Financing Mode Analysis of Chinese Real Estate Enterprises – A Case Study of Evergrande Group

Abstract

Chinese real estate industry has gone through a boom period and the growth rate tends to be gentle gradually in recent years. The survival and development of real estate enterprises have attracted extensive attention from multiple sectors of society. A stable source of funds and lower capital cost are crucial to the development of real estate enterprises, choosing financing mode correctly is a necessary condition accordingly. This paper selects Evergrande Group, a leading enterprise in Chinese real estate industry, as the research object to study its financing mode. Firstly, the study introduces the development history and financial status of Evergrande Group and analyzes its financing mode. Subsequently, through comparing the advantages and disadvantages of each financing mode, several problems existing in Evergrande financing mode are summarized: excessive asset-liability ratio, certain blindness in financing, excessive financing cost, certain dependence on bank loans, and excessive current liabilities. Finally, the article puts forward suggestions for improvement are put forward: Evergrande Group should choose a financing mode according to its own situation, avoid blindness; improve its own profitability; expand new financing models, and comply with national policies and market trends.