January 16, 2008 / 5:20 AM / 12 years ago

China property firm's woes spark fierce protests

BEIJING, Jan 16 (Reuters) - Employees and customers of a leading real estate agency have held rowdy protests after the closure of many of its offices in southern China sparked worries about the health of the firm, local media reported on Wednesday.

Chuanghui, which bills itself as the country’s biggest real estate agency, said it had closed 1,000 of its 1,800 outlets since October because of a deteriorating market but added that these cuts would let it stay afloat.

A company official blamed the company’s woes, including an 80 percent drop in its Shanghai business, on government policies to cool the real estate sector and rein in credit growth that have weighed heavily on property prices across the country.

“The market has taken a turn for the worse and our deals have dropped a lot,” company spokesman Zhang Min said from Shenzhen.

All of Chuanghui’s offices in four Pearl River Delta cities, including Guangzhou, were closed on Tuesday, while dozens more in Shenzhen and two other cities were also shut, local media reported.

One photo on a newspaper Web site showed people standing in front of locked doors with a sign reading: “Chuanghui, give us back the money we earned with our own blood.”

Newspapers reported that looters had smashed some of Chuanghui’s offices and run off with computers and printers.

Zhang said China’s tighter monetary policy along with new rules preventing people from obtaining mortgages for second homes had delivered a serious blow to Chuanghui but that its future was safe thanks to its cutback of branches.

“We will not let the company go under. We will maintain the brand,” he said.

The mortgage restrictions, coupled with a government freeze on bank lending, have begun to bite, with the real estate market weakening sharply across China at the end of last year.

House prices fell 20 percent in December alone in both Beijing in the north and Guangzhou in the south, state media have reported, without specifying whether they were referring to new or existing homes.

Official figures for December have not yet been released. Average prices nationwide in November were up 10.5 percent from a year earlier.

Along with Chuanghui’s plunge in business in Shanghai, Zhang said the company’s dealings in Shenzhen had been halved.

Another Chuanghui official, quoted in the Chinese press, said the company’s troubles stemmed from a hasty move into the Shanghai real estate market in the second half of 2007, as it was more accustomed to business in smaller southern cities.

Jiang Dexin, vice head of marketing, said Chuanghui had floundered in the metropolis and lost 80 million yuan ($11.1 million) after opening 250 offices in one go in Shanghai. ($1=7.236 Yuan) (Reporting by Jerry Hua and Simon Rabinovitch; Editing by Alan Wheatley)

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