Wang Shi

Wang Shi is the founder of China Vanke Co., Ltd. and served as the company’s chairman (chairman of the board) from 1988 to 2017, during which time he wrote the chairman’s statement for Vanke’s annual reports on many occasions. According to Caixin, Vanke was founded in 1984 and started out in trading; it was originally called the “Modern Science and Education Instrument Exhibition and Sales Center” and was affiliated with the local state-owned enterprise Shenzhen Special Economic Zone Development Company (hereinafter “SZSEZDC”). In 1986 Shenzhen, as a special economic zone, launched a shareholding pilot within the state-owned enterprise system, and Vanke’s share reform plan was approved at the end of 1988: its net assets of 13.24 million yuan were converted into 13.24 million shares, 60% held by the state and 40% by employees, and a further 28 million shares were issued publicly. SZSEZDC thus changed from Vanke’s supervising parent to its largest shareholder, with a 30% stake. Wang Shi was elected the first chairman, but he and the other members of management gave up the equity they could have held, working for Vanke as professional managers.

In the chairman’s business outlook in the 1993 annual report, Wang Shi proposed that in 1994 the group would continue to aim at building long-term strength and adjust its business structure: the property business would focus on urban residential projects in Shanghai, Beijing, Tianjin, Qingdao and Shijiazhuang and retain some commercial and office properties to earn relatively stable rental income; the equity investment business would explore minority and controlling stakes, and industrial projects would strengthen development of own products on the basis of cooperative processing, while ties with international capital markets would be strengthened to bring in international capital and management experience. The statement in the 1994 annual report stated that property remained the core business, focusing on developing urban residential projects and a moderate amount of commercial buildings in regional economic centres such as Beijing, Shanghai, Tianjin, Qingdao, Shenyang and Chengdu, and on bringing in mature international retail management experience, with emphasis on developing a chain retail business in Shenzhen. The statement in the 1995 annual report judged that, after its adjustment, the property market had broadly entered a healthy development track; it held that Shenzhen had entered the property sector earlier than other cities and would also be the first to complete the market adjustment, and on this basis it proposed that Shenzhen would become the focus of the group’s property investment in the coming year, that residential developments in Beijing, Shanghai, Tianjin and Shenyang would enter a second phase of large-scale development, that construction of the City Gardens in Shenzhen and Chengdu would start in the first half of the year, and that land reserves would be increased moderately; Wanjia Department Store Co., Ltd. would open a new store with 12,500 square metres of floor space in the second half of the year, about three times the size of its existing store. The statement in the 1996 annual report proposed that the group would use its professional strengths and the brand effect of Vanke City Garden to speed up the sell-through of existing property projects and complete the adjustment of its property projects in the coming year; among the twelve cities where it had developed projects, it would concentrate resources on residential development in large cities such as Shenzhen, Shanghai, Beijing and Tianjin, and, in view of Shenzhen’s market potential and the timing of Hong Kong’s 1997 handover, would continue to increase investment and land reserves in Shenzhen.

The statement in the 1999 annual report showed that the group’s operating revenue that year was 2,912.39 million yuan, up 28.4% on the previous year, and net profit was 229.14 million yuan, up 15.8%, with earnings per share of 0.42 yuan; completed floor area was 452,000 square metres, up 44%, and settled sales area was 386,000 square metres, up 39.9%, with projects in Shenzhen, Shanghai and Beijing remaining the main sources of profit; floor area started during the year was 574,000 square metres, and as of December 31, 1999 residential land reserves totalled 1.312 million square metres of planned gross floor area. In the same year the group raised its stake in Shenzhen Wanjia Department Store Co., Ltd. from 68% to 72%, and Wanjia opened its fourth branch in Bao’an District, Shenzhen, on New Year’s Day 2000; in January 2000 the group completed a rights issue raising 625 million yuan. According to Caixin, in 1994 Vanke faced a hostile takeover attempt by Jun’an Securities, and Wang Shi ultimately stabilised the situation; in 2000 Vanke brought in the state-owned China Resources Group as a major shareholder, and for more than ten years afterwards China Resources Group remained a purely financial shareholder that only “managed capital”.

The chairman’s statement in the 2000 annual report signed by Wang Shi reviewed the group’s results for the year: operating revenue was 3,873.30 million yuan, up 32.99%, and net profit was 301.23 million yuan, up 31.46%, with earnings per share of 0.48 yuan, up 14% on the previous year. In the property business, completed floor area was 536,000 square metres, up 18.6%, and settled sales area was 540,000 square metres, up 39.9%; the group mainly bought large land parcels on the urban-rural fringe through agreements with governments, and by the end of 2000 its land reserves in Shenzhen, Shanghai, Shenyang, Beijing, Tianjin and Chengdu totalled 4.5 million square metres, up 243% on the previous year. In the retail business, Shenzhen Wanjia Department Store Co., Ltd. opened its fourth and fifth branches during the year, and its full-year sales rose 60.7% year on year to 1.38 billion yuan, keeping it in first place in total sales among its peers in Guangdong Province. The group’s management headquarters completed a restructuring of its management framework, setting up a new design and engineering department, a property management department and an information centre; the 625 million yuan raised in the January 2000 rights issue was received and invested in residential projects and the retail business. During the year China Resources Group and its affiliates became the group’s largest shareholder, holding 15.08% of its total share capital. The statement also said that in 2001 the group would begin implementing a new expansion strategy, expected to enter four to five new cities for residential development during the year, and would further expand its land reserves.

The chairman’s statement in the 2001 annual report signed by Wang Shi reviewed the group’s results for the year: operating revenue was 4,455.06 million yuan, up 17.74%, and net profit was 373.75 million yuan, up 25.99%, with earnings per share of 0.59 yuan. In the same year the group successfully transferred its stake in Wanjia and exited the retail industry, completing its strategic adjustment towards specialisation; its property business entered four cities, Wuhan, Nanjing, Changchun and Nanchang, and increased investment in existing cities including Shenzhen, Shanghai, Beijing, Shenyang, Chengdu and Tianjin. By the end of 2001 the group’s projects awaiting development covered a site area of 9.8 million square metres. The statement also proposed continuing a prudent expansion strategy and exploring cooperation with international investment partners.

The statement in the 2002 annual report showed that the group’s operating revenue that year was 4,574.36 million yuan, up 2.7%, and net profit was 382.42 million yuan, up 2.3%, with earnings per share of 0.606 yuan; net profit after deducting non-recurring gains and losses rose 104% year on year; settled area, settled revenue and settled net profit of property projects reached 1.12 million square metres, 4.42 billion yuan and 382 million yuan respectively. The group successfully issued 1.5 billion yuan of convertible corporate bonds, obtained project resources in Nanhai District, Foshan, and began a regional investment strategy centred on Shenzhen and radiating across the Pearl River Delta. At the end of the period the group had project resources awaiting development of 7.06 million square metres of gross floor area. The statement also proposed advancing a regional development model targeting the Pearl River Delta and the Yangtze River Delta.

The statement in the 2003 annual report showed that the group’s real estate business had entered a period of rapid growth, achieving full-year operating revenue of 6.380 billion yuan and net profit of 542 million yuan, up 39.47% and 41.80% respectively from the previous year, with earnings per share of 0.39 yuan. The Shanghai and Shenzhen markets contributed 38.38% and 37.43% of the group’s net profit respectively. During the year the group formed regional management centres in Shenzhen, Shanghai and Shenyang; the Shenzhen region successively entered the Zhongshan and Guangzhou markets, and the Shenyang region entered the Dalian and Anshan markets. As of the end of the year, the company had project resources in 15 cities, with project resources awaiting development of 7.44 million square metres of floor area. That year the board proposed issuing 1.99 billion yuan of convertible corporate bonds, which was approved by the shareholders’ meeting. The statement also stated that the group would begin formulating its medium- and long-term development plan for the next 5 to 10 years.

According to a 2014 Caixin report, Wang Shi, while chairman of Vanke’s board, once admitted that Vanke was still puzzled about how to transform over the next decade and worried that Vanke would be the next company to fall. The same report said that Vanke first announced its transformation into an “urban supporting services provider” on June 27, 2013, whereas the keynote Wang Shi had previously set for Vanke had always been to “focus on housing”. On the evening of July 1, 2014, Wang Shi gave a speech titled “Bottom Line and Honour” at a master class at the China Europe International Business School. Speaking of Vanke’s position as industry leader, he said that Vanke had been number one in the industry since 1998, with sales of 170 billion yuan in 2013 and an original target of 200 billion yuan for 2014, but two other companies had set targets of 240 billion yuan and 250 billion yuan, and he asked, “If you were me, what would you do?” Wang Shi admitted that he could not forget the figures: Vanke had been the top Chinese property company since 1997, and even falling to second place by a symbolic margin of a few hundred thousand would subtly change the mindset of everyone from investors to management. He questioned, “Is being number one a result or a goal?” and held that “sometimes retreating is more important than advancing”. According to statistics from CRIC, in the first half of 2014 Vanke ranked first in sales with 101.8 billion yuan, followed by Greenland with 83 billion yuan and Evergrande with 71.4 billion yuan. Wang Shi also mentioned that in recent years Vanke had frequently tried diversified operations, including testing the waters in commercial property and logistics property, cooperating with Baidu on internet projects, and proposing a minority-stake operating strategy that used an asset-light model of exporting management and brand to raise return on equity. According to Caixin, in mid-2015 Vanke was targeted by the “barbarian” Baoneng, which built up a stake, after which it wrangled over equity for nearly two years with parties including Baoneng, China Resources Group and China Evergrande; this battle for control finally ended with Shenzhen Metro taking a stake. At the end of June 2017, the 66-year-old founder Wang Shi stepped down and Yu Liang succeeded him as chairman of Vanke’s board.

On April 2, 2020, on behalf of all Vanke employees, the Vanke Enterprise Shares Asset Management Center signed a donation agreement with the Tsinghua University Education Foundation, donating all of the center’s assets, namely 200 million Vanke shares, in a single gift to set up the “Tsinghua University Vanke Public Health and Health Discipline Development Special Fund”; Vanke and Tsinghua University jointly established the Vanke School of Public Health and Health at Tsinghua University, with former World Health Organization Director-General Margaret Chan as its first dean, and Vanke founder and honorary chairman of the board Wang Shi as honorary chairman of the school’s council. The 200 million Vanke shares donated had a market value of about 5.3 billion yuan at the time, the largest single donation to a university foundation in China at that point; what was donated was not an asset of the listed company Vanke but enterprise shares collectively held by employees, and Vanke sought no commercial benefit or financial return from it. Wang Shi said that the asset originated from the enterprise shares left over from the shareholding reform in 1988, equivalent to collective employee shares, which all employees unanimously decided around 2011 to contribute to social welfare causes; its value had grown from 5.2 million yuan in 1988 to more than 900 million yuan around 2011, and then to 5.3 billion yuan in 2020; he hoped the school would actively participate in and strongly support the development of public health in Shenzhen.

Wang Shi once wrote about his understanding of entrepreneurship, arguing that every society has certain traditions, norms and patterns, and that recognising the problems with these patterns, reorganising the elements and successfully creating value for society is entrepreneurship; the most important ability of an entrepreneur is persuasion, and beyond believing oneself worthy of respect, one must provide value to society in an entrepreneur’s way. He proposed that the positive energy entrepreneurs export to society consists of modern management systems, organisational structures and communication skills, that charitable projects should also be measured by corporate standards in their management, and that entrepreneurs’ organisations should move from networks of acquaintances to platforms of people bound by shared ideas and missions. According to Caixin, Wang Shi long insisted that Vanke should focus on property and follow a “path of residential specialisation”; at the end of 2012, the year after Wang Shi went to study in the United States, Yu Liang, then president of Vanke, first proposed positioning Vanke as an “urban supporting services provider”, and from then on Vanke began exploring diversified businesses.