Vanke CEO Arrested as Shenzhen Officials Take Charge of Developer: Reports

China Vanke president and CEO Zhu Jiusheng was reportedly arrested Wednesday by public security authorities, with the troubled developer’s operations now said to be in the hands of Shenzhen government officials.

Zhu’s detention was the subject of online media accounts Thursday and Friday by state-run groups, most of which later deleted their stories from the internet. The turn of events at Vanke, China’s fourth-largest builder by sales, was first reported in English-language media by Reuters, which cited a now pulled-down article at the Economic Observer, a state mouthpiece.

In a report still available to view on the web at Mingtiandi’s time of publication, state-owned news site Sina said it spoke with Zhu on Friday morning, shortly after the Vanke boss left an update at his WeChat profile.

“Business trips before the holidays, reunions during the Spring Festival, and return to work after the holidays, short-term business travel rentals for short transitions are more affordable,” Zhu wrote on WeChat.

Banker Turned Builder

Shenzhen-based Vanke, whose biggest shareholder is the city’s state-owned subway operator, had not issued a statement about the reports at the time of publication. Vanke’s website on Friday still showed Zhu as part of the management team.

Zhu took over as president and CEO in early 2018 from chairman Yu Liang, who had performed all three roles after Vanke founder Wang Shi stepped down in June 2017. Zhu previously served as chairman of the group’s financial services arm, Shenzhen Vanke Financial Consultancy, after joining Vanke as senior vice president in 2012.

Before joining the developer, Zhu worked at state-owned China Construction Bank for 19 years, rising to deputy president of the lender’s Futian branch in Shenzhen.

The apparent arrest recalls prior episodes at bankrupt builder China Evergrande, whose founder and chairman Xu Jiayin disappeared from public view in 2023 after reportedly being detained by authorities that September on suspicion of “illegal crimes”. In March 2024, Xu and former CEO Xia Haijun were slapped with a lifetime ban from China’s securities market.

In a client note cited by Reuters, JP Morgan analysts said Vanke would find itself in a “make or break” situation if news of Zhu’s detention turned out to be true, with implications for the company’s $4.5 billion in offshore debt coming due this year.

“The CEO being ‘taken away’ or the stepping-in of a working group may sound negative at first glance, but we believe it is important to note if the government’s ultimate determination is to support Vanke to meet debt obligations,” the analysts said.

Worsening Finances

Vanke posted a net loss of RMB 16.4 billion ($2.2 billion) for the first nine months of 2024, including RMB 8.1 billion in red ink for the third quarter alone.

The builder’s December contracted sales totalled RMB 23.3 billion, down 29 percent year-on-year, bringing the full-year total to RMB 246 billion, down 35 percent.

The financial situation may have prompted state authorities to step in, with Bloomberg reporting last month that China’s banking regulator had asked the nation’s insurers to report their financial exposure to Vanke, seeking to gauge how much support the developer needs to avoid default.