Round 2: Wenzhou Bosses Flee Again, This Time From Bad Real Estate Bets

Back in 2011, many factory bosses in Wenzhou fled high debts. At that time, the rising renminbi, high inflation and rising labor costs were squeezing profits. Firms were operating near 0% profit margins and deep in debt to loan sharks charging more than 10% monthly interest in some cases. See: Wenzhou factory owners run away from debt

Now Wenzhou is again experiencing factory bosses fleeing their debts, this time most people are involved in real estate speculation. As the article says at the outset, Wenzhou is China's capital bellwether. It is the heart of the private economy and what happens there is closely watched. 21st Century Business Herald asks, why is capital leaving industry?

The story this time is that business and capital are tight, and real estate investment losses are the straw breaking the camel's back.

温州民企“二波”危情：大多倒在房产投资上

Wenzhou is the capital of the citizenry. From the flow of capital can discern all the secrets of an era, the capital will be pulled Industrial why? It was first presented in the region, or available nationwide reflection.

21st Century Business Herald one after wave underway?

Wenzhou, which was once the origin of the real estate group, this time stuck in the mire of real estate. Continuous decline in housing prices nationwide, like dominoes, positive real economy in Wenzhou spread rapidly.

This year especially since June, has exposed several cases of Wenzhou industry leading enterprise funds strand breaks, or "run away" message. And the 2011 crisis situation which wave private security companies focus on different platforms, the companies involved have almost have more in-depth investment in real estate. Recently, the 21st Century Business Herald reporter went to Wenzhou survey conducted a few weeks, trying to "Wenzhou real economic survey report" series, local entities to restore the truth behind the economic crisis of cases.

Wenzhou is the capital of the citizenry. From the flow of capital can discern all the secrets of an era, the capital will be pulled Industrial why? It was first presented in the region, or available nationwide reflection. Is first.

"Problem" Business Directory

Wenzhou almost shaking the country's first wave of crisis situation, from private lending companies raised funds strand breaks. April 2011 portentously, after the Ching Ming Festival, the first cable manufacturer in Yueqing three flag group brink of bankruptcy, then longwan Jiangnan Leather Co., operator of Huang and his family "running away" closed, then Portman Wenzhou brand restaurant chain, Hong Kong still remember the boss Yan Qin as a couple "disappeared" out of business.

At the time, the "21st Century Business Herald" has done a centralized reports, the discovery of this wave of multi-enterprise involved in the accident had guarantees, investment advisory and other private lending business.

And this year, many enterprises in Wenzhou problem, it is down on real estate investments.

This year especially since June, it exposed several cases of Wenzhou industry leading enterprise funds strand breaks, or "run away" message. Which affect the larger case, the women entrepreneurs in Wenzhou, Tengxu Garments Co., Ltd., chairman 徐云旭 reason to take the risk because of the money chain, allegedly defrauding more than 2,000 yuan national export tax rebate is a criminal investigation.

Why the local deputies to take the risk? Informed sources, because corporate capital chain tightening factor. 徐云旭 intervened located Longwan Greentown "Haitang Bay" real estate projects, partners Greentown Real Estate Group is a joint project company, the shareholding proportion Tengxu clothing accounted for 30%.

"Because of this project than expected sales, coupled with export-led Tengxu their main business clothing business is also difficult, overall profits slashed." Insider analysis, Greentown Haitang Bay project start selling the occasion coincided with the Wenzhou prices continue to fall. Xu Yunxu in May "lost contact."

Real estate investment has become the last straw that breaks the dress Tengxu capital chain.

Some even list a local business problems, "List", including food, clothing, real estate and other areas there were 13 well-known enterprises.

Working group of persons "(these companies) have more or less real estate investments." Local companies involved in the disposal of such problems, a summary of the previous prices only continuous downward in Wenzhou, but this year Heavy nationwide (question enterprises) will be more concentrated in this time period.

This is not a wave of overnight once the crisis situation between. The past three years, 21st Century Business Herald reporter from Customs, Bureau of Statistics, the judicial system after another public data found that the economic slowdown, lack of demand for foreign trade, private lending crisis sequelae three factors have been superimposed on the role of local private enterprises in Wenzhou.

Cases of financial gains

21st Century Business Herald reporter in Wenzhou field survey found that the accident in the crisis situation in this wave of private enterprises, almost have more in-depth investment in real estate. With the country's housing prices began Heavy trend, many companies eventually could not stand more pumping more tight financial chain.

Another typical example is the City Construction Group. This has already started reforming the judicial business through the courts, private enterprises in Wenzhou in 2011 when the first wave of crisis situation, there was an awkward fall into the capital chain, worked in the government's help to ease. "This is actually spread before the wave 'foot' events." A joint-stock bank in charge of the disposal of non-performing loans department official said, although local government officials in a number of major public occasions to "positive energy" to boost regional economic recovery , but the effect remains to be seen.

21st Century Business Herald obtained a set of data from the core channel display, starting in 2008, Wenzhou financial cases has been in a slow upward trend in the September 2011 start rising sharply. The original annual target amount of private lending also 10 billion yuan, and by September 2011 to December, more than a quarter of cases the target amount reached more than 40 million. In 2012, the subject of financial cases of nearly 400 million, to 2013 reached about 520 million.

Influx of cases disposed of judicial mouth, has been soaring in the state and even private debt began to fall, and bank debt cases are still in the rally.

"This is mainly reflected in the high incidence of cases related to credit the past, very few cases of credit, also one year from two, are sporadic cases." Local judge said in public that, in 2012, the credit cases concentrated outbreak reached 262, the subject reached over 40 million. It has a relationship with the overall monetary policy adjustment in China.

"The current trade credit financing in the background there is often a false phenomenon, may become the object of criminal prosecution." Preceding the judge concluded that, at present, there is considerable controversy on the scale of criminal and civil examination review, "we tend to think, whether real trading background The court should take the initiative to review, and this is when the bank should review the contents of the letter of credit. "