(Yicai) March 11 -- China Vanke has thinned the number of its subsidiaries in southern China from 12 to eight as a result of changes in the market environment and its business needs, the struggling property developer’s regional division told Yicai.

Vanke merged its units in Guangzhou and Foshan, those in Dongguan and Huizhou, and those in Zhongshan and Zhuhai, which will now be in charge of business in Jiangmen, Zhongshan, and Zhuhai. The firm also combined its Fuzhou and Xiamen subsidiaries, which will oversee business in Fuzhou, Quanzhou, Xiamen, and Zhangzhou, while its Nanning unit will take responsibility for Liuzhou.

Reducing the number of units is typically associated with a company’s shrinkage, a source in the real estate sector told Yicai. Shenzhen-based Vanke has been among the top three builders in China by sales revenue for many years, ranking first in 2021, the person noted.

With the downturn in the property market, Vanke’s business has dropped off and the builder has had to cut its workforce. It had 131,817 employees in 2022, compared with a peak of 140,565 in 2020, according to data provider Wind Information.

Vanke's sales have been declining since 2021, with contracted sales down 9.8 percent to CNY376.1 billion (USD52.3 billion) last year, falling to just half of what they were in 2020. The situation remains bleak, with the figure tumbling 32 percent to CNY19.5 billion (USD2.7 billion) in January from a year ago.\

Vanke's southern regional division ranks second for sales, behind only Shanghai. Sales fell 28 percent to CNY103.9 billion in 2022, but still accounted for a quarter of the company's total.

This is Vanke’s second major organizational restructuring so far this year. In January, the firm set up a commercial business division after merging its commercial operations in seven regions with unit SCPG Holdings.

Editor: Martin Kadiev