The Debt Problem of Evergrande

Research Article
Open access

The Debt Problem of Evergrande

Jiasen Han 1*
  • 1 RDFZ experimental international high school, Beijing 100010, China    
  • *corresponding author Hanjiasen@rdfzcygj.cn
Published on 10 November 2023 | https://doi.org/10.54254/2754-1169/34/20231679
AEMPS Vol.34
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-83558-089-9
ISBN (Online): 978-1-83558-090-5

Abstract

Evergrande Real Estate Group Co., Ltd. was once a leading enterprise in China's real estate industry and one of the Fortune 500 companies. However, in the past few years, Evergrande fell into a huge debt crisis and was on the brink of bankruptcy. Although with the joint efforts of the leaders and employees of Evergrande Group, all core assets of Evergrande Group have been preserved, which allowing the company to continue normal operations. But the debt issue remains the biggest problem for Evergrande Group. This study conducted a survey and analysis based on the performance of Evergrande over the past 30 years, attempting to identify the reasons for Evergrande's two trillion yuan debt crisis. Based on the theories of economists and entrepreneurs' experiences, a solution to Evergrande's debt crisis can be integrated. This study will conduct a detailed analysis of the three main causes of Evergrande's debt crisis, including high leverage profit model, diversified development, and excessive dividends. The author will collect resources through online search, book browsing, and interviews with professionals, and then present them in the form of papers.

Keywords:

China Evergrande Group, 2 trillion RMB debt, high leverage profit model, diversified development, high dividend

Han,J. (2023). The Debt Problem of Evergrande. Advances in Economics, Management and Political Sciences,34,83-91.
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References

[1]. Warton.: China Evergrande Group: Strategic Repositioning Toward a Sustainable Growth Model. Available at: https://knowledge.wharton.upenn.edu/article/china-evergrande-group-strategic-repositioning-toward-sustainable-growth-model/ Last accessed: 2023/4/21.

[2]. Popuplartime line.com.: History of Evergrande Group in timeline. Available at: https://populartimelines.com/timeline/Evergrande-Group. Last accessed: 2023/4/19.

[3]. CBS, News.: Struggling Evergrande Group says it will make bond payment this week. Available at: https://www.cbsnews.com/news/deutsche-bank-shares-down/. Last accessed: 2023/4/21.

[4]. Grabar, H.: Why evergrande is causing panic in stock markets everywhere, Slate Magazine. Slate. Available at: https://slate.com/business/2021/09/evergrande-china-markets-real-estate-contagion.html. Last accessed: 2023/4/12.

[5]. Xun, J.: Evergrande, born leverage, die of leverage. Available at: https://baijiahao.baidu.com/s?id=1722641043164539508&wfr=spider&for=pc. Last accessed: 2023/4/11.

[6]. Zhiyuan, F., Ao, L., Wei Y.: Zhong Guo Heng da Zhi Teng Fei: Shang Ye Chuan Qi Xu Jia Yin. Guang zhou: Guang dong jing ji chu ban she. Guangdong economy Publishing House. Guangdong. P12-130. (2019).

[7]. Evergrande.: Evergrande Group document.write .Evergrande Group - Investor Relations - Annual Report/Interim Report .Available at: https://www.evergrande.com/ir/sc/reports.asp. Last accessed: 2023/4/18.

[8]. Morningstar, Inc.: China Evergrande Group EGRNF valuation. Available at: https://www.morningstar.com/stocks/pinx/egrnf/valuation. Last accessed: 2023/4/16. .

[9]. Kaimeng, Z.: Financial crisis and Prevention of real estate enterprises -- Taking Evergrande Group as an example [J]. Advances in Applied Mathematics. 11(7): 4411-4418. (2022).

[10]. Ling, W.: Xu Jia Yin: Di Chan,Zu Qiu,Heng da De Shi Jie. Beijing, pp30-49. Tai hai Publishing House. Beijing (2019).

[11]. Sanwan W.: Evergrande Bingquan, spent 6 billion advertising loss 4 billion yuan, helpless rout left the game. Available at: https://baijiahao.baidu.com/s?id=1732526428583018915&wfr=spider&for=pc. Last accessed: 2023/4/16.

[12]. Li Rongjin, Wang Zhen.: Research on Financial Risk and Prevention of Real estate enterprises [J]. Friends of Accounting (mid-day issue) (12) : 96-97 (2010).

[13]. Laura H.: Evergrande Group announces long-awaited debt restructuring deal after 2021 collapse. Available at: https://edition.cnn.com/2023/03/23/investing/china-evergrande-debt-restructuring-deal-intl-hnk/index.html#. Last accessed: 2023/4/9.

[14]. Weifeng Z.: New perspective of safe financial management: Financial crisis operation [J]. Productivity Research (8): 144-145 (2007).

[15]. Ying, S.:Evergrande plans to sell some assets of Evergrande Automobile and Evergrande Real Estate.Available at: http://news.winshang.com/html/068/8811.html. Last accessed: 2023/4/6.

Cite this article

Han,J. (2023). The Debt Problem of Evergrande. Advances in Economics, Management and Political Sciences,34,83-91.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

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About volume

Volume title: Proceedings of the 7th International Conference on Economic Management and Green Development

ISBN：978-1-83558-089-9(Print) / 978-1-83558-090-5(Online)
Editor：Canh Thien Dang
Conference website: https://www.icemgd.org/
Conference date: 6 August 2023
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.34
ISSN：2754-1169(Print) / 2754-1177(Online)

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References

[1]. Warton.: China Evergrande Group: Strategic Repositioning Toward a Sustainable Growth Model. Available at: https://knowledge.wharton.upenn.edu/article/china-evergrande-group-strategic-repositioning-toward-sustainable-growth-model/ Last accessed: 2023/4/21.

[2]. Popuplartime line.com.: History of Evergrande Group in timeline. Available at: https://populartimelines.com/timeline/Evergrande-Group. Last accessed: 2023/4/19.

[3]. CBS, News.: Struggling Evergrande Group says it will make bond payment this week. Available at: https://www.cbsnews.com/news/deutsche-bank-shares-down/. Last accessed: 2023/4/21.

[4]. Grabar, H.: Why evergrande is causing panic in stock markets everywhere, Slate Magazine. Slate. Available at: https://slate.com/business/2021/09/evergrande-china-markets-real-estate-contagion.html. Last accessed: 2023/4/12.

[5]. Xun, J.: Evergrande, born leverage, die of leverage. Available at: https://baijiahao.baidu.com/s?id=1722641043164539508&wfr=spider&for=pc. Last accessed: 2023/4/11.

[6]. Zhiyuan, F., Ao, L., Wei Y.: Zhong Guo Heng da Zhi Teng Fei: Shang Ye Chuan Qi Xu Jia Yin. Guang zhou: Guang dong jing ji chu ban she. Guangdong economy Publishing House. Guangdong. P12-130. (2019).

[7]. Evergrande.: Evergrande Group document.write .Evergrande Group - Investor Relations - Annual Report/Interim Report .Available at: https://www.evergrande.com/ir/sc/reports.asp. Last accessed: 2023/4/18.

[8]. Morningstar, Inc.: China Evergrande Group EGRNF valuation. Available at: https://www.morningstar.com/stocks/pinx/egrnf/valuation. Last accessed: 2023/4/16. .

[9]. Kaimeng, Z.: Financial crisis and Prevention of real estate enterprises -- Taking Evergrande Group as an example [J]. Advances in Applied Mathematics. 11(7): 4411-4418. (2022).

[10]. Ling, W.: Xu Jia Yin: Di Chan,Zu Qiu,Heng da De Shi Jie. Beijing, pp30-49. Tai hai Publishing House. Beijing (2019).

[11]. Sanwan W.: Evergrande Bingquan, spent 6 billion advertising loss 4 billion yuan, helpless rout left the game. Available at: https://baijiahao.baidu.com/s?id=1732526428583018915&wfr=spider&for=pc. Last accessed: 2023/4/16.

[12]. Li Rongjin, Wang Zhen.: Research on Financial Risk and Prevention of Real estate enterprises [J]. Friends of Accounting (mid-day issue) (12) : 96-97 (2010).

[13]. Laura H.: Evergrande Group announces long-awaited debt restructuring deal after 2021 collapse. Available at: https://edition.cnn.com/2023/03/23/investing/china-evergrande-debt-restructuring-deal-intl-hnk/index.html#. Last accessed: 2023/4/9.

[14]. Weifeng Z.: New perspective of safe financial management: Financial crisis operation [J]. Productivity Research (8): 144-145 (2007).

[15]. Ying, S.:Evergrande plans to sell some assets of Evergrande Automobile and Evergrande Real Estate.Available at: http://news.winshang.com/html/068/8811.html. Last accessed: 2023/4/6.

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