China Entrepreneur 2010-5-17 Huang Qiuli

Xia Haijun didn’t reveal Evergrande’s specific actions on merger and acquisition, but Evergrande was the first real estate enterprise clearly indicating that it would carry out merger and acquisition.

“Those small- and medium-sized real estate enterprises having the misjudgment on macroscopic situation would face a serious challenge this round.” On May 16, Xia Haijun, the vice chairman of the Board of Directors and the president of Evergrande, said in the press conference of Evergrande Town opening in Hefei that this adjustment would become an important opportunity for Evergrande’s future development. “Evergrande would take the second- and third-tier cities as the important markets and carry out merger and acquisition in these regions.”

Xia Haijun didn’t reveal Evergrande’s specific actions on merger and acquisition, but Evergrande was the first real estate enterprise clearly indicating that it would carry out merger and acquisition. On May 5, Evergrande took the lead in selling at a discount of 15%, and became the first company with price reduction since the policy of regulation and control. “The reason for price adjustment was to stabilize cash flow, which was our strategic decision.” Xia Haijun said by the end of April, Evergrande’s cash on the books was over 21 billion yuan, so the price reduction was absolutely not because there was something wrong with the company’s capital chain.” The great lesson Evergrande learnt from the regulation and control in 2008 was that only with sufficient cash flow could any developer triumph in the future.”

Xia Haijun said, “For the price adjustment this time, the first purpose was to cope with the more serious macroscopic situation, the second was to grantee that the products would not be affected, and the third was to capture the market opportunity. Evergrande took this regulation and control as an important opportunity for the future development. Therefore, Evergrande must adjust strategies in time.”

One month has been passed since the issuance of “National Ten” on April 17. Many small- and medium-sized real estate enterprises’ capital chains has already had problems. “The developers have all been seeking money and many of them start to borrow money from loan sharks. Now other than sales outstanding, other traditional financing channels of developers have been basically closed.” said one medium-size developer in Beijing. However, the rapid decline in sales volume has become an indisputable fact. “Among the telephone calls I have received, at least 2 or 3 out of 10 were to ask for investment.” said Zhang Mingeng, the president of Beijing Shengshi Shenzhou Real Estate Investment Fund Co., Ltd.

“If this adjustment of real estate market takes a long time, there would be a great potential of large-scale industry reshuffle.” said Tian Ming, the president of Nanjing Langshi Real Estate Co., Ltd.