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china equities



company name
Greentown Service
Group Co. Ltd
core business
Residential property management
Hangzhou, China
esg consideration
A stakeholder approach to customers and employees

Company Overview

Greentown Services Group is one of the largest residential-focused property management companies in China. The company manages over 250 million square metres of properties and provides services such as security, maintenance, and garbage disposal, as well as more value-added services like maid services, nanny services, and community group buying. Its treatment of employees is an important part of this culture of service. This stakeholder approach results in a symbiotic relationship, where treating employees well results in them treating customers well. 
250 M+
square metres of properties

ESG Consideration

Greentown’s focus on service has resulted in a stellar reputation and has allowed the company to achieve industry-leading retention rates, collection rates, and tender bidding success rates. For seven straight years, the China Index Association has selected Greentown as the number-one property manager in terms of customer satisfaction. Greentown caters to more premium customers who value service above price. We believe this focus on quality of service will allow Greentown to retain the properties it manages and increase prices over time.
According to Greentown, the company’s first mission is to create a respectful and harmonious working environment for its employees, committing to their career development as well as their physical and mental health.
Employee care is the most effective way to embody Greentown’s corporate culture. This is evidenced by its comprehensive welfare plan, which seeks to improve the quality of life for employees through benefits such as:
Social insurance
Housing fund
Child allowance
Greentown’s meritocratic approach ties compensation to performance, especially around metrics like customer satisfaction and retention rates. Rather than hiring externally, almost all of the company’s property managers have been trained within Greentown and have risen up the ranks there. Whatever the experience, a former security guard or a fresh college grad, if the candidate exhibits the values of exceptional customer service, anyone can become a property manager. As a result of their training and the focus paid to their wellbeing, these employees provide exceptional service, going above and beyond to delight customers. During our diligence, we heard numerous stories of thankful customers. Developing this culture is exceptionally difficult, and we believe it offers a competitive advantage to Greentown in a highly service-driven industry.
Greentown’s stakeholder approach has established a distinct culture, achieved industry-leading renewal and collection rates, and richly rewarded its stakeholders, even as the company has earned lower margins relative to peers. Despite having higher margins, these peers have also underinvested in these areas, and we believe that Greentown’s profitability is much more sustainable. Greentown is also looking for ways to provide more value to its customers through investing for future businesses. This long-term approach is something that we look for in the companies we invest in.
Final thoughts
We believe Greentown’s focus on environmental, social, and governance (ESG) factors, along with its stakeholder approach, will not only benefit shareholders over the long run, but all stakeholders.
Sources: Burgundy research, Greentown filings
About the author
Ching Chang
About the author
Ching Chang, CFA
Vice President, Portfolio Manager
Since high school, Ching has been interested in investing because it combines his love for psychology, philosophy, economics and mathematics. Ching believes that Burgundy’s quality value approach and long-term orientation matches perfectly with how he approaches investing. As a member of the Emerging Markets team, Ching puts Burgundy’s investment philosophy to work in regions where markets are still not efficient. This approach provides opportunities for investors willing to conduct deep fundamental analysis to uncover potentially profitable investment ideas.
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