Important Notice: 1. The Board, the Supervisory Committee and the Directors, members of the Supervisory Committee and senior management of the Company warrant that in respect of the information contained in 2020 Annual Report (the “Report”, or “Annual Report”), there are no misrepresentations, misleading statements or material omission, and individually and collectively accept full responsibility for the authenticity, accuracy and completeness of the information contained in the Report. 2. The Report has been approved by the sixth meeting of the 19th session of the Board (the “Meeting”) convened on 30 March 2021. Mr. XIN Jie and Mr. TANG Shaojie, both being Non-executive Directors, did not attend the Meeting due to business engagement, and had authorised Mr. LI Qiangqiang, also a Non-executive Director, to attend the Meeting and executed voting rights on their behalf. All other Directors attended the Meeting in person. 3. The Company’s proposal on dividend distribution for the year of 2020: Based on the total share capital on the equity registration date when dividends are paid, the total amount of cash dividends proposed for distribution for 2020 will be RMB14,522,165,251.25 (inclusive of tax), accounting for 34.98% of the net profit attributable to equity shareholders of the Company for 2020, without any bonus shares or transfer of equity reserve to the share capital. Based on the Company’s total number of 11,617,732,201 shares at the end of 2020, a cash dividend of RMB12.5 (inclusive of tax) will be distributed for each 10 shares. If any circumstances, such as issuance of new shares, share repurchase or conversion of any convertible bonds into share capital before the record date for dividend distribution, results in the changes in our total number of shares on record date for dividend distribution, dividend per share shall be adjusted accordingly on the premise that the total dividends amount remains unchanged. The abovementioned proposed dividend will be paid to shareholders of the Company on or around 31 August 2021 after such dividend proposal being considered and approved at the annual general meeting of 2020 of the Company. 4. The financial report of the Report has been audited by KPMG, which has issued an auditor’s report with unqualified audit opinion. 5. Mr. YU Liang, Chairman of the Board and Ms. HAN Huihua, Executive Vice President and Finance Principal declare that the financial report contained in the Report is warranted to be true, accurate and complete. 6. The Report contains forward-looking statements in relation to matters such as future plans and development strategies, which do not constitute any specific undertakings to investors by the Group. Investors are advised to be aware of the risks involved, understand the differences between plans, forecasts and undertakings, and pay attention to investment risks. 7. The Report details principal risks faced by the Company and countermeasures thereof. Investors are advised to refer to “Section 8 Corporate Governance Report”. 8. Unless otherwise specified, the currency referred to in the Report is Renminbi. The Report has been prepared in Chinese and English respectively. In case of discrepancy, the Chinese version shall prevail, except for the financial report prepared in accordance with International Financial Reporting Standards, of which the English version shall prevail. Contents Section 1 To Shareholders 4 Section 2 Corporate Information 6 Section 3 Accounting and Financial Highlights 8 Section 4 Directors’ Report 12 Section 5 Significant Events 102 Section 6 Change in Share Capital and Information on Shareholders 118 Section 7 Directors, Members of Supervisory Committee, Senior Management and Employees 126 Section 8 Corporate Governance Report 140 Section 9 Report of Supervisory Committee 178 Section 10 Information on Corporate Bonds 182 Section 11 Financial Report 187 Section 12 Contents of Documents Available for Inspection 304 2 China Vanke Co., Ltd. Definition Term Meaning The Company China Vanke Co., Ltd. Vanke, the Group China Vanke Co., Ltd. and its subsidiaries The Board The board of directors of the Company Supervisory Committee The Supervisory Committee of the Company Onewo Onewo Space-Tech Service Co., Ltd. SCPG SCPG Holdings Co., Limited, incorporated in the Cayman Islands VX Logistic Properties Vanke Logistics Development Co., Ltd. BG the abbreviation to Business Group, which refers to business group, including Southern Regional BG, Shanghai Regional BG, Northern Regional BG, Central and Western Regional BG, Northwestern Region BG and Property Service BG. BU the abbreviation to Business Unit, which refers to business unit, including SCPG BU, Logistics BU, Long-term Rental Apartment BU, Overseas BU, Hotel and Vacation BU, Meisha Education BU and Food BU CSRC China Securities Regulatory Commission SZSE Shenzhen Stock Exchange SEHK The Stock Exchange of Hong Kong Limited SZMC Shenzhen Metro Group Co., Ltd. Company Law Company Law of the People’s Republic of China Securities Law Securities Law of the People’s Republic of China SZSE Listing Rules Rules Governing the Listing of Stocks on the Shenzhen Stock Exchange SEHK Listing Rules Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited Corporate Governance Code Corporate Governance Code set out in Appendix 14 of SEHK Listing Rules Model Code Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 of SEHK Listing Rules A Share(s) (RMB- domestic ordinary share(s) with a nominal value of RMB1.00 each denominated Ordinary in the share capital of the Company, which are listed on the Share(s)) SZSE and traded in Renminbi H Share(s) (Overseas-listed overseas-listed foreign ordinary share(s) with a nominal value of Foreign Share(s)) RMB1.00 each in the share capital of the Company, which are listed on the SEHK and traded in Hong Kong dollars. Articles of Association Articles of Association of China Vanke Co., Ltd. Jinpeng No.1 Plan Guosen Securities – Industrial and Commercial Bank of China – Guosen Jinpeng No.1 Classified Collective Asset Management Plan Ying’an Partnership Shenzhen Ying’an Financial Advisory Enterprise (Limited Enterprise Partnership) Reporting Period 1 January 2020 to 31 December 2020 RMB Renminbi, unless otherwise specified Annual Report 2020 3 SECTION 1 To Shareholders The year 2020 marked the end of an era and the beginning of another for the real estate industry. Judged by sales figure alone, real estate is one of the few industries that still maintained growth amid the pandemic. The sales of commercial housing nationwide increased by 8.7% in 2020. More importantly, however, the industry’s competition rules are changing in a profound way. From the past to the foreseeable future, competition in the real estate industry has gone through three eras, namely, era of land dividends, of financial dividends, and of management dividends. When the value of land had yet to be widely recognized in the early days, some companies that obtained huge tracts of high-quality land at low prices became winners of the first era. The implementation of the “land bidding, auction and listing” system in 2002 marked the beginning of the era of financial dividends, when financial resources became a key element in companies’ leapfrog development. In August 2020, the People’s Bank of China and the Ministry of Housing and Urban-Rural Development, together with relevant departments, formulated the rules for fund monitoring and financing management of key real estate companies, known as the policy of three red lines in the industry. With the introduction of the policy, the industry rules were rewritten. Its impact on the industry is no less than that of the land bidding, auction and listing system. The model of relying on high leverage, high liabilities, and high inventory to achieve high growth will not sustain under the new policy, heralding the shift from the era of financial dividends to the era of management dividends. Characterized by “full competition”, the era of management dividends will witness more intense competition. If what mattered in the era of land dividends and the era of financial dividends was how much companies could profit and how fast they could develop, it is now a matter of survival for companies in the era of management dividends. If a company cannot win, it will be knocked out of the market. In the face of the competition in the new era, we should abandon the old model of seeking bigger scale and instead focus more on the quality of growth. The era of management dividends requires companies to be more capable. On the one hand, companies should have more comprehensive capabilities. “Land” and “finance” are both single resources of key importance, while “management” requires comprehensive capabilities. On the other hand, companies need to have unique advantages. When business models as well as products and services tend to be more homogeneous in a specific industry, companies should develop unique competitive advantages in order to stand out of the competition. In the face of higher-level competitions, we should forge our unique and definitive advantages that will help us leap forward while ensuring balanced development with no specific shortcoming. 4 China Vanke Co., Ltd. Section 1 To Shareholders The era of management dividends is full of uncertainties and challenges, but crisis and opportunity are always two sides of the same coin. After weighing up the changes and risks, we have to ask ourselves, “Where are the opportunities in the industry?” Opportunities come from the demands of customers. A company exists to meet customer demand, which is an eternal business logic. But customer demand is not constant. It is like a rose transcending time. When the Internet-driven younger generation became the mainstream of the market, their preferences emerged with unprecedented diversity. A new canvas is unfolding in front of every company.