Chinese developer forces staff to buy company real estate
Zhengzhou Zensun Real estate was slammed for forcing its employees to buy unsold apartments
A mainland real estate developer is reportedly forcing staff to buy its property. Zhengzhou Zensun Real estate is to deduct 60% of the pay from its managers who make over 10,000 yuan (US$1,458) per month in a scheme to sell them unsold property, according to the mainland press.
They have to buy property for at least 720,000 yuan from Zensun, a Henan developer which claims in its website to have over 80 residential, commercial, office and carpark projects in nine cities.
Other staff will have a minimum of 30% deducted from their pay to purchase property from their employers.
Many developers in China recently slashed prices by around 30% to clear unsold units between September and October, traditionally the best season for selling real estate.
However, both the property and equity markets in China suffered in recent months amid uncertainties over the Sino-American trade war and unsustainable economic growth.
It is understood that units forced upon Zensun staff were only discounted by between two and three percent from market price. Requests by staff who wanted to remain on full pay were declined, reportedly because Zensun wanted to cut its payroll costs.
For staff who found themselves in need of financing, Zensun offered to lend them the sum required for a down payment at an annual interest rate of 8%. This is lower than the average cost of financing offered by most mainland developers.
After their plan was not received well, Zensun issued a clarification statement on Weibo, China’s answer to Twitter. However, only hours later, they took it down. The statement described the scheme as a voluntary one that aimed to help Zensun staff achieve their dream homes. It said that resultant rumors have hurt the company’s reputation.
Taking up to 60% of staff pay is unheard of in a country where personal income tax rates are above 30%.
Mainland newspapers report that, as most front-end staff at Zensun refused to accept the salary cut and home purchase scheme, they have entered negotiations with the company owner. It is believed that, following intense media coverage of the plan, Zensun will be forced to, at the very least, fine tune the arrangement.