The group is crumbling, undermined by a debt of $304 billion, an amount equivalent to the GDP of Romania.
Taken from Diario Libre
From miraculous interest rates to high-risk investments, exploited creditors and employees describe the desperate tactics of Chinese real estate giant Evergrande to escape bankruptcy.
The behemoth had become in two decades one of the most visible faces of China's real estate frenzy, as millions of families have been able to acquire ownership of their homes.
Today, the group is crumbling, undermined by a debt of 260 billion euros (about 304 billion dollars), the equivalent of Romania's GDP, for example.
Unpaid suppliers and defrauded landlords protested last week outside the group's headquarters in Shenzhen (southern China). Such scenes are rare in a country where protests are largely met with little tolerance.
This sprawling group has over 1.4 million homes still under construction, which it can no longer finish or deliver to their owners.
Completely cornered, he is currently offering his creditors payment in kind, such as land or parking spaces. These offers are generally rejected by the interested parties.
“All I want is money!” an investor named Feng told AFP. “I’m not even going to look at this offer,” he added.
Faced with the imminent threat of bankruptcy, Evergrande has also proposed in recent months that its employees sell – but also buy for themselves – very attractive but high-risk investments, according to several of them contacted by AFP.
One of them, surnamed Huang, claims to have collected 1.5 million yuan (about 200,000 euros) with the help of her family to buy these proposed products.
Interest rates offer a return of between 7% and 9%, according to employees and brochures consulted by AFP.
“Before the due date, they asked us to put in more money instead of giving us a refund,” he reveals. “Now, we’ve lost everything,” he adds.
AFP contacted Evergrande for comment on these reports, but the group declined to comment.
A financial advisor in the wealth management sector at Evergrande, who declined to be identified for fear of retaliation, confessed that it was difficult to resist management's proposals.
“They strongly encouraged us to improve our performance, promising us bonuses,” he points out.
As a result, “many customers deposited all their money and their pensions in Evergrande because they trusted Xu Jiayin,” the group’s founder, who in just a few years has become one of China’s biggest billionaires, the employee explains.
But, at the beginning of this month, when it became difficult to get a refund, it became impossible to contact management, he says.
On Saturday, Evergrande announced it would apply “severe sanctions” to six company officials who allegedly managed to get their investments repaid before the maturity date.
At the height of the gigantic real estate bubble, Evergrande embarked on pharaonic projects.
In Suzhou, a city near Shanghai, famous for its canals and imperial gardens, the group was to build a huge residential complex, with schools, a leisure park and a European-style shopping district.
This unfinished “evergrande tourist and cultural city” is currently overrun by furious buyers who doubt they will ever recoup their investments.
One owner, speaking on condition of anonymity, says that many buyers have been persuaded to grant powers of attorney to Evergrande employees so they can sign documents on their behalf.
After that, the schedule for the delivery of the apartments kept changing, with the appearance of new financial conditions in the contracts, and it was necessary to start paying the common expenses of the condominium even before the keys were handed over.
“I was speechless,” she confesses.
However, the image of the real estate group remains intact in Canton (south), where Evergrande completed the construction of its first residential complex in 1996.
“Originally, their goal was to help ordinary families like ours pay for their apartment,” said Liu, a retired teacher.
“Evergrande isn’t a terrible company. They took great care of us,” he added
