Netizen Voices: Embattled Rental-Loan Firm Faces Rage After Evictions

Internet-based long-term residential rental company Danke Apartment (蛋壳公寓, literally “Eggshell Apartments”), founded in Beijing in 2015, has in recent years become a major player in China’s fast growing housing rental market. In January of this year, it went public on the New York Stock Exchange. Touting its big data and mobile app-fueled business approach and its typically young and educated client base, it attracted interest as both a tech and a property management firm. However, its model appears to be collapsing as tenants, property-owners, and even some employees are protesting after a string of evictions.

As reported on Weibo by Chinese business news outlet Ent-Biz (新文化商业), Danke runs on the risky model known as “rental-loans” (租金贷). Renters are given price incentives to pay upfront for a long term—generally six months or a year—and are offered loans to cover the sum through a partner bank. Meanwhile, Danke pays landlords on a monthly or quarterly schedule, allowing the company flexibility in financing. With cash flow strained by both the coronavirus pandemic and its own breakneck growth, Danke failed to make payments on time. In turn, owners began to evict renters, many of whom still have to pay back their loans to the bank. Earlier this month at Caixin, Niu Mujiangqu, Qu Hui, and Tang Ziyi reported in English on Danke’s troubles, further detailing the business model and backlash from clients:

The service makes its money by leasing apartments from property owners on a long-term basis, then renovating and furnishing the properties so they can be sublet to renters at a higher rental price. However, the company is now running out of cash after struggling to attract renters during the pandemic lockdowns.

Danke is now facing backlash from many of its landlords and renters in several big Chinese cities, including Beijing, Shenzhen and Hangzhou. Angry landlords who haven’t received rent payments from Danke have tried to evict the service’s users, multiple tenants told Caixin. But the users, who said they have already paid rent to Danke, were reluctant to give up their apartments.

Since last week, some landlords have taken action to force renters to leave, such as cutting off the electricity or water — or changing the locks, the tenants said. [Source]

A followup report from Caixin notes that Danke is one of many using the model to be in the same financial situation, and that the firm is courting new buyers amid serious skepticism about its model. At Quartz, Jane Li reports on Danke’s clients’ angry online posts over the last week, and onlookers’ analysis of the situation:

But in the last week, photos, videos, and posts shared by desperate, angry Danke tenants and landlords have gone viral on China’s Weibo. The cash-strapped company has reportedly stopped paying some landlords rental money they had collected from the tenants, in some cases prompting landlords to begin evictions. In one video, a woman is seen holding a knife while confronting her landlord who wanted to take the flat back. Other tenants have shared stories of having electricity and water cut off, or having their locks changed. One Danke tenant, who is a participant of a popular music reality show, complained online that his Wi-Fi was cut off, leaving him unable to produce and share his music.

[…] Danke tenants are seen as a much more privileged group than the other participants in the internet economy: migrant workers, or the so-called “low-end population,” most of whom have to stay in storage basements in big cities. While the wealthier class has enjoyed conveniences and opportunities presented by the internet and the flourishing tech scene, it is now falling victim to the boom-and-bust startup world. “The youngsters thought they were the beneficiaries of the internet age, but instead they have become the most helpless tiny shrimps in the capital games,” said a user on Weibo.

Others suggest that the tenants should push back. “My only wish is: the many youngsters living in the numerous Danke flats are not submissive,” said another Weibo user. “The highest authorities have already taught us: this era does not belong to those who are obedient.” [Chinese]

The Chinese report from Ent-Biz quotes a young man by the alias Xiao Zhang, who renewed his contract in September 2020 only to have his internet cut off a month later. “Then the cleaning lady stopped coming. Then the landlord came to evict me.” Danke asked Xiao Zhang to move out and apply for a refund through their app. Xiao Zhang followed those instructions, but the refund never came, and Danke’s customer service line was always busy as he tried to followup.

Thousands reportedly formed groups on WeChat, trying to negotiate with Danke. Other Chinese reports note that in addition to renters and landlords seeking compensation from Danke, employees are also pursuing damages from the embattled firm.  Victims and potential victims also took to Weibo to voice their concerns, but before long were censored. On November 20, Weibo banned “super-topic” relevant to the discussion. CDT Chinese reports on the censorship, including a short compilation of netizen remarks on the situation, some wondering why official media was still able to discuss the topic when Weibo users couldn’t. Several comments are translated below, and more can be read at CDT Chinese:

L**:”Danke Apartment” super-topic has been blocked, and I don’t know if what it is that’s being covered up. Any media or individual still able to say anything is surely worthy of respect.

阿**: These days young folks are all garlic chives. One crop after the next, as long as they’re still alive they don’t fear not being harvested.

雾**:Danke Apartment super-topic is gone, does that mean that this topic is forbidden from discussion @People’sDaily (@人民日报)?

**:People’s Daily is just a second-rate newspaper, that’s why they can.

H**:I am a Danke employee, and they already owe me half a year’s wages.

**:All those living in Danke Apartments are freshly graduated students. Why does the government treat young people this way just after they step their feet into society? [Chinese]

Yakexi contributed to this post.

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