From rural poverty to billions in real estate, the fortune of Xu Jiayin, Founder and President of Evergrande, has followed China’s rampant growth for much of the past two decades, but now he’s fighting to save his conglomerate out of a debt quagmire.
This 62-year-old man (aka Hui Ka Yan in Cantonese) He was once the richest man in China according to specialized rankings, with a taste for luxury brands, exclusive yachts and a nose to praise the Communist Party which steered the economy into a home ownership boom.
In 2017, his wealth was estimated at $ 43 billion, according to the Billionaires Index of Bloomberg. Nevertheless, this figure has been reduced to less than USD 9 billion, after having lost another $ 14.5 billion since the beginning of the year alone as Evergrande’s value plummeted.
Some have speculated that his success is due to his close relationships, including with former prime minister Wen Jiabao’s brother.
But Xu has attributed his success to education and the Communist Party: “Without the resumption of the national university entrance exam, I am still in the field. Without a state scholarship of 14 yuan, he would not be able to go to college. Without reform and opening up the country, Evergrande is not what it is today, ”he said. “Everything about Evergrande is given by the Party, the State and society”.
Three times he topped the list of Forbes of the nation’s largest philanthropists, with donations reaching $ 470 million per year.
His good relations in the Communist Party led him to receive an invitation to the 2018 party congress, where he delivered a speech and welcomed the contribution of private enterprise to China’s growth.
According to the consultant Cercius Group, specialized in the politics of the Chinese elite, Hui benefited from close connections with Zeng Qinghong, former vice president of the country in the 2000s, but already retired from politics. He also maintains close relationships with other Hong Kong billionaires, such as Joseph Lau and Cheung Chung-Kiu, with whom he plays poker.
Recently, he was photographed in Tiananmen Square during the centennial of the match. But that would not be a good sign “The fact that Hui was invited to the Party’s centenary this year means that he is on Xi Jinping’s radar, which is usually not a good thing.”, Point out the Cercius researchers, cited by the Financial Times.
It is that recently, the tycoons have fallen out of favor with Xi, who now promotes “common prosperity.” A) Yes, Xu faces a government crackdown on extreme wealth.
Evergrande began to waver under the new “three red lines” imposed on developers in a state offensive in August 2020, forcing the group to ditch increasingly discounted properties.
The company is sinking these weeks under hundreds of billions of dollars of debt, while fears of an imminent collapse that could affect the second largest economy in the world. “China’s property developers – and their creditors – appear to be approaching a reckoning,” analysts at Capital Economics say in a note. They warned that Evergrande is “close to collapse” and that big losses are coming for banks, bondholders and home buyers.
Total liabilities have increased to 1.97 trillion yuan ($ 305 billion), equivalent to about 2% of the Asian giant’s gross domestic product (GDP).
Thus, Hui is considered the world’s most indebted real estate developer and is already called in some circles as “the king of debt”.
A life on the rise
Xu’s rise has been a reflection of China, which has grown from an impoverished, rural society to the gigantic economy it is today.
The now-billionaire, whose mother died when he was less than a year old, recalled in a 2017 speech how he fed only on sweet potatoes and steamed bread during his school years, being raised by his grandmother. “The sheets she put on, the bedspreads she covered, and the clothes she wore were covered in lots of patches,” Xu said. “At that time, my greatest wish was to get out of the country, find a job and eat better.”
After leaving school in 1976 – the end of the decade of the Cultural Revolution – he struggled to find work. With the reopening of the universities, Xu studied metallurgy and was later assigned to a state steel mill. In 1992 he moved to Shenzhen, the bustling heart of China’s reform and opening-up experiment in the 1990s, before founding Evergrande in 1996.
The 323 apartments of the company’s first completed project were sold in half a day and raised 80 million yuan. Evergrande launched into mass promotion, building highly demanded apartments across China and tapping into its rapid accumulation of wealth.
The group was listed in Hong Kong in 2009, raising 70.5 billion of the local currency, the Hong Kong dollar (US $ 9 billion) in its initial public offering, making it the largest private real estate company in China and making it Xu in the richest man in mainland China, with a net worth of 42.2 billion yuan.
In 2010, Xu bought the then beleaguered football team of Guangzhou, renamed it as Guangzhou Evergrande and invested money in world-class players and coaches. Although he was a rookie in soccer when he bought the club, Xu helped the team win eight league championships and became the first Chinese club to triumph in the Asian Champions League.
He also cracked down on misbehavior, apparently fining a player who challenged the referee and introducing the “Five Duties”, including “Players must unconditionally obey the referee’s decision.”
The group also invested in electric vehicles, tourism and bottled water.
According to the SuperYachtFan website, Xu is owner of a 60 million dollar yacht. It also has a private jet which, according to Australian media, he used to explore development opportunities in Sydney in 2014.
Xu also became known for his fondness for luxury brands, in particular France’s Hermes, and earned the nickname “Belt Xu” after wearing a Hermes belt at the 2012 national political congress.
(With information from AFP)