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Title: Evergrande Crisis: Lessons and Reflections
Introduction: On the eve of the National Day and Mid-Autumn Festival, Xu Jiayin was subjected to compulsory measures, and Evergrande Real Estate was investigated for suspected violations of laws and regulations, causing market shocks. The incident not only wiped out Xu's wealth, but also revealed the controversy over the excessively high salaries of executives. This article explores the lessons behind the incident, recommends appropriate regulations, and views on the incident.
As the National Day and Mid-Autumn Festival approached, a shocking news came out: Xu Jiayin was subject to compulsory measures, while Evergrande Real Estate was investigated by securities regulators for suspected violations of laws and regulations.
The incident further exacerbated unease in the market. Some netizens even ridiculed: "Do you still need to choose an auspicious day to arrest people?" How many families have been harmed by such a person, he will also be arrested on the first day of the new year, so that he will be imprisoned forever. Some people sarcastically made Xu Jiayin unable to move into new houses for many buyers, just as the Mid-Autumn Festival made him experience the taste of family reunion.
In 2018, he first became China's richest man, and Xu Jiayin's net worth once reached 400 billion yuan. However, according to the 2023 Global Rich List, his wealth has shrunk by more than 95%, and now only 30 billion yuan remains.
The evaporation of this immense wealth reflects the enormous impact of the crisis on companies and executives. The collective suspension crisis of Evergrande-listed companies has also directly impacted Evergrande's listed companies, including China Evergrande, Evergrande Auto and Evergrande Property, which have suspended trading on the Hong Kong Stock Exchange. The decision was intended in response to the crisis, but it also raised more doubts about the company's future.
It originally promised to pay off the huge debt in 2023, but by the end of June, Evergrande's debt was still as high as 200 million. Although efforts were reduced by more than 400 million in the first half of the year, they were far from filling the remaining debt gap.
In fact, behind the bankruptcy crisis of Evergrande, the excessive high salaries of executives have also become one of the important reasons. When companies are losing money, many executives still receive high salaries or dividends, causing widespread controversy. This seemingly legal behavior actually transfers company assets to the executive's personal account, which is not only unfair, but can also lead to the bankruptcy of the company and harm the interests of creditors and minority shareholders.
In order to solve the problem of excessive high salaries of executives, the state should introduce corresponding regulations to limit the high salary level of executives of non-profit enterprises and ensure that executive salaries are consistent with the actual performance of enterprises.
High salaries should be agreed by all shareholders to avoid abuse of power. In addition, once the company loses money after receiving a high salary, the company should be allowed to recover the high salary paid to the executive in the past.
There are generally different views on this incident. Some argue that the crisis at Evergrande Real Estate is the result of the greed and irresponsibility of executives who are responsible for their actions. Others see it as an opportunity for reflection to focus more on corporate governance and the rationality of executive compensation.
Overall, the Evergrande crisis has taught us profound lessons.