2023-08-14 13:56:14
Two years after Evergrande, a major new Chinese property developer, Country Garden, is in deep trouble. This is the result of a large-scale housing crisis in China that began in late 2021 as the rest of the country’s economy grew. Real estate coupled with construction, strategic sectors that have long been key vectors of growth, can represent up to 30% of the country’s GDP, according to a study published in August 2022 by the General Directorate of the Treasury. «The top of this range represents a higher level than in the United States before the 2008 crisis“, we specify in Bercy. A figure that sends shivers down your spine at a time when real estate is faltering in most European countries. And this, especially since Country Garden is not an average promoter of China. It is quite simply the country’s largest real estate developer by sales.
Founded in 1992, this actor, present mainly in secondary towns, employs tens of thousands of employees. In 2014, Country Garden was ranked sixth among the wealthiest real estate developers in China, with the equivalent of 16.7 billion euros in turnover. Just below Evergrande (17.1 billion euros). But in 2022, this promoter, who has long been deemed financially sound, lost the equivalent of more than 800 million euros. Unheard of since its IPO in 2007! In 2021, Country Garden had still made a profit of 26.7 billion yuan (3.5 billion euros at the current exchange rate).
The president is no longer the richest woman in Asia
Having become a billionaire at the age of 25 after inheriting 70% of the group’s shares from her father, the president of Country Garden, Yang Huiyan, was named Asia’s richest woman by Forbes magazine in 2007. She is remained for nearly 15 years. In 2021, his fortune was estimated at nearly $24 billion. Before melting by half, a year later, to just over 11 billion, due to the real estate crisis that hit China. Then to just over $4 billion today. A tumble that made her lose the first place of the richest woman in Asia. She is a 73-year-old Indian businesswoman and politician, Savitri Devi Jindal, who dethroned her in the summer of 2022after seeing his fortune soar by $12 billion in just two years.
Why such setbacks for companies a priori with strong backs? This is the consequence of a tougher housing policy in China towards developers. The biggest are heavily indebted: the equivalent of more than 300 billion euros for Evergrande and 150 billion euros for Country Garden and even 176 billion euros, according to Bloomberg. A massive indebtedness perceived by the Chinese authorities as a major risk for the economy and the financial system of the country. To encourage them to reduce it, Beijing has gradually tightened, from 2020, the conditions of access to credit for promoters, which has dried up the sources of financing for groups already in debt. A wave of defaults followed, notably that of the Evergrande group, which undermined the confidence of potential buyers and reverberated throughout the sector, against a backdrop of economic slowdown in China.
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