Evergrande Group Crisis Deepens; Protests Erupt Across China

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HONG KONG, HONG KONG - AUGUST 21: A view of the LED Screen atop China Evergrande Centre (Advertiser: Samsung) on August 21 2018 in Hong Kong, Hong Kong. (Image: S3studio/Marcio Rodrigo Machado/Getty Images)

Protests erupted across China over the weekend at numerous properties owned and operated by the Evergrande Group with home buyers, retail investors and even Evergrandes’ own employees speaking out against how the struggling company is managing their wealth management products (WMP), among other things, in the face of significant financial pressure.

On Sept. 6 the Evergrande Group had trading of its bonds temporarily suspended by China’s stock exchanges after data indicated that its bonds had slid by more than 25 percent to a low of 40.18 yuan or US$ 6.22. 

The company’s stock, which was trading at over US$25.00 per share in July this year, has plummeted and was valued at just US$3.90 per share as of September 3, 2021. As of Sept. 13 the stock was trading at US$3.37 down 6.91 percent. The stock has lost more than 70 percent of its value in the past 9-months.

Amidst mounting financial pressure, the Evergrande Group, one of the most indebted companies on the planet, offered its retail investors three options in regards to their WMPS. 

“Investors can accept cash installments, property or investors’ payables on residential units they have purchased, according to [a] plan announced by Du Liang, head of Evergrande’s wealth management unit,” Caixin Global reported. 

“It is difficult for Evergrande to make 40 billion yuan ($US6.2 billion) of repayments at once for the wealth management products at this moment,” Du said.

On Sept. 9, Evergrande Wealth Management proposed a plan to repay investors through cash installments on a 5-year timetable but investors vigorously opposed the idea. 

Hundreds of investors gathered outside Evergrande’s headquarters in Shenzhen on Sunday demanding to meet with Du concerning their investments by chanting, “Return my hard-earned money.” 

A group was spotted holding a sign that stated, “Heartless Evergrande brutal layoffs, defaulting on employee commissions refusing to pay”

In Shenyang, near the border with North Korea, Evergrande staff were told to work from home after employees of the Evergrande Group, who bought the company’s WMPs, staged a protest over the weekend. 

The above occurred after fed-up home buyers in Guangzhou surrounded the local housing bureau demanding Evergrande restart stalled construction on their homes, Bloomberg reported. 

At the protest in Shenzhen, police descended on the crowd — that numbered in the hundreds — who had gathered at Evergrande’s headquarters. The protest did not turn violent however Chinese authorities have little tolerance for unsanctioned gatherings.  

The company is currently sitting on well over $300 billion in liabilities of which approximately $147 billion is reportedly owed in trade and other payables to suppliers.  

The company, which employs upwards of 200,000 people and claims to indirectly generate 3.8 million jobs in China, has a presence in more than 280 cities throughout China. Its bankruptcy would have devastating effects on the Chinese economy.