Uncertainty remains over Evergrande Group, China’s second-largest real estate developer, which faces more than $300 billion in debt and likely won’t receive a bailout in the form of a Beijing cash injection.
As newsweek As previously reported, the effects of Evergrande’s collapse are expected to impact businesses that work closely with it. While some major creditors may soon lose tens of millions of dollars in unpaid debts, many have the assets to come out alive from such losses.
However, for small businesses created through Evergrande’s participation in nearly 1,300 real estate properties, now could very well be the beginning of the end.
Guo Hui, a 50-year-old business owner from Guangzhou City, told Reuters Evergrande owes her cleaning company $3.1 million. He said the loans put his business on the verge of bankruptcy, forcing him to sell his Porsche Cayenne and put his apartment on the market.
“We’ve contacted the people in charge, but they either say they don’t have the money or don’t know when they can settle the payment,” Guo said. “We’re left in a very inactive state.”
Guo started his business 20 years ago and didn’t start working with Evergrande until 2017. However, since partnering with Evergrande, it has become the primary focus of his company’s efforts, accounting for 90 percent of the company’s business, he said.
To demonstrate his businesses’ efforts to clean and repair Evergrande’s properties in a timely manner, Guo hired a permanent staff of about 100 and hired 800 contractors, many of them from China’s inland provinces. Wealthy migrants. Guo owed them a large sum of money.
“They worked day and night for us. I’m trying my best to pay them off the loans I took, but I can only manage a third or a quarter. We still owe them about 2 million yuan ( approximately $310,000),” Guo said. “Frankly speaking, Evergrande really owes money to ordinary immigrants who have worked hard for it.”
Beijing urged the company to focus on completing its existing construction projects and paying individual investors, newsweek reported earlier this week. It told the company to focus on avoiding near-term default and invest $18 billion in the country’s banking system.
However, Beijing appears fine with letting the company fall. Last week, it was reported that the government had asked local agencies to take “only at the last minute” steps to prepare for Evergrande’s fall and manage the fallout. Gao remains optimistic that the country will soon see intervention.
“Never mind, I still believe in the government,” he said. “I’ll definitely buy my car back when I make some money. I’m sure I’ll get it back.”