Vanke gets creative with Alibaba discount program

Property companies are resorting to imaginative strategies to promote sales amid a market downturn. The latest tactic is teaming up with e-commerce companies.

Top developer China Vanke Co on Tuesday said it is working with e-commerce leader Alibaba Group Holding Ltd to offer discounts to home purchasers who also shop on the latter's Taobao market.

Through Sept 30, Vanke will offer discounts of up to 2 million yuan ($325,000) on certain properties if the buyer has spent more than that amount on Taobao in the past year. Those who have spent less than 50,000 yuan are eligible for a 50,000 yuan rebate. Consumers who spend 50,000 to 2 million yuan will get rebates according to the company's formula.

Vanke's Hangzhou branch launched the campaign, which was joined by branches in 11 other cities. Units in 23 Vanke projects in Beijing, Shanghai, Chongqing, Shenyang and other cities are also being offered, Vanke's executives told Chinese media.

Within 12 hours, more than 140 Taobao users had received 1 million yuan in discounts, the company said in a press release.

However, some said the discount program is more of a publicity stunt than a substantial price concession.

Zhou Man, a 27-year-old office worker in Beijing who is also a Taobao user, said: "At first glance, it is attractive. But when you look deeper, you find there are so many conditions. Not many people can meet all these conditions."

For example, Alibaba counts purchases only on Taobao, which features small vendors. Money spent on another important Alibaba platform - Tmall, which offers established brands - is not counted.

And the selection of projects is geographically limited. Hangzhou, a city that has been hard-hit by the market downturn and where inventories are extremely high, features 12 of the 23 projects. In Beijing, just one project has joined the campaign. That development is outside the southern Fifth Ring Road, far from the city center.

The Beijing Times reported that most projects in the program have a discount ceiling of 100,000 yuan. But many developers are already offering similar price cuts.

Vanke and other developers have been paring prices since March to lure buyers amid a slump in the nation's property market. Last month, new home prices fell in the largest number of cities tracked by the government since January 2011.

Total net profits of 82 real estate companies that have announced first-half financial results fell 3.57 percent to 20 billion yuan, according to Shanghai-based Wind Information Co Ltd.

Vanke performed better than most of its peers. Its first-half net profit edged up 5.55 percent to 4.81 billion yuan. But the growth rate was much slower than the year-earlier figure of 22.3 percent.

Slumping sales have prompted developers to ramp up sales campaigns in hopes of recovering their investment quickly. All kinds of incentives are being offered, including extra parking spaces, bigger discounts for group buying and exemptions from property management fees.

In addition, in early August, one project that participated in the Vanke-Alibaba campaign was reported by the media to have hired people to pose as buyers to create the impression of strong demand.