What does Evergrande do?
Evergrande is everywhere. Its main business is in real estate, and it’s China’s second-largest property developer by sales.
Evergrande owns more than 1,300 real estate projects in over 280 cities in China.
Its property services management arm is involved in nearly 2,800 projects across more than 310 cities in China.
The company has seven units dabbling in a wide range of industries, including electric vehicles, health-care services, consumer products, video and television production units and even a theme park.
The firm says it has 200,000 employees, but indirectly creates more than 3.8 million jobs every year, according to its website.
Evergrande’s shares and bonds are included in indexes across Asia.
Who will be affected?
The pool of affected parties include banks, suppliers, home-buyers and investors.
Evergrande warned this week its escalating troubles could lead to broader default risks.
It said that if it can’t repay its debt, it may lead to a situation of “cross default” — where a default triggered in one situation may spread to other obligations, leading to broader contagion.
A banking failure triggered by the collapse of major property developers was the single most likely scenario that could lead to a hard landing in China.
Mark Williams
CAPITAL ECONOMICS, CHIEF ASIA ECONOMIST
1. Banks
The banking industry would be among the first to be hit if there are any contagion effects on the wider property sector in China, said Williams of Capital Economics.
[b][b]“A banking failure triggered by the collapse of major property developers was the single most likely scenario that could lead to a hard landing in China. And the fact that financial markets aren’t currently signaling alarm doesn’t mean they won’t,” Williams wrote in a note last w[/b]eek[/b].