What the company or idea is
Evergrande Group was a Chinese property developer whose collapse in 2021 triggered a systemic crisis across the sector.
How it actually makes money
Chinese property developers made money by selling pre-sold apartments, borrowing against land and unsold inventory, and rolling over short-term debt to fund long-term construction.
What works
The pre-sale model worked while demand and credit were infinite. Debt recycling worked while ratings agencies deferred downgrades. Asset sales worked only if buyers existed.
What does not
Pre-sale financing did not work when buyers stopped buying. Offshore bond markets did not absorb losses. Restructuring did not restore solvency.
What to take from it
A crisis that began with one company’s default became structural because the entire industry shared its funding mechanics, risk profile, and regulatory exposure.
Is it worth your time
Yes — it reveals how regulatory tightening on leverage exposed a business model built on perpetual refinancing, not cash flow.
