A Case Study Of Country Garden Partner System

As China’s economy enters a new normal,the real estate industry has entered a lackluster silver age.The period that relies on land dividends and the rapid expansion of the population dividend has become a thing of the past.Real estate enterprises face the challenges of survival and development.A large number of real estate enterprises are trapped in the difficult situation of survival,not to mention development and expansion.But Country Garden can go against the current,and has become the largest black horse in China’s real estate industry in recent years.Since 2013 when its sales exceeded the 100 billion mark,the company has been creating its sales miracle with stunning enterprise scale growth.All this turning point stems from the implementation of the equity incentive scheme under the "double enjoyment" mechanism in the late2012,which is called the "business partner system" by Country Garden.The business partner system implemented by Country Garden,in its essence,is the application of virtual stock and restricted stock in the equity level of the company’s project,the core of which is still equity incentive,which belongs to the compound equity incentive scheme in a broad sense.On the basis of the idea of partnership,all employees are included in the incentive scope,so that employees become business partners,that is,the company’s shareholders in operating level.The system can also be called business partnership equity incentive.The equity incentive scheme of business partnership mainly includes two core elements,namely,employee shareholding and project investment,putting employees and enterprises into the interest community with the principle of "benefit sharing and risk co-sharing",which greatly solves the deficiency of the traditional equity incentive scheme in the incentive effect,and opens up a new idea for solving the principal-agent problem.As the first enterprise in China’s real estate industry to implement this kind of equity incentive scheme,Country Garden has achieved great success,so it is very practical to analyze and study the concrete implementation of the equity incentive scheme of the business partnership system in Country Garden.The main research method of this paper is case analysis.First of all,with the implementation of the business partner system of Country Garden as the research object and based on the relevant theory of equity incentive,the actual situation of the implementation of theCountry Garden is expounded,mainly including the basic situation of the Country Garden,the implementation of the business partner system background and content and its characteristics;Then,from different aspects,the effect of the implementation of the business partner system in Country Garden is analyzed in detail.The financial aspect of Country Garden and China Evergrande,which implemented the stock option method for equity incentives at the same time,is compared horizontally.The similarities and differences of financial capabilities under the equity incentive scheme are found to reveal the characteristics of this scheme,and evaluate the equity incentive scheme of Country Garden,including the advantages and existing problems and optimization suggestions.Finally,the reference significance and enlightenment of the Country Garden business partner system of are summarized,thus enriching the relevant research on the equity incentive of the business partnership,and providing reference for other real estate enterprises.Through the research,the following conclusions are drawn in this paper: the implementation of the business partner system of Country Garden has improved the company’s performance and greatly enhanced the overall financial ability,mainly focusing on the performance of cash flow and inventory turnover,and the two are significantly ahead of China Evergrande,which implemented the traditional equity incentive scheme.In addition,the capital market performance is positive with short-term stock yield rising.In the long run,the stock price continues to grow and shareholder wealth increases.But with the increase in the market share of enterprises,product quality problems are on the rise.