Evergrande Group was founded in 1996 by Xu Jiayin, also known as Hui Ka Yan, with the vision of transforming China's real estate landscape and providing affordable housing to millions.
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Xu Jiayin recognized the vast potential of China's booming real estate market and seized the opportunity to capitalize on rapid urbanization and rising demand for housing.

Many often wondered how can success like Evergrande and Alibaba could ever come to fore in a State-controlled economy like China, however most of its foundation can be traced back to the “Open door Policy” of China.​
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In December 1978, China announced a new policy, the Open Door Policy, to open the door to foreign businesses that wanted to set up shop in China. For the first time since the Kuomintang era, the country opened to foreign investment.​
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Initial Phase of Unprecedented Growth led to IPO in 2009

Evergrande over the years, grown to be a huge holding group that was internationally listed in Hong Kong and registered in the Cayman Islands.
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Within the group were several different subsidiaries and types of businesses, including renewable energy businesses.
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By this time Evergrande was arguably among the top three largest real estate developers and largest Chinese companies in China.
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• Rapid Expansion: Evergrande rapidly expanded its presence across China, acquiring land parcels and developing residential and commercial properties in major cities.
• Innovative Financing: The company pioneered innovative financing methods, including pre-sales and off-plan sales, to fund its ambitious development projects and maintain cash flow.
• Market Dominance: Evergrande’s aggressive marketing tactics and competitive pricing strategies helped it gain market share and become one of the top real estate developers in China.
• Brand Recognition: Evergrande’s strong brand recognition and marketing prowess enabled it to attract investors and homebuyers alike, cementing its position as a trusted and reputable real estate brand in China.
• Global Expansion: Evergrande’s foray into international markets, including the United States and Australia, demonstrated its ambition to become a global real estate player and diversify its revenue streams beyond China.

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BUT then, What went wrong?

• The China Open Door Policy in 1978 led to unintended consequences, such as a lack of regulation and policy loopholes in certain sectors.
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• Evergrande's stock market listing caused concerns about transparency, this was always a bone of contention for international stakeholders, who often worried about prioritizing Chinese stakeholders incase if things go south.
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• This panic triggered external funding freeze and an eventual debt default by Evergrande, highlighting the need for better regulation.

5 Mistakes that killed a $65 Billion Chinese Dragon
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1. Excessive Debt Burden: Evergrande amassed a staggering amount of debt to fund its aggressive expansion, leading to concerns over its solvency and ability to service its debt obligations.
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2. Over leveraged Business Model: The company relied heavily on short-term financing and high-interest loans to finance its development projects, exposing it to liquidity risks and financial instability.
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3. Market Downturn: The brand took a massive hit in China’s tightening regulatory environment, slowing economic growth, and a slumping real estate market, added to its financial woes.
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4. Corporate Governance Issues: Company’s opaque corporate structure and allegations of misconduct, including irregular accounting practices and related-party transactions, eroded investor confidence and raised governance concerns.
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5. Lack of Diversification: Their over-reliance on the real estate sector and failure to diversify its business into other industries left it vulnerable to market fluctuations and economic downturns.

Impact of Evergrande’s downfall on Chinese Economy:

1. Its default dragged down many of its peers in the real estate value chain, and pushed up the Chinese loan defaults causing panic in the stock markets and raising concerns about lending infrastructure in China.
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2. Led to a larger socio-economic impact by massively delaying the delivery of 1.5 Million housing units.

How Evergrande Could Have Avoided This?

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1. Debt Optimisation: Evergrande could have pursued a deleveraging strategy by reducing its debt burden through asset sales, debt restructuring, and cost-cutting measures.
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2. Diversification: Diversifying into non-real estate sectors, such as technology, healthcare, or renewable energy, albiet without financial misconduct and mismanagement, Evergrande could have mitigated risks.
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3. Improved Governance: Enhancing transparency, accountability, and corporate governance practices would have bolstered investor confidence and mitigated reputation risks.
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4. Strategic Partnerships: Forming strategic partnerships with financial institutions, private equity firms, or international investors could have provided Evergrande with access to additional capital and resources.

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