Research On Debt Risks And Countermeasures Of Evergrande Group

In the process of rapid urbanization in China,the real estate industry has become a pillar industry related to people’s livelihood stability and economic growth,the real estate industry in the high income at the same time,but also the phenomenon of overinvestment,accumulated a large number of debt risks,February 24,2022 State Council Information Office held a press conference,Minister of Housing and Urban-Rural Development Wang Menghui and Vice Minister Ni Hong stressed at the meeting that resolutely and forcefully deal with the risk of overdue delivery of real estate projects caused by the outbreak of debt risks of individual real estate enterprises,and this work is to "ensure the delivery of buildings,protect people’s livelihood and ensure stability" as the primary goal.Since the implementation of the "three red lines" financing policy for real estate in August 2020,the debt and financing behavior of the real estate industry have been constrained.Many real estate enterprises have been greatly negatively affected in raising and financing funds,which further amplifies the problem of debt risk of real estate enterprises.This paper takes Evergrande Group as the research object,takes the perspective of debt burden and capital supply as the breakthrough point of the article,compares and analyzes the company’s debt and capital situation in combination with the situation of the industry,summarizes the reasons for the formation of Evergrande’s debt risk,and puts forward more effective countermeasures and suggestions according to its problems and causes.It is found that the outbreak of debt risk of Evergrande Group is formed after a certain period of development,and the reasons for the formation are: First,the company’s aggressive real estate expansion has accumulated a large amount of debt,resulting in a continuous deterioration of the financial situation.Second,enterprises need a lot of financial support when blindly diversifying business operations,enterprises in order to obtain the funds needed for expansion,enterprises began to use too much high-cost short-term debt financing,and finally led to the imbalance of financing structure and debt structure,in the face of large-scale short-term debt and high financing interest rates,coupled with long-term high dividend rate dividends further weakened the liquidity of corporate cash.Third,the implementation of the new financing policy restricts the financing channels of enterprises and causes financing difficulties for Evergrande Group,in addition,the Evergrande Group incident further causes difficulties in enterprise sales collection and asset sales,in short,the new financing policy and the Evergrande incident have caused the capital chain of enterprises to break,and finally led to the inability of capital supply to cover the maturity of debts and the outbreak of corporate debt risks.Finally,effective suggestions and countermeasures are put forward according to the existing problems and the current situation of the debt risk of the enterprise.In addition,through the study of Evergrande Group,it can enhance the understanding of debt risk of real estate enterprises,and improve the attention of real estate enterprises to debt risk from the cognitive level,which is of great significance for stabilizing the goal of "ensuring the delivery of buildings,protecting people’s livelihood and ensuring stability".