Evergrande Group, once the largest real estate company in China, saw rapid growth by diversifying its portfolio and expanding its projects but faced a downfall due to government policy, mismanagement, and increasing competition. By 2021, it triggered a crisis in the Chinese property sector, with over 800 unfinished projects. The case highlights the importance of risk management, diversification, and adaptability in business.

1. EVERGRANDE
What next?

2. 1 2 3 4
MILESTONES
INTRODUCTIO
N
DOWNFALL CONCLUSION

3. INTRODUCTI
ON

4. Evergrande group is considered as one of the largest real estate
companies in China. According to the Forbes it is considered one of the
largest public companies in the world.
It was Founded in 1996 by Hui Ka Yan.
Its Headquarters in Guangdong, China.

5. The Group operates through the following segments.
. Real Estate
. Automotive
. Entertainment
. Tourism
. Health
In 2018 Evergrande became the most valuable real estate company in
the world but by 2021 it had collapsed financially and started the
Chinese property sector crisis.

6. MILESTONES

7. • It is the largest real estate developer company in China
• Diversification into residential, commercial, and mixed-use
developments.
• Extensive presence with 1300+ projects in 280 cities.
• Ballooning balance sheet of 150 billion within 10 years.
• Impressive revenue growth of 44% from 2004 to 2020.
• They also expand their operations to other regions of China
and diversified its portfolios with residential, commercial ,
and mixed use developments .

8. 1997
2000
2009
During the early
2000 evergrande experienced rapid
For the first time premium real estate was
accessible to the middle class in 1997.

9. 1997
2000
2009
During the early 2000 evergrande experienced
rapid growth ,fuled by the china’s booming
property market .

10. 1997
2000
2009
growth ,fuled by the china’s
booming property market .
They acquire football club in 2009 and entered
in the sports industry .

11. DOWNFALL

12. 1)Government Policy
Chinese government launched a program known as the
"three red lines system".
What is three red line system?
• Liability to asst ratio of less than 70%(excluding
advanced receipts)
• Net gearing ratio of less than 100%
• Cash to short term debt ratio of more than 1x.

13. No. of lines violated Debt growth permitted
0 15%
1 10%
2 5%
3 0%

14. 2) Mismanagement of funds
• In 2019 and 2020 company distributed 61000 crores
dividend and Net profit of the company was 27000 crores.
• Gift to the investor – like Gucci bag, Air purifier etc.
• Diversification in 2010
football team-1400 crores.
Stadium
Grocery
Bottled water.
Food and beverage
Theme Park
Electric vehicle

15. 3) Increasing competition
• Relaxation given by the government of China more and
more companies enter a real estate business therefore it
increases the competition in the market.
• Targeted audience was the middle-class family. Therefore,
increasing competition and limitation in land increases the
price of the property and Evergrande failed to fulfil his
customer need.
Current reports
Therefore, Evergrande started WMP (Wealth Management
product)
General public and employee started investing.
More than 800 projects are not finished yet.

16. CONCLUSION

17. 1)Innovative Business Model:
The company's innovative land Acquistion and pre scale
strategy, where they purchase land from local government, build
apartments & sell them before completion enabled rapid growth
& profitability.
2) Rapid Growth and expansion:
So, China is growing in the market of property in the early 2000s
because of their aggressive sales & marketing tactics.
3) Scale & Impact
With over 1300 projects in 250 cities employing 200,000 people
and generating 3.8 million jobs annually, the company has
significant presence & impact on the Chinese economy and
society.

18. What we learned as management students-
1. Risk management is key!
2. Diversification is essential
3. Monitoring Economic & Political Trends.
4. Adaptability & Flexibility