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Reforms at SOHO China lead to company shake-up

2011-12-26 14:42    Ecns.cn     Web Editor: Su Jie
Pan Shiyi and his wife Zhang Xin, founders of SOHO China.

Pan Shiyi and his wife Zhang Xin, founders of SOHO China.

(Ecns.cn)--SOHO China, the largest real estate developer in Beijing, is now undergoing radical structural reforms, driven largely by Zhang Xin, the company's current CEO and half of the glamour couple that founded it.

"The system reforms have sparked heated disputes," revealed Hu Dawei, former sales director of SOHO's Shanghai branch. Hu led a protest on December 13, claiming the company had not paid him and his sales team their salaries or sales commissions amounting to about 4 million yuan ($627,471).

Hu was soon fired on December 16 for allegedly cheating customers into buying apartments at a Shanghai project. However, in an interview with Shanghai Daily, Hu responded that the person in charge of the SOHO Shanghai branch is "hiding the truth from the public."

The protest was only one of the consequences of Zhang's reforms, pointed out the Southern Weekend, as Yan Wen, the sales manager who kicked out Hu, took up the reins at his current position just two months ago.

At that time, He Yanan, former sales manager and virtual founding member of SOHO, resigned, becoming the fifth senior manager to leave the company in the last two years, following Su Xin (former COO), Li Hong (former senior vice president), Wang Shaojian (former executive chairman and CFO) and Xu Yang (senior vice president).

"Those who build houses (Li Hong), sell houses (Su Xin) and lease out houses (Fan Xiaomei) have all left during the drastic reforms. The departments which Pan Shiyi (Zhang Xin's husband and the other founder of SOHO) was in charge of before have been reduced significantly," a sales manager commented.

The changes also suggest that Pan is gradually handing power over to his wife, the former investment banker of Goldman Sachs who has reshaped the company and grown it into a well-known brand on the world stage.

In October 2010, Zhang suspended publication of SOHO Xiao Bao, a famous magazine in the real estate industry. "I will cut down the budget for promotion in 2011, and shift our focus to online advertisement. Farewell print media!" she later tweeted.

Moreover, Zhang also simplified the company's sales department in the same year, combining five sales directors and 15 deputy sales directors into 10 directors, while in 2011, she simply disbanded the sales departments of SOHO Shanghai and Beijing.

The leasing department did not escape the chopping block either. After a failed trial attempt at hiring overseas educated talent as managers, Zhang eventually handed its businesses over to subcontractors in early 2010.

Yet sales, promotion and leasing used to be Pan Shiyi's central focus, which had played a core role in distinguishing SOHO from others, according to the Southern Weekend.

At this, Wang Ke, former SOHO employee and current partner of Teng Yu An, a real estate consulting company in Beijing, analyzed that "SOHO is exploring a way that suits itself best."

Wang added that SOHO's core departments have been reduced to Design and Investment, because they have found that products and investment and financing management are right down the company's alley for long-term development.

With an asset-light strategy and powerful sales, SOHO pocketed 23.8 billion yuan in 2010 and made its founding couple among the country's wealthiest people, pointed out Yi Xiaodi, Pan's friend and president of Sunshine 100, another real estate group.

However, as China's real estate market suffers from super slow sales, Pan and Zhang have also stressed several times that SOHO needs to be simplified, systemized and internationalized, transforming into an innovative company of asset management and operation, Yi added.

Driven by Zhang, SOHO China went public on the Hong Kong Stock Exchange in October 2007, raising HK$12.8 billion. Though SOHO is suffering from a downslide in sales volumes this year, as Asia's largest commercial real estate IPO, the company was named one of the "Most Admired Companies" in China by FORTUNE (China) Magazine for four years running from 2006 to 2009.