Xu Jiayin seeks constant greed and finally becomes empty|Financial peak commentary

Xu Jiayin

The first real estate developed by Evergrande is Jinbi Garden.

Evergrande had no money to buy land, so it borrowed 5 million yuan from the bank and paid the land deposit;

Evergrande had no money for construction, and relied on construction enterprises to fund and meet the pre-sale conditions;

Evergrande opened at a loss price of 2,800 yuan per square meter, sold out in two hours, achieved sales of more than 80 million yuan, and obtained the company's very valuable first pot of gold.

As long as "Evergrande" is replaced with "we", the above almost testimony history is the original words that Xu Jiayin said in public at the celebration of the 20th anniversary of the founding of Evergrande.

This series of "empty gloves white wolf" operation not only contains the wealth code of Evergrande Boxing, but also buries the bane of its sudden demise. Since then, Evergrande has embarked on the road of expanding by relying on bank loans to acquire land, occupying suppliers' funds for free, and using pre-sale funds as a capital pool.

Later, Xu Jiayin, who was greedy for speed, was not satisfied with this. Expand financing channels with diversification, build financing platforms with financial institutions, and launch internal fundraising with employees' financial indicators... Evergrande has opened a rare limit financing operation in the history of Chinese enterprises.

On September 28, on the eve of the Mid-Autumn Festival, Xu Jiayin was forced to take compulsory measures in accordance with the law and was forced to draw an end to his radical adventure.

Overnight, all kinds of rumors about Xu Jiayin and Evergrande poured in. Some people laughed that the whole network was teaching the former richest man how to do business; Others talk about its extravagant and pompous lifestyle.

Behind the hustle and bustle, there is a black hole of 2 trillion debts, millions of properties facing the end of rot, and countless creditors, suppliers, and owners who are hesitant and speechless.

Extreme financing, in fact, Ponzi

The operation of Jinbi Garden, the reason why Xu Jiayin was made public, was naturally because it was commonplace in the industry and was outside the supervision at that time.

Under the pre-sale system, real estate developers take loans to acquire land, collect the purchase price in advance, defer the payment of the project, and obtain a large amount of interest-free liabilities in stages for the rolling development of more projects.

This operation can be done quickly and at scale in the short term, but the key is whether the cash flow generated by the project can cover the principal and interest of the financing. If the principal and interest cannot be covered, it can only rely on the continuous appreciation of the assets at hand, and the sale can bring about an increase in wealth to maintain the capital chain.

Once the asset stops appreciating, the cash flow of the project itself cannot be corrected, and the whole model becomes a collection of funds from the back project to fill the hole in the previous project. At this point, it has evolved into Ponzi financing.

Before 2016, property prices were generally up, and asset appreciation masked the shortcomings of this conventional financing model in the industry.

After 2017, real estate regulation and control have come one after another, and the price of new houses in the first and second lines can only fall but not rise, which actually cuts off the possibility of maintaining the capital chain by asset appreciation. Housing companies, which failed to change their course in time, have since embarked on the road of no return for Ponzi financing.

What makes Evergrande more aggressive than other real estate companies is that it has opened up several new financing channels while the project capital pool rolls.

In 2016, Evergrande began to enter the financial industry, acquiring 17.29% of the shares of Shengjing Bank, injecting capital into Evergrande Life, and launching Evergrande Financial Services (the predecessor of Evergrande Wealth). These financial institutions controlled by Evergrande have become Evergrande's money bags.

Relying on universal insurance and other financial insurance, Evergrande Life has achieved an asset scale of 100 billion yuan within three years, and transfused blood for the real estate and other businesses of Evergrande Group.

Evergrande Wealth used its strong position to allocate financial indicators to Evergrande's employees and suppliers, and even let employees mobilize relatives and friends to participate. Xu Jiayin's domineering and Evergrande's strong corporate culture make it difficult for those who are in it to say no.

Executives were also forced to tie up chariots. Well-known economist Ren Zeping once joined Evergrande with an annual salary of 15 million yuan, but part of his income returned to Evergrande's capital pool through wealth management products. Earlier media reported that after Evergrande's wealth explosion, there were still about 300 departing employees with 200 million yuan of "super-receipt" principal unpaid, including Ren Zeping, chief economist of Evergrande Group, who joined in 2017.

While building a financing platform of "banking + insurance + Internet finance", Evergrande has opened up a diversified layout. Among them, Evergrande Ice Spring and new energy vehicle projects are the most well-known to the outside world.

In these extremely competitive industries, Evergrande resolutely entered the game with the courage given by Liang Jingru, and frantically threw money with the idea of vigorously producing miracles, hoping to quickly kill a bloody road through saturated marketing.

Cross-border success is inherently difficult, not to mention the self-confidence of Xu Jiayin fans, there are other intentions. Evergrande's various business layouts are all considered to open channels and facilitate financing. Until the eve of being arrested, Evergrande still did not give up the dream of PPT car manufacturing and capital market money.

However, things still develop according to their own laws, and diversification has not become a new financing channel for Evergrande, but has greatly consumed the funds that are already beyond their means.

With the increasing pressure on funds, Evergrande's financial platform and internal fundraising, the return has gradually increased, and the annualized 15% of the project abounds, and has reached more than 20% in the later stage.

Where does such a high return come from? Real estate projects themselves are increasingly thinning profits, and can only rely on asset appreciation, a round of water release, and inflation to dilute debt.

In 2008, Xu Jiayin, who was on the verge of breaking the capital chain and was about to jump off the building, waited for "four trillion yuan" and became the richest man in China and one of the world's top 500 companies in the future. After 2018, Xu Jiayin has no other possibility except to look forward to yesterday once more. Through Ponzi financing, holding out until a miracle comes is probably his last hope.

As the financing interest rate is getting higher and higher, the debt hole is getting bigger and bigger, and Xu Jiayin, who is a good gambler, has been exposed to various extreme financing operations.

The pre-sale system comes with a leverage function, the lack of effective supervision of the purchase money, and the drawbacks of corporate manipulation of financial self-financing, which have also been doubled by Evergrande's Ponzi financing.

Extravagant and pompous, achieve its madness

As the top among entrepreneurs, Xu Jiayin has always been not lacking in attention.

After his career was successful, Xu Jiayin paid more and more attention to the external image, and had a "zero tolerance" requirement for negative news, and even invested billions in brand public relations every year. Before Evergrande's thunderstorm, in the public reports of institutional media, the negative of Evergrande and Xu Jiayin were rare.

Incidentally, as part of its huge accounts payable, a lot of this money turned into bad debts for the media.

In his early years, he participated in the two sessions with a striking luxury brand logo, which earned him the nickname "Brother Belt". Since then, he has turned to a low profile in public, but his stories have always been passed down among the people.

Some of these factions have a deliberate element to send a signal of their strength to the surrounding area.

Climbing the city building, buying a plane, sponsoring a football team, scandals with female stars, rumors of a "harem group", in the eyes of different audiences, can improve the credit rating to a certain extent.

And the various jokes that circulated after the thunder blasted outlined, sketching a hegemonic image that is not less than "hegemonic literature".

Some paragraphs, verified by Evergrande insiders, are not fiction.

An executive who transitioned from media to Evergrande Group once revealed to me that his boss would call him, ring three times, and then he would be cursed when he picked it up; After ringing more than four times, the boss hangs up and scolds in public at the next meeting. The boss is also very energetic, usually working overtime until eleven or twelve o'clock is commonplace, and it is not uncommon to call in the middle of the night.

I can't help but ask, what do you do when you take a shower? He smiled: at home, let his wife hold the mobile phone and stand at the bathroom door; Outside, wrap your phone in a dry towel and take it into the bathroom.

He also said that he wanted to cash out part of it after the ban on equity incentives was lifted, and carefully mentioned it to his boss, and was scolded on the spot. The boss takes everyone to make money, but also strictly controls the spirit and money of the executives.

In this trillion-dollar business empire of more than 100,000 people, Xu Jiayin is an emperor-like existence.

In the "Evergrande Daily", Chairman Xu received leaders of a considerable level and was full of momentum.

THERE IS AN EXCEL SHEET ON THE INTERNET THAT RECORDS THE RECEPTION STANDARDS AND PRECAUTIONS FOR EVERGRANDE EXECUTIVES, AND ITS EXTRAVAGANCE IS SO THAT NETIZENS CAN ONLY LAMENT THAT "POVERTY LIMITS MY IMAGINATION."

Because he was not in good spirits on a certain photo, in order to prove his health, a basketball game was specially held to make Xu Jiayin the MVP. As a result, because the performance was too floating, it attracted ridicule from netizens.

Spend 100 million to buy the top floor of Shenzhen Bay No. 1, and I want to buy the top floor as well, because: "There can't be anyone above my bedroom." "Lovers of overlord literature see this, how can they not be high.

Repairing his father's grave and erecting a monument to himself in advance, these actions with the atmosphere of the times remind him of the background of the times in which he grew up and his personal underlying cognition.

A lonely young man from Henan, from the backbone of a state-owned enterprise in the mainland to a small salesman in Shenzhen, went to the sea to do business, and at the right time, not only became China's richest man, but also the world's first real estate company to appear on the Fortune 500 list in only 20 years, Xu Jiayin once created brilliant business achievements.

In 2016, Xu Jiayin led Evergrande's Hong Kong stock to rise tenfold and topped the throne of the richest man. Some financial media have a reputation as "constant but not falling, bigger and stronger". As everyone knows, full of losses, humble benefits. If God desires its death, it will make it mad. The pursuit of eternal aspirations, ruined by greed for big and fast, finally became a dream.

The end has long been preordained, but the price is too heavy.