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Real estate developers transform into “city operators”

December 11, 2014

konjaku: beginning an investigation of the term “city operator[business]” 城市运营商(chengshi yunyingshang),as a term large Chinese real estate developers are starting to use to refer to themselves. I have been following the construction of “micro-cities” in Yanjiao, a city in Hebei just across the river from Beijing. in which real estate projects are conceived of as offering residents shopping, recreation, medical care, and even education, either on site or very close by. Perhaps because of these ambitious projects, the real estate developers are starting to see themselves as “city operators,”in the sense that they see themselves as operating the management systems in these almost self-sufficient micro-cities, once completed. However, even more basic services such as water, power, and sanitation are presumably part of the larger urban fabric, and still under government administration.

The Six Big Real Estate Developers Transform to be “ High-Class, High-End, and High-Minded”: which of them will truly turn into a “city operator business?” 2014-03-25

In the past, large real estate developers have often been labelled as” local tyrants,” seen as engaged in profiteering, buying and selling land to drive up prices, and capital speculating. Nowadays, Wanke (Vanke), Ludi (Green lands), Longhu (Longfor properties), Shouchuang Zhiye (Beijing capital land), Lihai (L’sea), and Beida ziyuan (PKU resources), have, one after another, put forward a new ideal, and goal. They want to be in the business of operating cities. They have resolved to change entirely, to become “ high class, high end, and high-minded.” Residential real estate has reached its ceiling, now, along with the push forward to a new type of urbanization, they are faced with a huge opportunity and a challenge. Among the many developers seeking to transform themselves in the new realities, which of them will truly become “city-operators?”

Vanke –“its power overawes the rest” –providing a full set of city services Vanke is China’s largest residential real estate developer, as its name implies, (“Wanke”) has “10,000 departments.” From strictly residential development, to commercial real estate, now it is transforming itself to “offer a complete set of city services.” It has formerly announced its 5S, or 5 services concept: residential, shopping, leisure, offices, and culture. With its “two flanks fly together” strategy, it truly is awesome.

城市运营商 city operator business

万科 Vanke

绿地 Ludi (Green lands)

龙湖 Longhu (Longfor properties)

首创置业 Shouchuang Zhiye (Beijing capital land)

利海 Lihai (L’sea)

北大资源 Beida ziyuan (PKU resources)

konjaku: this article continues with a description of the other five real estate developers. When I looked further at what Vanke’s concept of “a complete set of city services” entails, I was surprised to find, at least initially, something decidedly not high-end. Instead of gleaming micro-cities of the future, they are offering something more modest and practical.

Vanke “Light on property, heavy on operations” transforms into the business of supplying city services


Vanke group executive vice-president Mao Daqing has stated that after study, they will borrow from the methods of the internet, to transform from selling residential properties to selling city services. “In the next 10 years, Vanke will completely transform itself. If we just repeat the logic of the past, we will be no different from any of the other real estate developers.” Vanke, by industrializing its building systems, including certified green technologies, has completed large residential projects. Through the Neighborhood Home concept they have taken the first exploratory step at providing community services as a part of their business. Except for those that have been open a year or under, in Vanke communities there are already dining rooms, fresh food markets, and laundries. Vanke is thinking over what more they can do. For example, senior centers, in the future possibly services to care for the aged.

From the point of view of real estate, Vanke is putting forth three product lines. The first is the “Neighborhood Home” concept, offering necessary services such as markets, pharmacies, and banks in convenient locations for the residents of communities. The second is the “Lifestyle Plaza,” a complex of stores, restaurants, etc., usually 10,000-30,000 square meters, radiating outward on the periphery of the community. These are not as large or spread out as a mall, but rather in the form of a village or town in scale, appropriate to the size of the community. The third is the “Vanke Plaza:” this is a larger complex appropriate to the size of a large city or city-center. Compared to the “Lifestyle Plaza,” the “Vanke Plaza” is a very large mall, but it is also aimed at providing the lifestyle needs of residents, including fashion, food, community culture, exercise, and childrens’ educational facilities. Lifestyle Plaza: 201391313831304 wankeshenghuoguangchanglunbo Vanke Plaza: 1363849709 201188173493248436 w2013122105705635215786253975000 上海万科广场-2

Mao Daqing said, going forward Vanke intends to exercise restraint and be sensitive to each community’s individual needs in planning which businesses to develop. They will even encourage Vanke staff members in the communities to create businesses for their particular communities.

At a recent conference on “Development of Areas under the New Urbanization Model” Vanke General Manager of Life and Family Operations Chen Suijing said, “The concept of the mall often results in something too big for the community, it also has a homogenizing effect which is deleterious. At the same time, we find that in Beijing city there is a lack of businesses supplying what residents absolutely require close by to them, a real gap of one or two times under what is needed. The Beijing Business Committee has a policy to fill the basic daily needs of residents within a 15 minute radius of where they live.” Apart from the business aspect, Beijing Vanke is exploring the idea of building care facilities for the aged. Apparently it has already done a detailed survey of elderly residents in 20 of its residential communities, and is formulating a plan for new system of old age security and care based on the entire community. Part of the plan is to set aside one building in each real estate community they build, offering rentals to the aged. They will start this next year in their Changyang project. However, Mao Daqing revealed that in Vanke’s transformation [into a service provider] it may in the future have to give up its sales targets of 200 to 300 billion yuan a year. In the end though, providing services for residents will lead to more home sales.

轻资产、重运营 light on property, heavy on operations

生活广场 Lifestyle Plaza

万科广场 Vanke Plaza

Vanke tests the water with its Neighborhood Home business concept –it is difficult to support if there are not enough residents


After reporting on the Vanke operated Di-wu shitang dining cafeterias, and the Xingfu fresh food markets, this reporter has learned that Beijing Vanke from next month plans to expand into banks, supermarkets, pharmacies and laundries, etc. These are called by either the trademark names, “Five vegetables in one soup” or “Neighborhood Home.” But in some places the proportion of the population is not large enough to support the businesses. In other cases, some Xifang markets have been forced to close.

Vanke Group Vice Director Mao Daqing says the “Neighborhood Home” brand is being tested in the Zhongliang Vanke Changlang bandao (Changlang penninsula) real estate complex. Mao Daqing believes that while in the past Vanke concentrated on building, it must now wed this function to the concept of providing services. Vanke will continue to build high quality residential buildings using advanced industrial techniques and green practices, but at the same time it is exploring the concept of “community business” using the “Neighborhood Home” trademark. That is, beside the Vanke enterprises people are already aware of, such as their chains of fresh food markets and dining “canteens (Xingfujieshi caichang and Di-wu shitang), they also have started banks attracting businesses to an area, supermarkets, drugstores, laundries, etc. Vanke in the future intends to expand this type of community-building business.

Although on the surface “community business” is meant to enrich the community and give satisfaction to customers, underneath it is a strategy of adjustment to changing conditions in the market. Faced with fierce competition, real estate developers must go further to inculcate brand loyalty. According to a management consultant, there are very few truly suitable brand-name service business operating in residential communities, consequently consumption within these communities is low. There is a need to finish, or complete these residential communities by making the necessary residential business services available, which Vanke seeks to answer with its “Neighborhood Home” brand. On the one hand, the “Neighborhood Home” concept is being tested in by Vanke in communities that are new and not yet fully established. For example the Zhongliang Vanke Changlang bandao (Changlang penninsula) real estate complex has been built where there were few already existing residents [near Fanshang, approximately 40 kilometers outside Beijing to the southwest]. Whether there is a large enough population in the area to support these businesses is not yet known. The reason the Di-wu shitang branch there has been successful is that there is not another food and beverage business in the whole district, and because there are a few hundred newly arrived households that have moved into Changlang penninsula. However, there are not enough people to sustain a drug store and a laundry. On the other hand, some of Vanke’s fresh food markets (Xingfujieshi caichang) have been faced with shut-downs, showing that Vanke is faced with problems of how to coordinate. “Vanke considers by providing businesses, these will give back benefits to the residential side, and also cause these communities to appreciate in value. But if the way they operate is not appropriate to the need, it could end up having an unfavorable effect.” said an industry insider.

opening of a new market (Vanke chain)

opening of a new market (Vanke chain)

a pharmacy

a pharmacy

a pharmacy

a pharmacy

a laundromat

a laundromat

laundromat interior

laundromat interior

dining "canteen" Di-wu shitang

dining “canteen” Di-wu shitang

a local branch of the banking chain Vanke bought

a local branch of the banking chain Vanke bought

Di-wu shitang 第五食堂

Xingfu jieshi caichang幸福街市菜场

邻里家Neighborhood Home

五菜一汤 “Five vegetables in one soup

中粮万科长阳半岛 Zhongliang Vanke Changlang bandao

konjaku: I gather from this that there are a number of sites in which the building of residential projects has out-paced, or preceded, the development of basic businesses and services for the new residents. Vanke has decided to expand into this area. Vanke’s foray into the banking sector has been covered in the western media. As this headline shows, the shift is mysterious to market-oriented thinking. “China Vanke’s Bank Investment Puzzles Investors” there is also

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