Real estate companies have long been financing through private institutions.

Starting from 2016, major real estate companies such as Wanda, Evergrande, Cedar, and Country Garden successively established their own internet wealth companies. By splitting and nesting various types of assets such as private equity and trusts, they packaged assets into financial products starting from 1,000 yuan or 10,000 yuan for individual customers, using this method to finance their own industry chain upstream and downstream. However, in the second half of 2017, as regulatory scrutiny of the splitting and nesting structures of internet finance became stricter, some keen real estate magnates began to deregister such companies and made one-time redemption of all customers' investments, with Wanda being one of them.

It is understood that in the first half of 2018, Wanda circulated financial projects through its platforms such as Wanda Wealth and 99Bill Wealth Management, including property insurance performance insurance projects and local urban investment trust projects, with a scale of about 6 billion yuan. Even at this time, Wanda's credit had been tightened by banks, and Wang Jianlin had started the "cutting off the arm to survive" mode of selling assets. However, the 6 billion yuan of customer investments were all paid off at once by Wang Jianlin.

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At that time, Evergrande and Cedar, who were still holding on to a fluke mentality and thought it was none of their business, continued to leverage and recycle funds through their platforms by selling internet financial products, private equity products, trust products, factoring products, etc.

Now, debt default events are unfolding one after another.

1. Evergrande in 2021

In the real estate circle, if 2021 is said to be the "Year of Xu Jiayin," it is likely that no one would disagree. From the beginning to the end of the year, news about Evergrande's default, bankruptcy, and redemption continuously made headlines in industry media. In addition to the more than 90% decline in the stock prices of China Evergrande and Evergrande Automobile listed on the Hong Kong stock market, another matter closely related to ordinary investors is that the unredeemed financial products of Evergrande Wealth amounted to 40 billion yuan.

In September 2021, at the Evergrande investor meeting, Du Liang, the general manager of Evergrande Wealth, mentioned on the spot that it was very difficult for Evergrande to come up with 40 billion yuan for redemption at one time and admitted that senior executives had redeemed financial products in advance. Du Liang's statement at that time caused a great stir, and some investors followed the clues to find that six Evergrande senior executives, including Ding Yumei, the wife of Evergrande founder Xu Jiayin, were involved in the early redemption, with a total amount exceeding 30 million yuan, and it was a full redemption of principal and interest.

While many investors were waiting anxiously downstairs at Evergrande's headquarters, and while many employees who believed in Evergrande were comforting investors time and again, the "small moves" of Evergrande's senior executives chilled everyone's hearts, and Xu Jiayin's previous promise, "I can have nothing, but I can't let investors have nothing," became a joke.

And just when the heat of Evergrande's 40 billion yuan default event had not yet passed, at the beginning of 2022, Cedar Holdings, a Fortune Global 500 company and "Guangzhou's number one private enterprise," also defaulted.II. Cedar Holdings in 2022

According to the "2021 Fortune Global 500" list published by Fortune Magazine, Cedar Holdings was ranked 359th globally. Among the Chinese companies listed, it was ranked 107th.

Many people first heard the name "Cedar Holdings" around 2018 when Cedar spent billions of dollars to acquire Zhongjiang Trust, which was then mired in a debt crisis and known as the "minefield king" in the trust industry, thus obtaining a valuable trust license.

Trust licenses are scarce resources in China, with only 68 in total nationwide, most of which have state-owned enterprises or local state-owned capital backgrounds. The predecessor of Zhongjiang Trust, which Cedar acquired, was Jiangxi International Trust, with an asset management scale exceeding 150 billion. Before acquiring Zhongjiang Trust, Cedar had already obtained licenses for factoring, micro-lending, and financial leasing, but none of them were formal financial licenses. Therefore, when many industry insiders thought that obtaining a license while also taking on the huge debt behind Zhongjiang Trust was too much of a loss, the founder of Cedar Holdings, "post-70s entrepreneur" Zhang Jin, responded: "It's worth it."

When outsiders questioned how Cedar would fill the holes in Zhongjiang Trust, Zhang Jin replied assertively: "Payment is the hard truth." Zhang Jin once publicly stated that Cedar's goal was to achieve a market value, sales, and assets of "three trillions." However, just four years later, Zhang Jin's "trillion dream" has turned into a mirage.

On the eve of the Spring Festival just passed, a handwritten letter signed by Zhang Jin, Chairman of Cedar Holdings, was delivered to every investor. However, this letter was not a blessing for the Year of the Tiger, but an apology letter, informing investors that due to the untimely disposal of assets, the wealth management products due in January would be postponed until the end of February.

According to a report by Caixin Online, the current issuance scale of Cedar's wealth management products is about 20 billion yuan, with an average investment amount of 2.5 million yuan per person. A single asset involved in delayed payment means that 20 billion yuan of assets will be affected. Therefore, investors who were upset during the Spring Festival holiday did not give Zhang Jin a chance until the end of February and gathered at the bottom of Cedar Holdings' Guangzhou headquarters on February 10th.

III. Conclusion

Whether it's Evergrande's Xu Jiayin or Cedar's Zhang Jin, they all share a common characteristic: they have expanded significantly, attempting to solve all problems with capital. However, now they have been backfired by capital.

In contrast, the "old hand" in the real estate industry, Wang Jianlin, demonstrated to the "younger generation" as early as five years ago how to sell assets, donate money and materials, and act low-key when the capital chain breaks. Abandoning heavy assets in real estate and turning to commercial property centered on brand value is another key method Wang Jianlin has shown to the "younger generation" on how to be reborn from the ashes.However, Xu Jiayin, who is now in debt of 2 trillion, may not have the opportunity to learn. As for Zhang Jin, who just suffered a 20 billion explosion, does he still have a chance?