Research On The Causes And Prevention Measures Of Real Estate Enterprise Debt Crisi

The 20 years since 1998 have been an era of rapid development of China’s real estate industry.However,since 2018,with the various control policies introduced by the government and the subsequent negative effects of the epidemic,the real estate industry has been continuously impacted,and a number of large real estate enterprises have defaulted on their debts,causing widespread concern in the society and the market.Under the macro background of the implementation of the "three red lines" policy of housing enterprise financing,this paper selects a typical Evergrande as the case study object,studies the causes of its debt crisis and puts forward countermeasures and suggestions.Through the case study,this paper finds that the debt crisis of Evergrande is caused by multiple factors: First,the centrifugal diversification strategy of the company not only causes huge debts,but also impacts its core real estate business,weakens its core competitiveness and intensifies financial risks.Secondly,the huge amount of capital needed to diversify its business leads to a serious external debt burden,unreasonable debt structure and high financing costs.In addition,under the background of fund shortage,Evergrande’s management still lacks the awareness of fund management,and pays high dividends for years.Finally,under the constraints of the epidemic and the "three red lines" policy,Evergrande’s external financing ability and sales performance declined.All of the above factors led to the poor liquidity of Evergrande,the shortage of funds,and the worsening debt risk.Finally,Evergrande could not repay the maturing debt,resulting in debt default and debt crisis.In view of the above problems,this paper puts forward relevant suggestions: first,reasonable diversification,reasonable use of its own advantages in the diversified layout,considering the industry related to the main business;Second,comply with the policy regulation,actively expand financing channels,reasonable arrangement of financing structure;Third,strengthen cash flow management,promote capital return in many ways;Fourth,we will improve external oversight,allowing external institutions to play their oversight role.At present,the external environment of real estate enterprises is relatively bad,the operating pressure is great,and the debt risk is intensified.This paper studies the debt crisis of Evergrande,hoping to provide help for Evergrande and other enterprises in the same industry in dealing with the debt crisis and play a certain reference role.