In a remarkable display of power and influence, Hui Ka Yan, the founder of China Evergrande Group, stood amidst the grandeur of Tiananmen Square on July 1, 2021, celebrating the centenary of the Chinese Communist Party. Clad in a navy blue suit with an open-neck shirt, he appeared unfazed by the mounting financial pressure looming over his company. It was an event that many considered an official endorsement of the billionaire businessman’s standing within the Chinese power structure.
Just a month prior to this momentous occasion, Hui, as the chairman of Evergrande, hosted an uncommon gathering that brought together over 1,000 of the company’s suppliers. Surrounded by fellow members of the business elite, he addressed the crowd, articulating his aspirations for debt reduction and financial stability.
Fast forward two short years, and Hui Ka Yan finds himself under the watchful eye of the police, as reported by Bloomberg News. The colossal property empire he meticulously built over decades is now teetering on the precipice of liquidation. Sources close to Evergrande reveal that Hui has gone silent, ceasing all communication with his staff, and an industry insider paints a picture of inaccessibility. Both sources, understandably, remain anonymous due to a lack of authorization to speak to the media.
Requests for comments from Evergrande, the Guangdong province police department, and the public security ministry have met with silence, as the world anxiously watches the unfolding crisis.
The numbers are staggering. Evergrande’s total liabilities have ballooned to over $300 billion, equivalent to the entire gross domestic product of Finland. The once-heralded developer, now the world’s most indebted, has witnessed a rapid deterioration of its financial health. Efforts to secure creditor approval for an offshore debt restructuring plan hit a major roadblock when Evergrande announced its inability to issue new debt, citing an investigation into its primary China unit.
Recent reports from Reuters suggest that a significant group of offshore creditors is considering filing a petition for liquidation against Evergrande if a fresh debt restructuring plan fails to materialize by the end of October.
Hui Ka Yan’s journey to this precipice is a remarkable one. Born into humble beginnings, the 64-year-old entrepreneur was raised by his grandmother in a rural village in central Henan province. His path to immense wealth was paved by a keen sense for low-priced homes and a relentless drive.
Under Hui’s stewardship, Evergrande embarked on an aggressive expansion strategy. The company leveraged loans to fuel its land acquisitions and sold homes at slim profit margins to ensure rapid turnover. By 2020, Evergrande boasted annual sales exceeding 700 billion yuan ($95.8 billion).
In 2017, Hui reached the pinnacle of Asia’s wealthiest individuals with a net worth of $45.3 billion, according to Forbes. Today, his net worth has dwindled to an estimated $3.2 billion, emblematic of the dramatic reversal of fortunes that has befallen him and his empire.
Hui Ka Yan was not known for a flamboyant public persona. Instead, he was a workaholic who often demanded that those around him adopt his relentless work ethic, as attested by three employees interviewed by Reuters.
He also displayed unwavering confidence in his company’s high-leverage projects. When questioned by investors and reporters over the past decade, Hui asserted that Evergrande’s substantial turnover and asset value were more than sufficient to cover its debt obligations.
But Hui was not content with real estate ventures alone. He ventured into new territories, aligning with China’s broader objectives. His forays into electric cars and soccer mirrored the passions of Chinese President Xi Jinping.
Beyond mainland China, Hui cultivated relationships with Hong Kong’s business elite. He became an integral member of the “poker club,” a close-knit circle of tycoons known for collaborating on investment deals.
An insider disclosed, “He was very composed when he was first brought to the club; he knowingly lost a lot of money in the games and gained the fondness of Cheng,” referring to the late founder of New World Development, Cheng Yu Tung. Cheng’s injection of $150 million into Evergrande a year before its 2009 IPO in Hong Kong played a pivotal role in navigating the company through the financial crisis that followed its rapid expansion.
However, Evergrande’s spiraling debt situation began to raise concerns among regulators, who issued warnings to the company to rectify its precarious financial position to prevent potential contagion.
In 2018, Hui was honored at the China Charity Awards, winning for the eighth consecutive year. During his acceptance speech, he proudly declared that Evergrande had contributed 185 billion yuan in taxes over the past two decades and donated more than 10 billion yuan to various charitable causes.
He expressed profound gratitude for the opportunities he had received from the country, citing the transformative impact of higher education reforms and government scholarships on his own life. Hui concluded, “Therefore, everything that Evergrande and I have, they are all given by the Party, by the country, and by society.”
In hindsight, these words take on a poignant resonance, as Hui Ka Yan’s empire teeters on the brink, and the fate of China Evergrande Group hangs in the balance. The rise and fall of one of China’s most prominent business figures serve as a stark reminder of the ever-shifting dynamics of wealth and power in the world’s second-largest economy.
Read More: