After Alibaba was slapped with a record $2.8 billion fine for anti-competitive behaviour (see WiC536), regulators called a meeting of more than 30 of the country’s largest internet firms to “give full play to the cautionary example of the Alibaba case”.
But as the sector speculated over who might be the next for punishment, tycoon Yao Jinbo had a very specific target in mind.
Last week, the chief executive of 58.com – a classifieds portal sometimes described as China’s Craigslist – called for an antitrust fine for its rival Beike, the leading online real estate platform.
Yao accused Beike of practices similar to those that have been censured at Alibaba. “In the property brokerage sector someone is pretending that sellers are voluntarily choosing ‘one from two’ [a now frowned upon tactic that forces merchants to choose a single platform as their exclusive distribution channel]. I strongly urge the country to impose an antitrust fine on Beike of Rmb4 billion, using 4% as the benchmark [the same penalty levied on Alibaba’s sales],” he wrote.
Beike, set up by the real estate brokerage Lianjia, has been accused of sharp practice by rivals in the past. According to iheima, a news portal, it was the first agency to come up with agreements that required homeowners to contract Lianjia as sole sales agent. The brokerage then promises to sell the property within a certain period of time at a price above market value. To protect the seller’s interest, Lianjia offers compensation if it fails to generate appropriate offers. However, Lianjia also charges a hefty commission for each successful transaction.
Founded in 2001, Lianjia started out as a bricks-and-mortar estate agent with branches in large cities. That meant it was already well-known when it introduced a website and mobile app with listings of new and second-hand properties. In 2018 it went one step further in launching Beike, a platform that sells properties assigned to other brokers, not just agents from Lianjia.
Beike quickly took off and it is now the undisputed leader in its sector. In fact, based on gross transaction value (GTV), it is the country’s second largest e-commerce firm, behind Alibaba Group, with a transaction value of Rmb3.5 trillion ($538 billion) in 2020, outpacing e-commerce giants like JD.com and Pinduoduo.
Beike completed an IPO in New York last summer. As of early this week, it boasted a market capitalisation of $61 billion, surpassing China’s largest property developers like Vanke and Country Garden.
In response to Yao’s accusation, Beike told ThePaper.cn that it has “adhered to lawful management, improved compliance, and used technology to drive the healthy development of the industry”.
Of course, Yao is hardly a disinterested party. In his post last week he added that Anjuke, 58.com’s real estate subsidiary, will be ramping up its sales of new homes this year, after submitting an IPO application to the Hong Kong Stock Exchange two weeks ago. Anjuke generates almost all of its revenues from listing fees paid by real estate brokerages, although it has another arm called Aifang that is contributing a growing share of commissions on its own sales of new homes by agents and developers.
Yao’s very public WeChat rebuke of Beike received widespread attention online, although large numbers of netizens took the opportunity to complain about fake listings on Anjuke’s platform, prompting him to close the comments function on his feed.
As of 2020 Aifang had racked up GTV of Rmb65.3 billion, up 282% from 2019. Revenue has been steadily increasing at Anjuke from Rmb6.2 billion in 2018 to Rmb8.1 billion last year.
But these efforts are still dwarfed by Beike’s transaction value in home sales and overall income that increased from Rmb28.6 billion to Rmb70.5 billion during the same period.
“Just like Alibaba, the young dragon slayer who once promised to transform the industry is now the evil dragon. As Beike becomes the country’s largest real estate transaction and service platform… its peers and developers are all feeling its pressure,” iheima concludes.
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