Research On The Debt Crisis Of Evergrande Group Under The Diversification Strategy

With the domestic economic shift and structural reform,many enterprises are faced with operational risks and pressure in transformation.In order to cope with the changes in the external environment,some enterprises choose to extend their business scope to other fields and industries,and diversified operation has become an important strategy for enterprise development.However,everything has two sides.While providing new drivers and new directions for the development of enterprises,diversification will inevitably increase the operational risks of enterprises.If in the process of diversification,excessive reliance on debt financing leads to a capital structure imbalance,it is more likely to face financial difficulties such as high debt and cash flow collapse,and eventually lead to debt crisis.There are many reasons affecting the debt crisis,including macroeconomic environment,industry environment,corporate governance and financial structure.This paper takes the debt crisis brought by the diversified operation under the high debt as the research direction,and selects the typical Evergrande Group as the research object for case analysis.first,The paper discusses the related concepts of diversification and debt crisis through the induction and combing of relevant literature;next,Selected the Evergrande Group as the research object,Introduce the basic situation of the enterprise,the industry background,the basic situation of implementing the diversification strategy and the impact of the debt crisis;Then we studied the debt repayment,operating and cash flow difficulties of Evergrande Group under the diversified development,At the same time,the paper analyzes the causes of Evergrande Group’s debt crisis from many aspects,For example,the real estate sector expands too fast,relies too much on debt funds for diversification,fast diversified layout and low income,weak risk awareness and lack of risk warning;finally,Put forward the suggestions for the prevention of corporate debt crisis in the same industry,For example,reasonable planning of diversified development,improve the proportion of equity financing,strengthen enterprise management to enhance profitability,establish a scientific and sustainable development concept,improve the level of comprehensive risk management.At the same time,this paper discusses the lessons and enlightenment of Evergrande’s debt crisis to enterprises,regulatory authorities and investors.