Recently, a land dispute in Dongguan, Guangdong Province has sparked public attention. Two private enterprises spent 1.7 billion RMB to purchase 258 mu of land in Dongguan, only to have it confiscated without compensation and forced to pay a 300 million RMB fine. Mainland netizens have expressed outrage, calling the situation “absurd”.
According to Wu Song, vice general manager of China’s Ziguang Group Science and Technology Development (Guangdong) Co., Ltd. (referred to as “Huachuang Company”) and Ziguang Group Technology Development (Guangdong) Co., Ltd. (referred to as “He Rong Company”), this is one of the most bizarre incidents he has encountered in his over twenty years of real estate development experience.
Wu Song revealed to “Economic Observer” that Huachuang Company and He Rong Company were both registered in September 2019, with headquarters located in Dongguan’s Binhaiwan New District, and registered capital of 200 million and 600 million RMB respectively. In the same year, both companies fully paid for the 258 mu of land in Dongguan’s “Ziguang Chip Cloud Industry City Project Phase I”.
Huachuang Company paid 167 million RMB for 108 mu of industrial land, while He Rong Company paid 1.554 billion RMB for 150 mu of commercial land.
This piece of land, located in Dongguan’s Binhaiwan New District, is separated from Shenzhen’s Bao’an District by just a river. By crossing the bridge, one can reach Shenzhen within minutes.
As early as 2017, they had contact with Dongguan officials, and in November of the same year, they signed a “Strategic Cooperation Framework Agreement” with the Dongguan Municipal Government. In May 2018, they signed a “Project Investment Agreement”.
In November 2019, Huachuang Company and He Rong Company signed a contract with Dongguan’s Natural Resources Bureau to obtain the land use rights for the 258 mu of land. In December of the same year, they obtained the “Construction Land Planning Permit” for the mentioned land. Subsequently, the two companies fully paid a total of 1.721 billion RMB for the land.
However, in April 2021, Dongguan’s Natural Resources Bureau initiated an investigation into the idle status of the 258 mu of land.
In March 2023, the bureau issued a “Decision on the Collection of Land Idle Fees”, imposing a penalty of 344 million RMB on Huachuang Company and He Rong Company. At the same time, the bureau issued a “Decision to Revoke the Land Use Rights of State-owned Construction Land”, announcing the unconditional retrieval of the 258 mu of land.
Huachuang Company and He Rong Company’s administrative review applications to the Dongguan Municipal Government were rejected.
Wu Song stated, “Fully paying over 1.7 billion for the land, only to have the government announce unconditional retrieval and impose an additional penalty of over 300 million, this is unheard of.”
Subsequently, Huachuang Company and He Rong Company took Dongguan’s Natural Resources Bureau and Municipal Government to court. In January of this year, the court ruled against the two companies. They filed an appeal again, and in May, the retrial of the case took place in Dongguan Intermediate People’s Court, with no verdict announced to date.
Dongguan’s Natural Resources Bureau Director Lv Peng responded to media inquiries in September, stating that the penalty of unconditional retrieval of idle land in Dongguan is not an isolated case and emphasized that everything is done according to law and regulations.
The bureau believes that Huachuang Company and He Rong Company did not develop and build on the 258 mu of land within the agreed timeframe and development conditions stipulated in the transfer contract. This constitutes idle land under the provision of the “Land Idle Land Disposal Method” (Ministry of Land and Resources Order No. 53), thus prompting the investigation.
The “Land Idle Land Disposal Method” defines idle land as “State-owned construction land use rights that have not been developed one year after the agreed start date as stipulated in the remuneration contract or allocation decision of the land use rights”.
“If the developed construction land area accounts for less than one-third of the total land to be developed or the investment amount accounts for less than 25% of the total investment amount, and development has been suspended for a year, it can also be deemed as idle land.”
It is worth mentioning that the time of Dongguan’s Natural Resources Bureau initiating this investigation is less than a year from the deadline for breach of contract.
In the subsequent administrative litigation, the first instance court of Dongguan admitted, “There are flaws in the initiation time of this investigation”.
In September, lawyers representing He Rong Company and Huachuang Company in the litigation told “Economic Observer” that having the basic level court of Dongguan “hear our case against the Dongguan Municipal Government and Municipal Bureau of Natural Resources is indeed problematic.”
They said, “The Dongguan Municipal Government clearly stated that ‘if we are dissatisfied, we can file an administrative lawsuit with the Dongguan Intermediate People’s Court.’ We have raised this issue with the Guangdong Provincial Legal Affairs Office, but no results have been achieved.”
“Too ridiculous, confiscating land unconditionally and fining over 300 million, there are significant problems in Dongguan! It is recommended to investigate the flow of that 1.7 billion fund.”
“Understandable to fine for idle land after a few years of non-development, but confiscating land payment is unreasonable.”
“The unconditional retrieval damages the government’s image. Imposing high default fines incrementally to prevent land hoarding and allowing companies unable to pay the fines to appeal to the court for the final judgment.”
“If following the law, Li Ka-Shing should be fined to bankruptcy.”
“Why hasn’t Li Ka-Shing had his idle land reclaimed when he purchased so much land at low prices in the past?”
“For over thirty years, the properties that the family in Haojia, Nansha Village have remain idle. Check them out!”
“My village’s over 100 mu of farmland expropriated in 1992, still idle for over 30 years, covered with grass, not allowed for cultivation, located in Luoyang Langtou, Huizhou.”
Some netizens analyzed the reasons for the penalties of the two companies:
“Believing in the leadership’s verbal commitments earlier that there would be no problem with delayed development for a few years. When the leaders retire and a new leader takes over, he does not recognize it. That’s when you’re in trouble because you broke the law.”
“In fact, this company is just a shell company. They went to Northeast China to defraud loans, and then came to Dongguan empty-handed. They even mortgaged all the land. The mastermind of the company has been arrested by the police. The land has remained undeveloped for several years, seriously delaying the local economic development plan! Of course, the government has the right to reclaim it! It’s not justifiable by having the media report on one side of the story!”
“In reality, in recent years, the land market has been poor, compounded by the impact of the epidemic. The involvement of shareholders in serious cases, the local government is waiting in the shadows for the deadline to come, consuming every bit of it once time is up. The investors are left penniless and cornered.”
“Ziguang Group used the name of chip production to obtain land for industrial real estate development. It is unlikely to generate the agreed tax revenue in the future. Put simply, the municipal government saw that Ziguang was in trouble and decided to seize the land. Many real estate developers have hoarded land without development for over a decade, and yet they have not had it confiscated?”
On May 14, 2025, the Jilin Intermediate People’s Court pronounced the first instance verdict of Ziguang Group’s former chairman Zhao Weiguo. Zhao Weiguo was charged with illegally occupying state-owned assets worth over 470 million RMB. He was sentenced to death, with a two-year reprieve, for corruption, illegally profiting for family and friends, and infringing upon the interests of a listed company.