Summary of Key Points
This news article uses the "wine party incident" in Hangzhou as a catalyst to discuss the cooperation between China Merchants Shekou and Jianfa Real Estate regarding a high-value land plot in Binjiang. It then outlines the evolution of Hangzhou's land market over the past decade: from changes in bidding rules (from competitive bidding for land prices to competing for the requirement to retain a certain percentage of the developed land for self-use, to a lottery system, and finally back to the principle of "the highest bidder wins"), historical instances of rule violations (such as collusive bidding and rent-seeking behavior by authorities), the strategies of real estate companies within these rules (for example, Songdu's decision to withdraw from a land deal), to the current market characteristics (shrinking supply, fierce competition for key plots, and concentrated investment by major players). The article raises a crucial question: as high-quality land resources become increasingly scarce, how can real estate companies maintain legal and ethical boundaries in their business interactions?
I. Behind the Wine Party Incident: Cooperative Projects Are Highly Desirable, but Boundaries Must Be Maintained
The main figures involved in the wine party incident, Zhao Haifeng (General Manager of China Merchants Shekou in Zhejiang) and Ma Moumou (General Manager of Jianfa Real Estate in Hangzhou), are associated with a cooperative project on the Binjiang Permanent River plot. In June this year, China Merchants Shekou acquired the land for 6.094 billion yuan, with a premium rate of 79%, and subsequently partnered with Jianfa to develop it. How valuable is this plot? After 243 rounds of bidding, the floor price reached over 50,000 yuan per square meter, making it a "golden plot" in Hangzhou's core area.
Why cooperate? Because key plots are expensive and carry high risks; by joining forces, companies can share the costs. However, the closer the cooperation, the easier it is for boundaries between businesses to blur. For instance, when Jianfa invited its female employees to a dinner with the partner company, it led to an incident of sexual assault. This highlights that no matter how important a project is, business interactions must not cross legal and ethical lines.
II. Changes in Hangzhou's Land Auction Rules: A Decade of Circles, Back to "The Highest Bidder Wins"
The evolution of Hangzhou's land auction rules can be seen as a cycle of trying to control land prices:
- Early period (before 2010): The simple principle of "the highest bidder wins" led to soaring land prices.
- 2017 and onwards: Fearing excessively high land prices, the rules were changed to require bidders to compete for the percentage of land they would retain for self-use. Once a certain price was reached, they could no longer increase the bid; instead, it became about who would agree to hold more residential units (the retained portion could not be sold but only rented).
- 2021: The rules were changed again to require bidders to either donate the land for affordable housing or participate in a lottery to further control prices.
- After 2023: With the cooling of the real estate market, the government lifted price restrictions and returned to the "highest bidder wins" system.
These changes reflect an attempt to balance "land revenue generation" with the pressures on real estate companies: controlling prices during market booms to prevent bubbles and relaxing rules during downturns to stimulate investment.
III. Under-the-Radar Manipulations: Using Money to Deter Competitors, Officials Helping to Remove Obstacles
Even with strict rules, some try to find shortcuts:
- 2010 Lin'an case: A developer offered 1 million yuan to a competitor to withdraw from the bidding, resulting in the land being sold for only 1.06 million yuan more than the starting price, saving 1 million yuan in potential bids. However, the developer was convicted of bid rigging.
- 2014-2018 Xiaoshan case: Cao Pengying, a state-owned enterprise official, used his position to help real estate companies eliminate competitors and received over 1 million yuan in bribes, eventually serving an 8-year prison sentence for corruption.
Such practices undermine fair competition and result in the loss of revenue that could have been generated through competitive bidding.
IV. The Dilemma for Real Estate Companies: The "Lossy Business" of the "Compete for Self-Use" Era
The "compete for self-use" rule from 2017 to 2021 was particularly detrimental to companies:
- Songdu's Withdrawal: In 2021, Songdu acquired a plot in Gongshu District with a 21% requirement to retain land for self-use but decided to withdraw two months later, sacrificing a 50-million yuan deposit. The reason? The retained portion could not be sold, and with the market cooling, the project might have been unprofitable.
This shows that rapid changes in rules can lead to significant losses if companies misjudge the direction of the market. While the rule aims to control prices, it actually shifts the risk to the companies, which must hold large amounts of unsold property, posing a major challenge to their financial stability.
V. The Current Hangzhou Land Market: Reduced Supply, Fierce Competition for Core Plots
The current land market in Hangzhou presents a stark contrast:
- Shrinking supply: In the first half of 2026, only 34 residential plots were sold, half the number from the same period in 2025, with transaction amounts dropping by nearly 60%. The government is more selective in its land sales.
- Fierce competition for core plots: Plots in key areas like Binjiang and Xiaoshan are being bid for at premium rates of 70%-80%, while peripheral areas like Linan and Chongxian see no buyers and have their land sold at reserve prices.
- Concentrated investment: Major companies (Binjiang, Greentown, Jianfa, China Merchants) dominate the core market, leaving smaller players on the sidelines.
This polarization indicates that high-quality land is becoming increasingly scarce, leading to more focused competition among real estate companies. The need for cooperation is greater, but with it comes the added importance of maintaining clear boundaries to avoid incidents like the one described in this article.
Conclusion
The evolution of Hangzhou's land auction market reflects the cyclical nature of the real estate industry and the ongoing struggle between rules and human behavior. Regardless of how the rules change, upholding "fair competition" and "business ethics" will be the long-term foundation for success for both companies and professionals in the industry.