At the end of 1999, when occupants moved into the first apartment building, Pan Shiyi first offered his 'no-questions-asked' return policy. Pan Shiyi's policy is based on his 'cutting-your-losses' theory: if there is no prospect for improving a situation, ending it is always the best solution. The policy received unanimous criticism in real estate circles because it imposed enormous pressure on other developers, but enjoyed a favourable reception from both consumers and the public at large.
According to statistics provided by New Town, only four owners out of 1,300 residents returned their houses after the implementation of the 'no-questions-asked' return policy. Further enquiry revealed that family problems, rather than dissatisfaction with the apartments, were the cause of the return of the properties in question.
Thus, the 'no-questions-asked' return policy is both very popular and rarely invoked. Based on this overall experience, SOHO New Town decided to continue with the practice and implement an enhanced version of the original policy, by adding an extra 10% interest. Just when it seemed like there was nothing more they could do, SOHO New Town has once again exceeded people's expectations.
When Pan Shiyi explains the upgraded version of 'no-questions-asked' return policy, the reasoning behind it is very simple, "We discovered two problems when we applied this policy to the apartment section. First, clients had too short a time to consider the offer. The house they bought is an investment worth over a million Yuan, and therefore they needed more time to make their decision.
Secondly, many clients complained that the value of their house had increased a great deal over the course of their ownership, and it would not be fair if only the original payment was refunded. I understand that our clients bought houses from us as an investment. They supported us, and at the same time took on a great deal of risk.
Their concerns are understandable, so I felt we should offer part of our profits from the increased value of the houses as a 'thank you' to our clients. I asked our financial department to determine a way that we could return the payment together with the increased value to the clients. That was our basic idea.
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Of course, the implications behind this new policy are far-reaching. The 'no-questions-asked' return policy will help to stimulate discussion about possible directions for the Chinese real estate industry to take in a market economy. The 10% addition to the prevailing bank interest rate will help to show the potential for profitable investment in China's developing real estate market.
Although other problems such as legislation, housing prices, industry profits and project evaluation will also need to be raised in the future, the new version of Pan Shiyi's return policy will point toward new solutions and help raise awareness of new possibilities for profitable real estate investment.
