Evergrande: the fall of the “Chinese dream”
Evergrande, one of China’s largest real estate conglomerates, is currently in the grip of an unprecedented financial crisis. And at the heart of this turmoil is Xu Jiayin, the CEO of Evergrande. Once considered the symbol of Chinese success, he is now in the spotlight, with rumors of police surveillance and even house arrest. How did we get there ? Return to a tumultuous journey.
Xu Jiayin, whose Cantonese name is Hui Ka Yan, was born in a small rural village in the Henan region of China in the late 1950s. From a modest background, he managed to rise through the ranks to become a one of the richest men in China. But his rise was not without obstacles.
After working for nearly ten years for a steel group, Xu Jiayin decided to venture into real estate by founding Evergrande in 1996. At the time, the real estate sector was booming, driven by the emergence of a growing middle class in China. The government actively supported those entering the industry, which encouraged Xu Jiayin to take the risk.
He then increased his investments, acquiring land and launching numerous real estate projects across the country. But he didn’t stop there. Xu Jiayin diversified Evergrande’s business by investing in football, bottled water sales and even amusement parks. It has also bet several billion dollars on the electric car sector, in line with the strategic priorities of the Chinese government.
However, this rapid expansion was also accompanied by a massive accumulation of debt. In 2021, Evergrande found itself with a debt of more than $300 billion to its creditors. Financial difficulties began to be felt, and the crisis deepened to the point where Evergrande’s survival was in question.
Today, Xu Jiayin is at the center of all discussions. The media reported that he would be “under police surveillance” or even “under house arrest”. These rumors have fueled speculation about the situation of Evergrande and the fate of the CEO.
Some believe that the Chinese authorities decided to blame Xu Jiayin because they failed to save Evergrande. Whatever the case, its abrupt fall marks the end of an era, that of the “Chinese dream” and success at all costs.
The consequences of the Evergrande crisis are being felt not only in China, but also on global financial markets. Investors fear a domino effect which could affect other companies and cause a more serious crisis.
Without a doubt, Xu Jiayin and Evergrande will go down in history as a tragic example of the excess and greed that characterized China’s real estate boom.. A lesson to ponder for future entrepreneurs and for governments seeking to contain the financial risks linked to unbridled economic growth.
With the Evergrande crisis, a page is turning for the Chinese real estate sector, and perhaps even for the entire Chinese economy. A new era is beginning, where prudence and sustainability may finally be prioritized over the frantic race to wealth.