Evergrande’s Money Maze Leaves Investors in a Sticky Situation
Once upon a time, investors were dazzled by the prospect of almost 12 % returns, sleek Dyson air‑purifiers, and Gucci bags. The promise of a secured partnership with China Evergrande — the world’s top selling developer – turned a casual search for high yields into a frenzy, with tens of thousands of people pouring their cash into the company’s wealth‑management products (WMP).
Why the buzz turned into a buzzkill
- Evergrande paused repayment to some investors, sparking alarm bells that rang across global markets.
- Instead of cash, the company offered discounted apartments, offices, stores, and parking spots as a repayment alternative.
- Investors protested the exchange, saying it was “morally wrong” to keep their hard‑earned money for a day or two.
Speaking from the front lines
A lone voice in the crowd—Du, a resident of Guangdong—shared his experience:
“I bought a WMP after seeing an ad in the elevator, trusting Evergrande as a Fortune Global 500 name.”
He lamented that the company failed to return his investment of 650,000 yuan (about S$135,900) at a rate of more than 7 %. “It’s immoral of Evergrande not to pay my hard‑earned money back,” he said sharply.
The numbers that paint the picture
- Evergrande’s WMP platform: launched in 2016 as a peer‑to‑peer lending portal originally meant to fund property projects.
- Over 80,000 people—including employees, their families, and friends—invested, raising >100 billion yuan in five years.
- Current outstanding debt: roughly 40 billion yuan.
- Evergrande’s total debt inventory exceeds $300 billion, hitting a liquidity knot that rattled global markets.
Evergrande has pledged to repay WMP investors, but with the company facing a major cash crunch, the promise seems more like a distant echo.
Bottom line
Investors who once felt the allure of high returns now face uncertainty. With Evergrande scrambling to keep its debt ladder intact, hope remains uncertain—just as the company’s greatest strength, its brand, may have betrayed its own customers.
Christmas promotion
Evergrande’s Secret WMP Sale: The Giggles Behind the Debt Maze
Why They’re Turning to WMPs
Evergrande is stuck in a debt dilemma after Beijing slammed property developers’ borrowing limits. The company reached out to employees, suppliers, and customers for cash, using commercial paper, trusts, and wealth‑management products.
The WMP Twist
Back in 2019, Evergrande Wealth started handing out WMP tokens to investors. The market slump in peer‑to‑peer lending forced a surprise pivot: sell WMPs to ordinary people.
Christmas Sizzle 2023
The sales manager rolled out a promo: anyone who shelled out over three million yuan got a flashy Dyson air purifier and a Gucci handbag. Sounds fancy, right? But the product’s glossy brochure marketed it as a “fixed‑income, conservative play” for steady returns.
How It All Feels
- Imagine investors bragging about Gucci bags while crunching rates.
- Evergrande’s WMPs feel like a secret handshake in a high‑stakes game.
- Employees might smile at Dyson‑room purifiers but wonder if the yields are worth the hassle.
In short, when the debt spikes, the company’s creativity spikes even more. The WMP scheme blends financial desperation with a little dash of luxury, hoping to keep the cash flow humming while keeping investors intrigued.
‘De-facto Evergrande product’
Evergrande’s “Super‑Yield” Deals: A Quick Dive
Last November, a construction firm in Qingdao rolled out two cash‑raising campaigns. One aimed at pulling in up to 10 million yuan with an annualised return of 7%. The other targeted 20 million yuan and offered yields between 7.8% and 9.5%, depending on how much investors staked.
Key Figures
- Minimum investment: 100,000 yuan (first deal)
- Minimum investment: 300,000 yuan (second deal)
Evergrande added a twist: certain investors could snag an extra 1.8%, pushing their yearly payoff over 11% on a 12‑month hold, according to the sales manager.
Where the Money Goes
The capital was earmarked for Qingdao Lvye International Construction Co.’s working‑capital needs. The firm, however, declined to comment, citing a public holiday.
Repayment Rules
Refunds hinge on the issuer’s revenue or, if that falls short, on Evergrande Internet Information Service (Shenzhen) Co., Evergrande’s subsidiary that runs “Evergrande Wealth.” In the worst case, this arm pledges to cover both principal and interest.
The sales manager noted the Qingdao company is already collaborating on Evergrande projects, promising that any project earnings will go straight back into repayments.
“It’s basically an Evergrande product,” the manager shrugged.
Industry Context
Other highly leveraged Chinese giants—HNA Group (bankrupt earlier this year) and China Baoneng—have pushed similar schemes. In Guangdong, a brigade of WMP investors filed a petition with several government bodies. They allege Evergrande misused investors’ money earmarked for issuers, ran its own projects, and failed to disclose the risks properly.
The petition also criticises the glamour of Evergrande’s chairman, Hui Ka‑yan, who graced a 2019 celebration of the 70th anniversary of the People’s Republic. The investors claim their trust in Evergrande was powered by a yearning for national pride.
“We trusted Evergrande because we believed in the party and the government,” the group wrote.
