Dozens of Chinese business owners, suppliers and contractors have descended on Evergrande's headquarters in Shenzhen, China to demand money owed to them, according to numerous reports. In most cases, the money is in the form of a commercial paper, or an IOU, that Evergrande had been issuing for years. With China's real estate boom firmly in sight and construction projects rising throughout China, its people took these IOUs on good faith, according to The Los Angeles Times.
"Evergrande, pay up!'
Angered over the large sums of money that many say they need in order to pay hundreds of workers, the Chinese middlemen are weilding signs with slogans including, "Evergrande, pay up!". Other protestors hold banners saying, "Gathering Evidence" as they feel emboldened to take each other's photographs in this communist nation.
Not surprisingly, the he Chinese protestors' seething anger is being met with police in riot gear and a cavalier attitude from the real estate giant. "They say, 'We have no money. Do whatever you like,'" Li Gexin, manager of a janitorial company with 200 workers owed more than $300,000 in Evergrande IOUs for work performed in the past year, told The Los Angeles Times.
"If we don't get the money, we can't eat," said Li, who drove 24 hours straight to Evergrande's HQ to join the protestors.
U.S, rating agencies Fitch, Moody's and S&P have all downgraded Evergrande bonds to "default or "near default," its stock is down 80% since the beginning of the year, and it has a backlog of 1.4 million homes that have been sold but have yet to be built.
The LA Times also says that Evergrande sells wealth management products, and that some Chinese workers got so caught up in China's real estate boom that they put their homes up as collateral in order to do business with Evergrande and other big real estate conglomerates like it.
"The entire construction supply chain had been using Evergrande's IOUs instead of cash for years," the Los Angeles Times says. One supplier who asked to have their name withheld called the Evergrande IOUs "worthless pieces of paper."
Evergrande evidently has been offering its creditors some of its properties as payment, including parking spaces, at deep discount.
News outlets have yet to report on the investment management products that Evergrande has sold.
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