Zhang Xu

Zhang Xu formerly served as executive vice president and chief operating officer of Vanke Group, and later took part in Vanke’s logistics business as chief partner of Vanke’s logistics business unit. On November 10, 2017, at Vanke’s year-end media briefing held in Ningbo, Zhang Xu, then executive vice president and chief operating officer of Vanke Group, disclosed for the first time the logic behind Vanke’s move into logistics property and outlined Vanke’s specific plans and targets in the logistics sector.

According to Zhang Xu, Vanke’s idea of entering logistics real estate came from an earlier study trip to the United States. Around 2014, Yu Liang, Zhang Xu and others visited the US and asked the head of Warburg Pincus which businesses in China were set to flourish in future that the US had already been through; the answer was logistics, and he revealed that Warburg Pincus was already positioning itself there. They then asked well-known US investment groups such as Carlyle and Blackstone and received the same advice to invest in logistics, which they believed had enormous room for development in China. At the time, GLP dominated China’s logistics and warehousing industry. On 15 March 2014, Vanke invited Ming Mei, then CEO of GLP, to lecture at Vanke’s headquarters; Ming Mei said that China’s logistics industry was only just beginning to develop and that there would be future demand for more than 200 million square metres of warehousing, which led Vanke to consider doing it itself. In 2015, Vanke established Vanke Logistics Real Estate Development Co., Ltd., formally entering the logistics real estate industry. Zhang Xu said that at the time the top ten players in the industry were all foreign companies, because everyone thought logistics did not make money, or made less than housing; after more than two years of building its presence, Vanke understood better what logistics is: logistics is the road to a better life for ordinary people, connected to every aspect of daily life and involving both the real economy and the new economy, with the ultimate aim of improving efficiency and reducing costs.

On its logistics real estate footprint, Zhang Xu described specific scenarios of Vanke’s cooperation with GLP: Vanke and GLP’s warehouses in the Ningbo Free Trade Zone serve the needs of cross-border online shoppers in Zhejiang, while Vanke’s cold-chain warehouse in Shenyang supplies McDonald’s burgers for the entire Northeast region. Citing the just-ended “Double Eleven” shopping festival as an example, he said that if 1 billion items were shipped that day, about 500 million of them came from warehouses connected with Vanke, meaning half of all parcels in the country were linked to Vanke; warehouses in Kunming, Nanning and Shigatse were leased to the bike-sharing company ofo.

On the state of domestic warehousing facilities, Zhang Xu said on the same occasion that more than 95% of China’s warehousing had previously been low-standard “farmer warehouses”, with dilapidated facilities, poor transport access, no fire protection and extremely low transport efficiency. Vanke requires its logistics warehousing to be safer, more scientific and more intensive, and automated. In value-added services, Vanke builds apartments in each logistics warehouse for its clients’ staff, with supporting entertainment and sports facilities; in technology, Vanke requires all facilities and equipment in its warehouses and parks to be connected to a logistics network and has built an information services platform, enabling clients to request repairs with one click, track online and monitor via mobile devices, among other functions. Zhang Xu also stressed that Vanke’s logistics platform can create synergies with Vanke’s other business segments; for example, all 27 of Vanke’s shopping centres have Watsons stores, whose warehousing is handled by GLP’s Xi’an warehouse, forming a “store in front, warehouse behind” model; once logistics clients move onto Vanke’s warehousing platform, their staff can live in Vanke’s long-term rental apartments. This “move-in-and-expand” model has already been put into practice, and Vanke had earlier signed a similar strategic agreement with SF Express.

On scale, Zhang Xu revealed that as of early November 2017, Vanke’s own logistics warehousing totalled 5 million square metres; including GLP’s scale, the logistics portfolio connected with Vanke would approach 60 million square metres, covering more than 500 modern logistics parks and over 800 high-quality clients, with a 60% share of China’s logistics industry. Vanke’s goal is to join forces with GLP to become the world’s number one logistics real estate service provider. Zhang Xu said logistics is by nature a network business: only a networked layout can generate greater returns, and only a global layout can deliver the greatest returns.

Before the GLP acquisition, Vanke’s logistics real estate business already had the brand “Vanwei Logistics Real Estate”, headquartered in Shanghai. According to Vanke board secretary Zhu Xu at an investor conference call in September 2017, from January to September that year Vanke added 23 logistics projects with a total area of 1.65 million square metres; by the end of September its business covered 25 cities, with a cumulative 41 new logistics projects totalling 3.13 million square metres, and its clients were mainly courier and e-commerce retail companies. On 14 July 2017, a Chinese consortium of Vanke, Ming Mei, Hopu Investment, Hillhouse Capital and Bank of China Group Investment issued a joint announcement with GLP stating that the consortium and the GLP board had reached agreement on the full privatisation of the Singapore-listed company; the price was S$3.38 per share (about 16.67 yuan), for a total transaction value of about S$15.9 billion (about 78.441 billion yuan). Upon completion of the privatisation, Vanke would hold a 21.4% interest, becoming GLP’s largest shareholder.

Responding to public concerns about profitability, Zhang Xu said that Vanke Logistics aimed to earn the money released “because society becomes more efficient”; with warehouses priced at a few fen per square metre per day, the business could in fact be made very large. Vanke was optimistic about the business because it was optimistic about the development of China’s economy and GDP; total retail sales on commercial platforms grew 10% year on year, overall logistics volume was huge, making it a big business, and the platform brought more business and possibilities. He said Vanke relied on saving money for customers and creating value through efficiency, and every fen saved for customers was value created; none of the warehouses Vanke built would be sold, and they would be operated in perpetuity.

On 20 October 2023, Vanke held a media briefing in Xi’an, which Zhang Xu attended as chief partner of Vanke’s logistics business unit. He said Vanke’s Vanwei Logistics serves more than 1,600 companies worldwide and is the only multi-temperature-zone supply chain service provider in China’s cold-chain industry able to serve seven different industries at once. Vanwei’s food safety management standards are well above the industry level, and in 2023 it obtained BRCGS certification, the most authoritative in the international food safety field. Zhang Xu also presented the “report card” from clients over the past year: in the annual food safety audits of several Fortune Global 500 clients, including Walmart, Tyson, Lamb Weston and Yum! Brands, Vanwei Logistics ranked first nationwide; it also received Starbucks’ annual Best Quality Award for supply chain service providers and an “Excellence” rating as a Ferrero global supplier. In cold-chain management, Vanwei’s standards extend to detailed modules such as temperature and humidity, pests and foreign matter, and it has established the cold-chain industry’s first temperature and humidity control system and working mechanism, enabling round-the-clock 24-hour monitoring with temperature fluctuations controlled to within ±0.5°C.