Evergrande Group, once the largest real estate company in China, has a diversified business layout, involving football, automobiles, health, tourism and other fields. However, in recent years, Evergrande Group has fallen into a serious debt crisis, constantly improving its assets, and seeking a life-saving straw. On January 8, 2024, an important figure of Evergrande Group, Liu Yongzhuo, was criminally detained on suspicion of violating the law and committing crimes.
Liu Yongzhuo used to be the chairman of Guangzhou Evergrande Football Club, the executive director of Evergrande Automobile, and the president of Hengchi Automobile. His ** has had a huge impact on the business and image of Evergrande Group. After the resumption of trading, Evergrande Automobile's share price fell by 17%. Will the crisis of Evergrande Group lead to greater risks?Is there any hope for the transformation of Evergrande Group?
Liu Yongzhuo, born in 1967, is one of the veterans of Evergrande Group and has a deep friendship with Xu Jiayin, chairman of the board of directors of Evergrande Group. Liu Yongzhuo has held a number of key positions in Evergrande Group, including Vice President of Evergrande Real Estate, Chairman of Evergrande Football Club, Executive Director of Evergrande Automobile, and President of Hengchi Automobile. He is considered to be the "gold manager" of Evergrande Group and has made important contributions in many fields of Evergrande Group.
Especially in Evergrande Football Club, Liu Yongzhuo has led the team to win many championships and has become a banner of Chinese football. Liu Yongzhuo is also the core figure of Evergrande Automobile, responsible for the strategic planning, product research and development, marketing and other work of Evergrande Automobile. Evergrande Auto is a key transformation project of Evergrande Group, aiming to build China's Tesla and become the world's leading new energy vehicle manufacturer. Evergrande Automobile has announced that it plans to achieve the production and sales target of one million units in 2024 and enter the top ten auto brands in the world in 2025.
However, Liu Yongzhuo's brilliant resume came to an abrupt end on January 8, 2024. Evergrande Automobile issued an announcement, saying that its executive director Liu Yongzhuo has been criminally detained in accordance with the law on suspicion of violating the law and committing crimes. The announcement did not disclose the specific crimes Liu Yongzhuo was suspected of, but there were ** reports that Liu Yongzhuo was suspected of economic crimes, which was related to the debt crisis of Evergrande Group. Liu Yongzhuo's ** has dealt a heavy blow to Evergrande Automobile. After the resumption of trading, Evergrande Automobile's share price fell by 17%, and the total market value shrank by nearly HK $10 billion.
The crisis of Evergrande Group has actually been brewing for a long time. Evergrande Group is China's largest real estate company and one of the world's largest debt companies. As of September 30, 2023, Evergrande Group's total liabilities were as high as 195 trillion yuan, of which more than 900 billion yuan of debt will mature in 2024. Evergrande's debt crisis stems from its over-expansion and diversification strategy.
Evergrande Group has hoarded a large amount of land across the country, resulting in the high cost of its land reserve, and the regulation and competition of the real estate market have made it difficult to increase its sales revenue. In order to get rid of its dependence on real estate, Evergrande Group has invested heavily in football, automobiles, health, tourism and other fields, trying to achieve transformation and upgrading. However, these areas require a large amount of capital investment, and the return cycle is long, the risk is high, Evergrande Group has not formed an effective profit model, but exacerbated the tension of its capital chain.
In order to deal with the debt crisis, Evergrande Group had to take a series of emergency measures, including **assets, price reductions**, layoffs and salary cuts, and postponement of payments. Evergrande Group has ** its shares in subsidiaries such as Evergrande Health, Evergrande Property, and Evergrande Football to raise cash. Evergrande Group has also slashed the selling prices of its real estate projects in a bid to boost sales. Evergrande Group has also laid off some employees, reduced the remuneration of management, and even postponed the payment of some ** merchants and creditors.
In order to prevent risks in the real estate market, China has implemented the regulation policy of "housing for living, not speculation", strengthened the supervision and restraint of real estate enterprises, and limited their financing and expansion space. China's real estate market is also facing an imbalance between supply and demand, on the one hand, housing prices in first-tier cities and some hot cities are still high, which is difficult for many ordinary consumers to afford
On the other hand, the surplus of third- and fourth-tier cities and some unpopular cities is difficult to digest. The structural problems of China's real estate market also restrict the development of real estate enterprises. China's real estate industry needs to undergo profound changes and innovations to adapt to the changes in China's economy and society.
Evergrande Group, as a leader in China's real estate industry, also needs to find new opportunities and breakthroughs in such an environment. Although there are certain risks and difficulties in Evergrande Group's transformation strategy, it also reflects its vision and courage for the future. Evergrande Group has chosen football, automobile, health, tourism and other fields as the direction of its transformation, which are all important parts of China's economy and society, as well as the new needs and trends of Chinese consumers.
Evergrande Group has its own advantages and resources in these fields, as well as its own vision and goals. If Evergrande Group can make full use of its foundation and experience in the real estate industry and effectively synergize and compete with its partners and competitors in other fields, it will be possible to achieve the success of its transformation and make new contributions to China's economic and social development.
Evergrande Group is an enterprise full of legends and controversies, and its rise and fall and changes are also a microcosm of China's economy and society. Evergrande Group is facing unprecedented crises and challenges, but also has rare opportunities and hopes. Evergrande Group needs to maintain rationality and innovation in such an era, adhere to its own transformation and development, and build a new Evergrande for its own future and for China's future. Evergrande Group, can we get out of the predicament and realize our dreams?Let's wait and see. Liu Yongzhuo, executive director of Evergrande Automobile, was detained