This is the once renowned Evergrande Song & Dance Troupe. Entertainment fit for royalty. All recruits had to be handpicked by Mr Xu Jiayin. Selected talents undergo rigorous training and were required to provide outstanding performances and visual feasts for special guests which included government officials and dignitaries. Jack Ma used to be a regular in the audience. Just by looking at this song and dance troupe, the uninformed may not know that the company is currently bankrupt.
Founded by Xu Jiayin in Guangzhou in 1996, property developer Evergrande grew at an amazing speed, taking on massive debt to rapidly expand the company, with thousands of developments across China. The company went public in 2009. As of June it owned land reserves of 190 square km.
Hui was at one time China’s third-richest man. His personal fortune peaked at more than US$36bn in 2019, according to Forbes, before plunging to an estimated $3.2bn by early 2023.
The trouble began in 2021. Amid Chinese government concerns over high debt levels in the property industry, a regulatory crackdown meant Evergrande found itself unable to make interest repayments on more than US$300bn in debt, sending China’s housing development sector into a liquidity crisis. The company started forcing its employees to buy and sell “investment products” which were really a way of raising capital by selling debt instruments.
Throughout its period of rapid expansion, Evergrande had been operating its business more or less like a pyramid scheme. Sales proceeds from one development are used to pay for the development of a new development long before the sold development has been completed. All this has been allowed to take place because government officials had chosen to look the other way.
At least 100,000 buyers of undelivered apartments have already been affected since Evergrande’s woes escalated in 2021, and a full collapse will mean an inability to maintain and complete units that are already occupied. Evergrande has filed for bankruptcy in the US in order to protect its US assets.
Many victimised homeowners point out that while the company was supporting the dance troupe to entertain government officials and dignitaries (so that they could continue with their shady schemes), they didn’t seem to have the money to complete their construction projects.