![]() But if Languang succeeds in finding a strategic investor, “we may switch our business according to their needs”. “If we stay in the property sector, the path forward will be building a boutique shop pursuing quality growth,” he added. Yang sees Languang’s best way forward as a complete restructuring. The developer has about 400 active projects in total. For instance, builders must finish one floor of a given building before they get paid they only start work on the next floor once payment has been received. Still, Yang says the company has restarted more than 90 per cent of its stalled housing projects with the help of local government mediation.Ĭity officials brought various stakeholders to the table to negotiate how to complete the work. Documents are printed on both sides, offices are only air-conditioned part of the time and lavish banquets with creditors - a common feature of doing business in China - have become a rarity. To control costs, little things now matter. The departures included several senior managers, some of whom have succumbed to depression. Some have opened restaurants or become ride-sharing drivers, while others are retraining or remain unemployed. Of the thousands of staff to leave Languang, many have abandoned the property industry altogether. Yang describes feeling overwhelmed by his company’s challenges. ![]() The future will be about working with relevant authorities to seek some rescue.” WAY FORWARD “For the sector, I think a policy trough has come. “We are still struggling to survive but there is light at the end of the tunnel,” Yang said. The government’s priorities are ensuring that unfinished homes are completed, after a spate of protests last year, and supporting high-quality developers.īut more embattled businesses will need to lift themselves up even as China’s economic growth slows and consumer sentiment remains weak in the wake of zero-COVID. Traders piled back into the sector, causing the stock gauge to surge more than 50 per cent over the past two months. In November, it rolled out a 16-point plan to ease liquidity issues in the sector and last month hinted there would be more support to come. Now the Chinese government has lowered the systemic risk presented by the likes of Evergrande, it is stepping up efforts to calm the property sector’s turmoil. But that route to prosperity seems to be closed. His story - of a family rising from modest origins to substantial wealth on the back of the property boom - is common to many of his generation. Years of high leverage and high growth taught entrepreneurs like Yang’s father to bet big. Languang’s shares have fallen by more than half since its default.Īnd across the sector, the turmoil has been far-reaching: A Bloomberg gauge tracking Chinese developers’ stocks has fallen more than 40 per cent over the past two years while an index of high-yield dollar bonds dominated by builders had its second-worst year on record in 2022. “It was a deadlock, stakeholders want to cut their losses.” WIDESPREAD TURMOIL “After our default, we had around 100 housing projects that were stalled in over 70 cities,” said Yang, who seems years older than his true age and maintains his composure even when describing a crisis. Yang succeeded him as chairman in June 2021 - just weeks before the company defaulted on a debt payment. Since mid-2020, policy makers have sought to reduce the risk of a property bubble with measures such as lending limits for banks and curbs to restrict borrowing by developers who fail to meet strict financial targets.įor many small and mid-sized companies, these moves have been especially brutal. “Essentially, a lot of us are trying to win time,” Yang said. Currently his goal is simply to “hold our team together while exploring a way forward - whether that will be restructuring, strategic investment or a market turnaround”. It has been selling off assets as it fights to stay afloat, and 27-year-old chairman Yang Wuzheng has approached dozens of larger real estate companies and other potential investors in search of a bailout - so far, without success. Languang has slashed about 90 per cent of its workforce since early 2021 and reported an accrued loss of 11.7 billion yuan (US$1.7 billion) as of the third quarter last year. After a sweeping two-year crackdown on its debt-ridden property developers, China’s recent moves to shore up the sector are bringing some respite. But a slew of smaller builders are still struggling for survival.Ī case in point is Sichuan Languang Development, a builder of residential buildings and offices based in the southwestern city of Chengdu.
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