Evergrande Group, once the first share of China's real estate, has finally declared bankruptcy. On January 29, the High Court of Hong Kong officially issued a winding-up order against it, which means that this real estate empire, which has been glorious for 26 years since its establishment in 1996, is about to enter history.
Looking back at that year, Xu Jiayin, the founder of Evergrande, can be said to be a legendary entrepreneur. How a young man from a poor village built Evergrande Group, which has nothing in just a few decades, into a leading real estate boss in China, must contain many unknown insiders and stories.
In 1992, Xu Jiayin, then 29 years old, came to Shenzhen to work. At that time, he was penniless, but he had the ambition to get rich. In order to realize his dream, Xu Jiayin successively worked as a construction worker and engaged in small business, and finally gradually accumulated the first pot of gold with his business vision.
In 1996, Xu Jiayin registered and established Evergrande Group in Shenzhen. At first, Evergrande was just a small decoration company with a registered capital of only 500,000 yuan. But with its business acumen and strong desire to expand, Evergrande quickly grew into a real estate giant.
In 2003, Xu Jiayin turned his attention to Guangzhou and began to enter the Pearl River Delta region. This year, he used 400 million yuan to acquire 10 square kilometers of low-rent real estate from Guangzhou City, opening the door to building a city in Guangzhou in one fell swoop.
Since then, Evergrande Group has entered a period of rapid expansion. In just a few years, Xu Jiayin has successively laid out in Guangzhou, Shenzhen, Hangzhou, Wuhan and other first-tier and new first-tier cities, acquired a large number of low-rent houses and township enterprises with low prices, and then used his own decoration team to transform and renovate them, quickly forming Evergrande's "city within a city" product matrix.
By 2009, in the past six years alone, Evergrande's total assets exceeded the 100 billion mark, and it was officially promoted to the head enterprise of China's real estate. At the same time, Xu Jiayin's personal wealth is also accumulating rapidly, and he has successively ranked among the top 10 of the Hurun Report.
It is worth mentioning that at the same time as the development of Evergrande, Xu Jiayin also founded Guangzhou Evergrande Football Club and personally served as the chairman and general manager. Since the establishment of the Evergrande football team in 2003, Xu Jiayin has spared no effort to invest in the team, bringing in stars, and eventually building the team into one of the most successful football brands in China. It can be said that without Xu Jiayin's huge investment and persistence, there would be no glorious Evergrande football.
In the eyes of the outside world, Evergrande Group has been in its heyday for 10 years since 2003, but in fact, problems are already surging in the undercurrent. There are two main points:
First, Evergrande's business expansion is too fast and its debt is huge. The land purchase fee alone requires a huge amount of capital investment, which leads to the need for Evergrande to continue to raise funds and issue bonds to support operations. By 2013, Evergrande's total interest-bearing debt was as high as 586 billion yuan.
Second, Evergrande's profitability is weak, and it mainly relies on pre-sales and additional issuances to maintain operations. As a result, the company's cash flow is extremely tight, and operating risks are gradually accumulating.
It can be said that Evergrande seems to be "smiling proudly" in the outside world, but in fact it is already on the verge of high debt. It's like a high-speed race car, with full power, and once the steering wheel gets out of control, the consequences are unimaginable. In 2014, Xu Jiayin was punished by the China Securities Regulatory Commission for alleged insider trading, which became the fuse for Evergrande's accumulation.
Since then, Evergrande Group has begun to go downhill. In the following years, Evergrande was constantly exposed to scandals such as illegal guarantees, defaulted supplies, and illegal financing. Although Xu Jiayin has been emphasizing the need to ensure that Evergrande does not fall, the company has fallen into the quagmire of declining performance and cannot extricate itself.
In 2020, the outbreak of the new crown epidemic became the last straw that crushed Evergrande. In the past two years, Evergrande's share price has been cut in half by more than 90%, and its turnover has plummeted by more than 95%. The constant doubts about Evergrande from the outside world finally became a reality, and this "giraffe of China's real estate" was finally paralyzed in February 2022.
Xu Jiayin, as he promised many times, did not choose to give in or sell Evergrande at the last moment, but advanced and retreated with Evergrande, and finally entered the end of bankruptcy liquidation together.
We should not judge too much about the outcome of Xu Jiayin and Evergrande Group, but should have a sympathetic eye. It is truly commendable for an entrepreneur to start from scratch, create a business empire, and finally choose to live and die with it.
At the same time, Evergrande's lesson also shows that every entrepreneur needs to be more cautious and prudent on the road to development and growth. As one wise man once said, "Success is a process, not an end".
I hope that Xu Jiayin can look back at the business miracle he created without regrets, and we outsiders must also learn lessons from it, so that our careers can be on the vast road and fragrant.