As of November 1, 2010, 360 days had passed since Evergrande was listed. During the year, Evergrande has been developing rapidly. By the end of October, Evergrande had completed the full-year sales target of 40 billion yuan. And according to the released interim report of 2010 and the increasingly higher data afterwards, in fact, Evergrande has become the most powerful challenger to Vanke, the leader of the real estate industry. Under such development trend, how Evergrande balances the relations and deals with a range of problems during development has been the focus of the industry.

Internal Force Determines Speed

Compared to Vanke, Country Garden and other enterprises, Evergrande started a few years later. And in the depth of Hui Ka Yan’s heart, Chairman of the Board of Directors of Evergrande Group, he was always worried that he had lagged behind too far. In 2007, when Country Garden was successfully listed with the market value of over 100 billion yuan and became the huge monster of China real estate, Evergrande also quietly followed up. In 2008, when Evergrande stepped into the 10 Billion Club, it was still not on the ranking of Top 30 in Chinese real estate industry. In 2009, when Evergrande was successfully listed and leaped into the 30 Billion Club, it ranked the third place in sales area and the sixth place in sales amount among the Chinese real estate enterprises. In the first half of 2010, the area under construction of Evergrande increased from over 700,000 square in 2006 meters to 23.06 million square meters, with an increase of 32-fold; the property sales amount increased from 1.89 billion yuan in the full year of 2006 to 20.25 billion yuan, with an increase of 10-fold. By September this year, Evergrande had brought in the sales amount of 35.6 billion yuan, with an increase of over 20-fold compared to that in the full year of 2006.

Balance of Quality and Scale

The industry has the impression of “the Leader of Boutique Real Estate with Standardized Operation in China” on Evergrande. From the initial focusing on gardens and oath-taking rally for boutique properties, the subsequent inviting experts at home and abroad to discuss the splendid residential standard and establish several thousands of high-quality standard polices, to the recent establishing strategic alliances with 150 Top 10 enterprises throughout the country, the principle of boutique properties has been throughout the development of Evergrande.

As early as 2004, Evergrande introduced Standards for Boutique Projects in Guangzhou, detailing the boutique construction standards into over 6000 articles. Hui Ka Yan once said to the media, “After the oath-taking rally for boutique properties in 2004, the central garden already constructed in Century Garden was dismantled and reconstructed. The value of that project was up to 10 million yuan. At that time, many people did not understand. But in my opinion, what we devote to the citizens should be the perfect boutique projects. The incident also indicated that Evergrande would proceed to a Boutique Age to develop products with higher and stricter standards.”

High-admission Talent System

Hui Ka Yan once said, “Talents are the precious fortune of Evergrande, and the advantage of talents is one of the core advantages of competitiveness.” The present Evergrande may have truly realized the intention of the boss’s viewpoint. Evergrande has to solve the problems in both the number of talent reserves and the cultivation and dispatching of human resources, so as to closely follow the development speed.

At present, Evergrande has a young, highly educated and high-quality workforce, and over 90% of the management personnel have bachelor degree or above. Evergrande pays special attention to the attraction of graduating students with excellent bachelor degree from the foremost universities in the country, making the campus recruitment as an important way for the enterprise to cultivate and reserve talents.

The tough management measures of Evergrande are evident even in the management of Evergrande Football. On October 18, 2010, Gao Lin, the main player of Evergrande Football, was sentenced to a fine of 100,000 yuan by the Team, receiving the most severe punishment for the players in the history of nation clubs, who was also the “first people” severely punished by China Football. Severe penalty is the manifestation of ironhanded management and no tolerance of Hui Ka Yan, and also the permanent management way of Evergrande to pursue high specification and high efficiency.

How to Not Be in Bad Need of Money

 “Scale management, overall operation and progressive development are the key of cost leadership of Evergrande”. Rapid development, rapid collection of payment and low-profit business model are the main ways for Evergrande to guarantee the capital chain. It is learned that Evergrande requests to control the period from land acquisition to marketing within 6-8 months, so as to achieve the target of the fastest investment cycle and also keep the rapid development. In August 2010, when the market was in a strong wait-and-see atmosphere, and many developers were fighting hard, Evergrande took the lead in launching the 15%-off strategy. At the press conference of Evergrande’s Interim Sales Performance in 2010, Xia Haijun acknowledged, “the satisfactory sales performance of the first half year is attributable to the 15%-off strategy to some extent.” In the adverse situation, it is beyond question that Evergrande is able to collect cash by the means of discount. The 15%-off strategy is a factor, but not an absolute factor. What the ordinary people need is highly cost-effective houses. The root cause why Evergrande’s products are widely recognized by the market lies in the significant advantage of cost-effectiveness.

On the other hand, the cash flow also benefits from Evergrande’s understanding on the trend of international capital market and the prediction on the trend of monetary tightening of macro-control in China. In May 6^th , based on the wait-and-see atmosphere of the market caused by the new policy, Evergrande adjusted the prices, and many media thought there was something wrong with the capital chain of Evergrande. In fact, the reason why Evergrande could adjust the prices was due to its abundant land reserves. If an enterprise has no sufficient land reserves, it does not qualify to adjust prices, but can only wait for the next climax in the case of sufficient cash flow. In January through April, Evergrande predicted the adjustment trend of the state macro-control, and made the response in advance of other real estate enterprises. It was just after Evergrande raised capital of 750 million U.S dollars internationally in January that the international capital market was closed immediately, and many enterprises could not complete the bond issuance. In April 2010, before the introduction of new policy, Evergrande raised 600 million U.S dollars from Joseph Lau in Hong Kong. When Evergrande received the capital on Friday, the new state macro-control policy was introduced on Saturday. Such resolute decision-making determines that Evergrande can seize the first chance in the complex and critical year. At the press conference of Evergrande’s Interim Sales Performance in 2010, Xia Haijun acknowledged, “The year 2010 is a good opportunity to expand lands for the enterprises with sufficient capital. Maybe there will be no such good opportunity in 2011.” Evergrande has obtained this development opportunity, and its cash balance had been 21 billion yuan by the end of June, over 20 billion yuan for three consecutive months.

Self-transcendental Capability

In 2009, Evergrande became the real estate developer with the fastest development in China with the sales amount of 30.3 billion yuan, an increase of 402.3% on a year-on-year basis. According to the management officers of Evergrande Group, Evergrande had completed the annual sales target of 40 billion yuan in advance by October 2010. When Evergrande develops rapidly with vigorous strides, people cannot help asking: has Evergrande taken its sustainable development into account?

The rapidness of Evergrande is not only in the response, but also in the uniformity and preciseness when Evergrande executes the new policies throughout the country. When the head quarter announced the price adjustment nationwide, all the projects on sale achieved the high uniformity in the twinkling of an eye according to the standardized execution program. This is the best manifestation of Evergrande’s executive force. An employee from Evergrande told the reporters that Evergrande has very strict planning management and appraisal system; the management of Evergrande is mainly featured by ample reward and server penalty. “Everyone’s performance is announced every month. If you have done a good job, you will have rewards. This is quite fair. In Evergrande, there is nobody who can only be promoted but not demoted. Therefore, the employees of Evergrande have sufficient crisis awareness and motive awareness.”