How Does China Evergrande Group Company Work?

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How did China Evergrande Group operate?

Once a titan in China's real estate sector, China Evergrande Group was known for its rapid expansion and large-scale residential developments. At its peak, the company was valued at over $50 billion and was the nation's second-largest property developer by sales.

Beyond property development, Evergrande diversified into property management, investment, new energy vehicles, and tourism, aiming for integrated residential communities.

How does China Evergrande Group work amidst its collapse?

The company defaulted on its debt in 2021, leading to a crisis in China's property market. In January 2024, a Hong Kong court issued a winding-up order due to its insolvency, with liabilities exceeding $300 billion. Its shares are slated for delisting on August 25, 2025. Understanding its past operations and current state is crucial for grasping the risks of rapid, debt-fueled expansion. A China Evergrande Group PESTEL Analysis can provide further context.

Historically, the company's core operations centered on large-scale residential property development across China, building comprehensive communities. Its value proposition focused on delivering integrated living environments with diverse amenities to upper and middle-income buyers.

Historical Core Operations

The company engaged in extensive land acquisition and massive construction projects. It managed sourcing of materials and utilized a direct sales approach through a wide network of sales offices.

Historical Value Proposition

Its main appeal was the ability to deliver integrated living environments at scale. Differentiation came from the sheer volume of projects and the inclusion of various amenities within its communities.

Current Operational Focus

Following a liquidation order, operations shifted from expansion to stabilizing existing projects and assets. The primary goal is the guaranteed delivery of pre-sold homes, a significant challenge.

Property Services Subsidiary

The Evergrande Property Services Group continues to operate, managing a diverse portfolio. Services include preliminary management, pre-delivery, repair, maintenance, and community value-added services.

The Evergrande business model historically relied on rapid expansion funded by pre-sales and debt, aiming to capture market share through extensive land acquisition and large-scale development. This approach allowed them to build a vast portfolio and offer integrated communities, a key aspect of their value proposition. Understanding Revenue Streams & Business Model of China Evergrande Group provides further context on how the company generated revenue and managed its operations.

Impact of Financial Distress on Operations

The company's financial distress has severely impacted its supply chain and partnerships. Payment issues to suppliers are a major impediment to project timelines and the overall operational efficiency.

• As of December 31, 2024, Evergrande Property Services Group managed approximately 579 million square meters of gross floor area (GFA).
• The focus has shifted to stabilizing existing projects and ensuring the delivery of pre-sold homes.
• Payment delays to suppliers have disrupted project execution and strained relationships.
• The operational scope is now largely confined to managing ongoing projects and subsidiaries within mainland China.

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Before its significant financial challenges, the company's primary revenue stream was property sales. This was complemented by income from property management, property investment, new energy vehicle sales, and tourism. The core monetization strategy revolved around a pre-sales model, leveraging buyer deposits for uncompleted homes to fund new projects.

Property Sales Dominance

The company's historical revenue was heavily reliant on the sale of residential and commercial properties. This segment formed the backbone of its business model, driving growth and project development.

Pre-Sales Funding Model

A key aspect of its monetization was the pre-sales strategy. Buyers paid deposits for properties under construction, providing crucial upfront capital for ongoing and future developments.

Diversified Income Streams

Beyond property sales, the company also generated revenue from property management services, strategic property investments, and ventures into new energy vehicles and tourism.

Subsidiary Revenue Generation

Even with the parent company's liquidation, its subsidiary, Evergrande Property Services Group (EPSG), continues to operate and generate revenue.

EPSG's 2024 Performance

For the year ending December 31, 2024, EPSG reported operating revenue of approximately RMB 12,756.7 million, a 2.2% increase year-on-year.

EPSG's Revenue Breakdown

EPSG's revenue is primarily derived from property management, community living, asset management, and community operation services.

The financial situation of the main entity has significantly reshaped the revenue landscape. While the parent group is undergoing liquidation, its subsidiary, Evergrande Property Services Group (EPSG), has shown resilience. In 2024, EPSG achieved an operating revenue of approximately RMB 12,756.7 million, reflecting a 2.2% year-on-year increase. This revenue is segmented across property management, community living, asset management, and community operation services. Despite revenue growth, EPSG's gross profit for 2024 saw a decrease of about 5.7 percentage points to RMB 2,443.4 million, and net profit fell by approximately 4.4 percentage points to RMB 1,032.0 million, resulting in a net profit margin of 8.1%. A notable shift is the minimal contribution from services to fellow subsidiaries and joint ventures of the main group, accounting for only about 0.7% of EPSG's total revenue in 2024. This indicates a strategic pivot towards third-party contracts, with EPSG experiencing a more than 100% increase in newly signed contracted gross floor area (GFA) from third parties in 2024, signaling a diversification effort away from its distressed parent. This shift is a critical element in understanding the evolving Marketing Strategy of China Evergrande Group.

EPSG's Financial Trends and Strategic Shift

EPSG's financial performance in 2024 shows a divergence from its parent company's struggles, with a focus on expanding its third-party client base.

• Operating Revenue (2024): Approximately RMB 12,756.7 million (up 2.2% YoY).
• Gross Profit (2024): RMB 2,443.4 million (down ~5.7 percentage points).
• Net Profit (2024): RMB 1,032.0 million (down ~4.4 percentage points).
• Net Profit Margin (2024): 8.1%.
• Revenue from Parent Group Affiliates (2024): ~0.7% of total revenue.
• Third-Party Contract Growth (2024): Over 100% increase in newly signed contracted GFA.

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The journey of China Evergrande Group was characterized by a rapid rise to prominence in the global real estate sector, commencing in 1996. Key milestones included its significant listing on the Hong Kong Stock Exchange in 2009 and subsequent diversification into sectors such as new energy vehicles and tourism. The company's competitive edge was built upon an aggressive expansion strategy, a substantial land bank, and the realization of economies of scale.

Key Milestones in Evergrande's Growth

Founded in 1996, the company achieved a major milestone with its listing in Hong Kong in 2009. This period saw rapid expansion, including ventures into new energy vehicles and tourism, showcasing a broad diversification strategy beyond its core real estate operations.

Evergrande's Competitive Advantages

The company's competitive edge was largely derived from its aggressive expansion tactics and a vast land bank. This allowed for economies of scale and a perceived brand strength that facilitated pre-sales, driving rapid market share growth.

Challenges and Downfall

Significant operational and market challenges led to a default in 2021, with debt exceeding $300 billion. Regulatory actions targeting leverage in China's property market and a downturn in property sales intensified these financial difficulties.

Liquidation and Restructuring Efforts

Failed debt restructuring attempts culminated in a Hong Kong court ordering the company's liquidation in January 2024. The detention of its founder in September 2023 and a substantial fine on its subsidiary for falsifying financial records in 2024 mark critical negative developments.

The company's once-formidable competitive advantages have been significantly diminished. Its current focus is entirely on managing existing assets and completing pre-sold projects, a stark contrast to its previous pursuit of new ventures. The liquidation process itself represents a major strategic shift, moving from a growth-oriented developer to an entity primarily focused on asset disposal and creditor repayment. This complex process, managed by liquidators, is estimated to extend for over a decade, reflecting the scale of the challenges in unwinding its extensive operations and financial obligations. Understanding the Brief History of China Evergrande Group provides context for its ambitious operational scale and subsequent financial entanglements.

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China Evergrande Group's industry position has undergone a drastic transformation from a leading property developer to a company in liquidation. Its market share has significantly declined, and its brand reputation has been severely impacted by its financial collapse. The ongoing liquidation process is the largest in China's history, underscoring the scale of its former operations and the magnitude of its downfall.

Industry Position

Once a dominant force in China's real estate sector, Evergrande's market position has collapsed. Its market share in new property sales has plummeted, and its brand strength has been critically undermined by its financial distress and subsequent liquidation. The company's former scale is evident in the unprecedented size of its liquidation proceedings.

Key Risks and Challenges

The company is navigating immense risks, primarily stemming from its substantial debt crisis and the complexities of its liquidation. Total claims against Evergrande have reached approximately HK$350 billion (US$45 billion). A major hurdle is the enforceability of the Hong Kong liquidation order across mainland China, where over 90% of its assets are located, due to differing legal jurisdictions.

Future Outlook and Operations

Evergrande's future is intrinsically tied to its liquidation process, with a focus on asset management to satisfy creditors and, crucially, to ensure the completion of pre-sold homes. As of August 2025, liquidators had managed to sell about US$255 million in assets, with a smaller portion directly from Evergrande's holdings.

Asset Realization and Delisting

While its property services segment shows some operational resilience with an increase in third-party contracts, the parent company's path forward involves a protracted asset realization and debt repayment under liquidator supervision. The delisting from the Hong Kong Stock Exchange on August 25, 2025, signifies the end of its public trading era and its transition into a company undergoing dismemberment.

Broader Market Impact and Operational Realities

Beyond its own financial struggles, Evergrande's situation reflects a broader downturn in China's property market, impacting consumer confidence and attracting continued regulatory attention. Understanding the intricacies of Mission, Vision & Core Values of China Evergrande Group provides context for its past operational strategies and its current challenges.

• The company's business model, heavily reliant on rapid expansion and high leverage, contributed significantly to its downfall.
• China Evergrande operations are now primarily focused on asset liquidation and fulfilling obligations to homebuyers.
• The Evergrande Group structure, once a complex web of subsidiaries, is now being dismantled through the liquidation process.
• Key subsidiaries are being evaluated for asset sales to generate funds for debt repayment.
• The Evergrande debt crisis has had ripple effects throughout the Chinese economy and financial system.

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