A few days ago, major trading indices, including the Nasdaq, Dow Jones and S&P 500, turned red, showing a general downward trend. It didn’t last long, but it made many anxious. And the reason for the unrest in the global stock market was the Chinese company Evergrande Group.
Many times, when I covered the stages of development of the Evergrande Auto electric vehicle project, I said that the automobile company was created within the framework of a large corporation, the main activity of which was construction earlier and today. In a number of previous articles on Evergrande Auto, I have voiced concerns about the sustainability of the company due to the consequences of the crisis caused by circumstances known to all. This crisis almost took off last year by the electric car startup Byton. This happened almost a couple of months before the start of production at a new automobile plant in Nanjing. And I asked if the same fate threatens Evergrande.
But one must understand that Evergrande Group is one of the backbone companies for the Chinese economy. And as they say, a large wardrobe falls loudly, and can fill up many with its debris nearby. The Evergrande Group is just such a «big closet».
This week is the due date for coupon payments on some bonds. But as previously reported, the #evergrande Group was in a cash crunch.
Evergrande Group owes too much or too much. But the Chinese government is well aware of what caused this crisis. Therefore, I assume, based on the measures already taken by the government, Evergrande will be able to avoid default. The only thing that remains unclear for me today is why the Evergrande Group, foreseeing the impending # crisis, did not take #evergrande auto into a separate company, independent of the group, so that it would not suffer.
In the next couple of weeks, it will become clear what awaits the electric car company Evergrande Auto. In the meantime, she is subject to the same stresses as the entire Group. According to some reports, # salary payments, as well as payments to suppliers, have been suspended at Evergrande Auto.
One more scenario can be considered. The Chinese government can let go of the situation in which the Evergrande Group will be declared bankrupt, and its assets, including the electric vehicle division, will come under the control of other companies. But this did not work with #byton, although it was several times smaller. #foxconn, which at the beginning of the year decided to enter the business, supporting Byton, recently announced the withdrawal of its personnel from all divisions of the company. Thus, Byton is almost on the verge of real bankruptcy. They still have hope in the Chinese state-owned company FAW, which has announced the possibility of producing electric vehicles of the Red Banner brand at a plant in Nanjing. But so far nothing concrete can be seen or heard from the #faw side.
Dear readers, do not forget to click the button
You can also subscribe to
Your participation is very important to us!