Power struggle hits as Vanke sees sharp sales drop in July

An apartment building is reflected on glass at a sales center of a residential property project in Jinan city, east China's Shandong province, February 10, 2016. [Photo/IC]

China Vanke Co Ltd, the country's largest residential developer, on Wednesday announced its sharpest month-on-month decline after the Spring Festival.

The company's housing sales area and sales figures in July dropped to 2.08 million square meters and 27.44 billion yuan ($4.14 billion), down 36.4 percent and 35.3 percent respectively.

It overall sold 16.17 million square meters amounting to 217.51 billion yuan from January to July, with the sales areas and sales amount peaking in June.

Despite the off-season effect happening to the property sector in July and August, Vanke's dramatic sales decline in July still draws big concerns, especially when it is compared with other property companies of the top group.

Evergrande Group's sales in July just set a new record of the sector, amounting to 43 billion yuan, up 37.2 percent month-on-month.

Last July, having a 79 percent year-on-year growth, Vanke's sales performance did not suffer such a month-on-month decline, with its housing sales area and sales amount reaching 1.82 million square meters and 23.85 billion yuan, dropping by 7.2 percent and 5.3 percent month-on-month respectively.

The battle between the company's management team and its major shareholder Baoneng Group that has not been settled is negatively affecting Vanke's sales performance, according to a report by National Business Daily (NBD).

JPMorgan Chase & Co on July 12 said that the change in the management team of Vanke is destroying the company's biggest advantage, according to this NBD report.

It said that given the role of the management team's contribution to Vanke, any actions that might change the team or their corporate culture will have a negative impact on the company.