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Chairman’s Statement

Upon reaching RMB10 billion in contract sales in 2012, Central China Real Estate has entered the stage of sustainable development. For CCRE to achieve RMB50 billion is just a matter of time. In the coming few years, we will continue enhance and strength the diversification of financing channels, product standardization, standardization of human resource development, as well as standardization of planning and control. Nonetheless, it is difficult to ensure that the leading position of CCRE in Henan property market will not be transcended. The reasons are as following: i) several outstanding property developers have entered the market successively and has evidently put pressure on the property market; ii) due to the expansion of the market at an extraordinary pace during this past decade, the market in Beijing, Shanghai, Guangzhou, Shenzhen and other first-tier cities becoming saturated. Major property developers will consider provincial second-tier cities as target markets and expand market share in those cities. Zhengzhou is no exception; iii) when compared to other leading competitors, the advantages of CCRE’s brand, assets, talented people, products as well as marketing and sales will gradually be deemed nonexistent. In light of such competitive environment, CCRE has no choice but to strive for a breakthrough by further implementing strategies.

While searching for a breakthrough direction, we must first review the Company’s strategies. The advantages of our established provincial strategy are as following i) thanks to the tremendous efforts and continued investment in brand building over the past 20 years, the Company has successfully established an irreplaceable brand reputation in the Henan market; ii) as current and target customers focus on particular areas in Henan, our products and services well cover the region with high management efficiency; iii) with close to 100,000 customers and a continuously growing customer base, there is still room for improvement in terms of marketing and sales, as well as value added services; iv) community services, call center, VIP cards, soccer, education, commerce, hotel, cultural tourism, green facilities and other resources are concentrated in the same region, the effect of integration is significant. These advantages are sole efforts of CCRE and also difficult to be imitated, which should be totally become CCRE’s new competitive capabilities. Particularly, we launched VIP cards since 2008 – “the Services System of CCRE”, which has accelerated the nurturing of core corporate business competitiveness. Once the strategic planning is accomplished, CCRE would achieve a significant breakthrough, boast new market advantages and further expand its development scale.

How to implement the grand strategic planning?

Discovering demand, satisfying demand, directing demand and creating demand is the essence of running a business. As the need of clients continue to increase, along with the continuous trend of product homogenization, competition among enterprises continue to extend to product related services, resulting in a need to reinvent value added services. As depicted in the movie “Personal Tailor” by Feng Xiaogang, innovative services and personalization were underlying themes of the movie. Similarly, in CCRE’s version of “Personal Tailor”, the Company will aim to fully utilize its resources to meet demands arising from evolved living standards, to provide all customers with tailored and customized services. In CCRE’s version of the film, its “script” will most likely include i) community property management agencies to be upgraded to customer service centers, with service areas covering housekeeping services, express delivery or transfer of purchased e-commerce goods, as well as subscriptions to online e-commerce terminals or information thereof etc.; ii) opening “CCRE Specialty Delivery Stores” in various communities, and enhancing the nationwide “Shopping Basket Program”, by including delivery of flower and fruits apart from vegetables; iii) establishing a corporate service command and control center at “9617777”, centralizing province-wide services; iv) creating the “superior smart card”, a stored value smart card for residents to gain access and make electronic payments to various resources (community, hotel, shopping malls, schools, nurseries, soccer fields, property showrooms etc), to create a symbol of status for our prestigious residents; v) allow entrepreneurs among our clients to meet and exchange conversations with prestigious business leaders and renowned economists, cultural and health experts to share their wisdom and experience; vi) last but not least, to create a “Blind-spot Free Network” in terms of time, geographic location and features, within Henan. As depicted above, CCRE’s version of “Personal Tailor” services is a set of complex transformation procedures that requires the whole CCRE team to participate, strengthen their knowledge, maximize contribution and continuously pursue forward in order to reach this goal. When these transformations commence operation and are readily available to our customers, CCRE has thus, successfully undergone economic transformation – to not only a property developer, but one that provides value-added services to customers in the new-age lifestyle. Moreover, the Company will enter the desired state of sustainable development, while its value will directly influence and determine the future.

The above is some food for thought for the Year of the Horse.

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