A Single “Complaint Letter” Exposes the Tensions Behind a Major Partnership Between Two Leading Property Developers

A single “complaint letter” has unexpectedly exposed underlying tensions between two leading real estate developers.

Recently, a letter sent by Beijing Xingding Real Estate Development Co., Ltd. to the Guangzhou State-owned Assets Supervision and Administration Commission began circulating within the industry. The letter alleged that, in the Beijing Puyue project, majority shareholder CSCEC Zhidi accused its operating partner, Yuexiu, of failing to follow established pricing rules, secretly adjusting prices for certain units, and affecting sales at the neighboring project.

Sources close to both parties confirmed to Yicai that the letter is authentic. All shareholders involved in the project are now actively negotiating in hopes of resolving the marketing-related issues.

Price reductions and “price wars” among new developments have become increasingly common in today’s new-home market—even in Beijing’s high-end segments. What makes this case distinctive is that the dispute arose between partners working on the same large-scale luxury development. As the housing market continues to adjust, risks embedded within the co-development model are beginning to surface.

A Turbulent Chapter in Beijing’s Luxury Property “Alliance”

In recent weeks, central SOE CSCEC Zhidi and Guangzhou state-owned developer Yuexiu found themselves at odds over marketing and operational decisions for the Beijing Puyue project.

Beijing Xingding, a subsidiary 97% owned by CSCEC Zhidi, sent a “complaint letter” to the Guangzhou SASAC accusing Yuexiu of deviating from the unified pricing system by changing list prices and adjusting discount structures, ultimately causing transaction prices to stray from the agreed pricing logic.

Why would a major Beijing-based central enterprise clash with a Guangzhou state-owned developer over pricing?

The conflict traces back to April of this year, when a consortium formed by CSCEC Zhidi, Jinmao, Yuexiu, and Chaoyang Chengkai secured the Huangshan Mudi plot for 12.6 billion yuan. The site was later divided into two phases: the southern parcel (Zijinchengyuan), marketed by CSCEC Zhidi, and the northern parcel (Puyue), managed and operated by Yuexiu.

Despite their shared origins and similar shareholding structures—with CSCEC Zhidi holding the largest stake in both projects—the division of land into two separately operated developments created natural competition.

To avoid direct head-to-head competition, the two projects initially pursued differentiated positioning. Zijinchengyuan adopted a Song-style residential aesthetic, offering units from 133 to 400 square meters. Puyue took on a more international, modern-Oriental style, with units between 152 and 258 square meters, all designed as four-bedroom layouts.

By October, both developments launched to strong market reception. Zijinchengyuan reported 5.65 billion yuan in sales, while Puyue achieved 4.565 billion yuan—together becoming two of Beijing’s hottest new projects that month.

Not long ago, the two projects even “joined forces” in marketing, releasing a joint poster celebrating their October dominance in Beijing’s new-home sales rankings with the slogan: “Two Masterpieces of the Era, One Shared Success Story.”

But within half a month, the emergence of the complaint letter revealed tensions behind the glossy façade of strong sales.

According to Beijing Housing Authority data as of November 15, Zijinchengyuan had signed 120 contracts with an average price of 98,500 yuan per sqm, while Puyue had signed 130 units at an average price of 99,600 yuan per sqm—a modest gap of about 1,100 yuan per sqm.

CSCEC Zhidi argues that Yuexiu’s launch pricing for Puyue was unreasonable. They claim that comparable buildings at Puyue were priced lower than those at the adjacent phase. The company also alleges inappropriate competitive behavior by Yuexiu’s marketing team, stating that it caused “loss of pre-committed customers for the southern parcel” and “lowered customer price expectations in the entire district.”

As the largest shareholder, CSCEC Zhidi formally expressed its stance. A letter addressed to Yuexiu asked the company to hand over marketing responsibilities for the northern parcel. The eventual outcome remains uncertain.

Sources close to Yuexiu note that all parties are negotiating to find a responsible solution. CSCEC Zhidi’s core demand, they say, is to correct improper marketing conduct so the two projects can ultimately achieve a “win-win” outcome and support healthy pricing in the district, offering quality products and homes to buyers.

Hidden Risks in Joint Real Estate Development

The conflict between CSCEC Zhidi and Yuexiu ultimately reflects the increasingly fierce competition in the new-home market.

The two projects occupy one of Beijing’s most coveted residential locations. When the land was acquired in April, analysts noted that the Huangshan Mudi area—situated between the East Fourth and Fifth rings—was the only new residential plot added to the Chaoyang-Qingnian Road subdistrict in nearly a decade, with exceptionally strong amenities.

This area is widely recognized as a true “luxury” zone. Northwest of the parcel lies the iconic Xinghewan development, where resale listings hover around 95,000 yuan per sqm. Surrounding projects include Runfeng Shuishang, Huafang Yicheng, and GOME First City.

However, competition within Beijing’s Chaoyang District luxury segment is intense. Current listings include Poly Chaoguantianjun, Jinmao Manyao, China Overseas Shiguang Zhijing, China Overseas Chaoyang ONE, and CK Hutchison’s Yucuiyuan. Official information indicates that Chaoyang will release 30 additional high-quality residential plots over the next three years.

As multiple premium developments compete directly, buyers now have more choices. Although Zijinchengyuan and Puyue enjoy strong location and product advantages, they still face overlap in target customers—many buyers visit both sites before making a final decision.

This dispute also highlights inherent risks in co-development models.

During the real estate boom, developers widely used joint ventures to expand rapidly. Data from Guotai Haitong shows that by the first half of 2025, minority shareholder equity among 36 major developers had reached a historic high of 44%.

While co-development helps scale growth, it can also lead to hidden liabilities, complex debt structures, and misaligned incentives—risks that often surface when the market turns downward.

According to Bai Wenxi, Vice President of the China Enterprise Capital Alliance, joint development models carry several structural risks. First, divergent interests make coordination difficult, especially when market performance weakens and disagreements arise over pricing, marketing, and cost control. Second, mismatches between shareholding ratios and operating control—such as Yuexiu being a smaller shareholder yet holding operational authority—can spark conflict. Third, when sales pressure grows, partners may take aggressive measures to protect their own performance, disrupting the cooperation balance.

Both CSCEC Zhidi and Yuexiu are currently pushing hard to expand their presence in Beijing.

CSCEC Zhidi, a major force in Beijing’s new-home market, rebranded in 2020 and has since accelerated its investments, often through joint acquisitions. According to the China Index Academy, from January to October 2025, China Overseas, CSCEC Zhidi, and China Resources Land ranked top three in Beijing by equity sales, with 37.62 billion, 16.61 billion, and 16.23 billion yuan respectively.

Yuexiu is equally aggressive. In the first half of 2025, the company achieved 19.72 billion yuan in contracted sales in Beijing—a year-on-year surge of 255%. From January to October, Yuexiu’s total sales reached 25.49 billion yuan, ranking second, while its equity sales amounted to 11.53 billion yuan, ranking fifth.

Whether these two industry heavyweights can ultimately reach a consensus on their shared project remains to be seen.