system can truly achieve organizational transformation goals, whether headquarters coordination capabilities can synergize with regional companies, and whether centralized headquarters management might constrain regional market flexibility remain to be tested by time.

**First Half Losses Exceed 10 Billion Yuan**

Two days before the mid-2025 work conference, China Vanke released its interim 2025 results, showing losses again as operational difficulties persist.

China Vanke's main businesses include "real estate development and related asset operations" and "property services." According to financial reports, in the first half of this year, China Vanke achieved operating revenue of 105.32 billion yuan, with net losses attributable to listed company shareholders of 11.95 billion yuan, representing year-on-year declines of 26.2% and 21.3% respectively. Basic loss per share was 1.01 yuan, down 21.3% year-on-year.

By business type, operating revenue from real estate development and related asset operations was 84.44 billion yuan, accounting for 80.2%, while property services revenue was 17.09 billion yuan, accounting for 16.2%.

Before deducting taxes and surcharges, the gross profit margin for real estate development and related asset operations was 8.7%, up 1.5 percentage points from the same period in 2024, with development business settlement gross profit margin at 8.1%. Property services gross profit margin was 13.9%, up 0.3 percentage points year-on-year. Overall group gross profit margin was 9.97%, up 1.85 percentage points year-on-year.

China Vanke attributed the main losses to: significantly reduced settlement scale in real estate development business, with gross profit margins remaining at low levels. In the first half of 2025, real estate development business achieved settlement area of 5.336 million square meters, down 39.3% year-on-year, with settlement revenue of 74.05 billion yuan, down 33.7% year-on-year, and settlement gross profit margin of 8.1%.

Additionally, considering changes in industry, market, and operating environments, and rising business risk exposure, new asset impairment provisions were made. In the first half of 2025, China Vanke made total impairment provisions of 5.449 billion yuan, reducing net profit attributable to shareholders by approximately 4.478 billion yuan. Another reason was that some bulk asset transactions and equity transactions were priced below book value.

**Declining Sales Scale**

In the first half of this year, China Vanke achieved sales area of 5.389 million square meters and sales amount of 69.11 billion yuan, down 42.6% and 45.7% year-on-year respectively.

"The year-on-year decline in sales scale was quite significant, mainly due to limited new project supply, focusing primarily on existing inventory disposal," China Vanke management stated at an analyst meeting held on August 22.

Management emphasized that despite limited total supply this year, the company's newly launched projects still achieved good sales performance. In the first half, all first-opening projects fulfilled investment commitments, with projects like Wenzhou Pushi Yunzhou, Chengdu Duhui Jiadi, Chengdu Jinshang Yanghua, and Tianjin Donglu achieving over 90% subscription rates at first opening. Inventory disposal also achieved positive results, with existing property inventory decreasing compared to the beginning of the year.

As of the reporting period end, China Vanke's inventory was 462.52 billion yuan, down 10.9% from the end of 2024. This included products to be developed at 86.23 billion yuan (18.6%), products under development at 256.69 billion yuan (55.5%), and completed development products (existing properties) at 117.13 billion yuan (25.3%). Despite the decline, existing property inventory pressure remains significant.

"From total resource perspective, as of mid-2025, China Vanke's unsettled projects to be developed, under construction, and existing land reserves total over 60 million square meters of buildable area, which can maintain certain construction and inventory scales under active revitalization and effective supply," management noted.

According to financial reports, as of the reporting period end, China Vanke had projects under construction totaling approximately 32.272 million square meters of planned buildable area, with equity-based planned buildable area of approximately 21.166 million square meters. Planned projects totaled approximately 30.074 million square meters of planned buildable area, with equity-based planned buildable area of approximately 19.265 million square meters. Additionally, China Vanke participated in urban renewal projects with total planned buildable area of approximately 3.568 million square meters under current planning conditions.

Despite owning over 60 million square meters of land reserves, new investment contracted sharply. In the first half of this year, China Vanke acquired 6 new projects with total planned buildable area of 558,000 square meters, equity-based buildable area of 296,000 square meters, and equity-based land price of approximately 1.34 billion yuan.

China Vanke stated that besides its long-standing conservative investment strategy, land acquisition emphasizes continuous improvement in resource quality. The company focuses on areas with good customer and market foundations and projects with good investment returns that the company can confidently deliver, while revitalizing some land through resource activation methods to continuously improve existing resource structure and distribution.

Since 2023, China Vanke has revitalized 64 projects, contributing approximately 78.5 billion yuan in sellable value, with 22.6 billion yuan in realized sales.

**How Long Can Major Shareholder Capital Injection Sustain?**

In terms of financing, major shareholder assistance to China Vanke has been unreserved. On August 6, China Vanke announced that major shareholder Shenzhen Metro Group planned to provide loans to the company not exceeding 1.681 billion yuan, with an interest rate of 2.34% and a three-year term, to be used for repaying principal and interest of bonds issued by China Vanke in public markets and designated loan interest approved by Shenzhen Metro Group.

This marks the eighth capital injection from Shenzhen Metro Group to China Vanke since the beginning of this year. Since February, Shenzhen Metro Group has provided shareholder loans of 2.8 billion yuan, 4.2 billion yuan, 3.3 billion yuan, 1.552 billion yuan, 3.0 billion yuan, 6.249 billion yuan, 869 million yuan, and 1.681 billion yuan respectively, totaling 23.65 billion yuan. All eight loans carried 2.34% interest rates and were used for repaying principal and interest of bonds issued by China Vanke in public markets.

As of the first half of this year, China Vanke's interest-bearing debt totaled 364.26 billion yuan, accounting for 30.5% of total assets. Of interest-bearing debt, 155.37 billion yuan was due within one year (42.7%), while 208.89 billion yuan was due after one year (57.3%). Cash and cash equivalents balance was 69.348 billion yuan, with coverage ratio below 45%.

China Vanke management stated that in the first half, new financing and refinancing within the consolidated reporting scope was 24.9 billion yuan (excluding shareholder loans). As of now, the company has successfully completed 24.39 billion yuan in public debt repayment, with no overseas public debt maturing before 2027.

On the evening of August 22, interim 2025 results released simultaneously by Shenzhen Metro Group and China Vanke showed that in the first half, Shenzhen Metro Group achieved operating revenue of approximately 7.284 billion yuan, down 21.67% year-on-year, with net losses attributable to parent company shareholders of approximately 3.361 billion yuan, narrowing losses by about 432 million yuan year-on-year. As of end-June, Shenzhen Metro Group had total assets of 793.232 billion yuan and total liabilities of 479.62 billion yuan, with an asset-liability ratio of approximately 60.46%, slightly up from the same period last year.

Station-city integrated development business, an important revenue source, achieved operating revenue of 1.62 billion yuan, down 63% year-on-year, with revenue proportion continuing to fall to 22.3%. Shenzhen Metro Group attributed this mainly to cyclical settlement impacts in real estate.

In April this year, Shenzhen Metro Group released a major loss announcement showing that in 2024, consolidated reporting scope losses reached 33.461 billion yuan, accounting for 10.46% of net assets at end-2023, exceeding 10%. Regarding loss reasons, Shenzhen Metro Group explained that losses were mainly due to business losses at associate company China Vanke Co.,Ltd. in 2024, leading Shenzhen Metro Group to recognize investment losses on its long-term equity investment in China Vanke and make investment impairment provisions, resulting in annual losses.

In May this year, China Chengxin International Credit Rating Co., Ltd. stated in its "Shenzhen Metro Group Co., Ltd. 2025 Tracking Rating Report" that Shenzhen Metro Group faced rapid debt growth with future capital expenditure pressure, station-city development business susceptibility to real estate market and regulatory policy impacts, and effects from China Vanke's operational changes and impairment provisions - factors requiring continued attention regarding their impact on overall credit conditions along with related party transactions with China Vanke.

China Vanke Chairman Xin Jie stated at the company's 2024 annual shareholders' meeting on June 27 that China Vanke and Shenzhen Metro teams working together create synergies exceeding the sum of parts to jointly address risks and challenges. However, this vision has yet to materialize.

Yu Liang once said "real estate has entered the black iron age," and now China Vanke and Shenzhen Metro are making a bold bet on the possibility of refining black iron into steel.