Unpaid workers in limbo as property developer's debts rack up
An
unfinished theme park in Taicang that is part of the
Evergrande Cultural Tourism City. (Picture by CK Tan) CK
TAN, Nikkei staff writerSeptember 26, 2021 16:30 JST SHANGHAI
-- As China Evergrande tries to claw its way out of financial crisis and global
markets fret over its fate, the lives of the ordinary people who work for the
property developer and its many contractors are on hold. On
Thursday, about 10 middle-aged people gathered in front of the entrance to the
group's sales office in Taicang, a provincial city next to Shanghai. Sitting
on plastic stools and laying out what appeared to be maps of a development
project, they have been coming to this spot for days, protesting outstanding
payments. "Evergrande
may have defaulted on bond payments as the media reported," said the
group's leader, a man who only identified himself as Li. "That's its
problem. We just want what's due to us." A
subcontractor who provided landscaping services in Evergrande's 110 billion
yuan ($17 billion) mixed development in Taicang, Li said Evergrande's
contractor owed his company 15 million yuan for work over the past two years. "The
contractor disappeared a few months ago and we could only turn to Evergrande
because it is the developer," he said. Pointing to his workers, some
including working mothers, to whom he owes months of salary, Li said he could
only placate them by bringing them to the protest. Such
protests are a rare sight in China and in Li's case, he and other
subcontractors are demonstrating quietly. Protesters
stake out at an Evergrande
sales office in Taicang City to claim unpaid
bills. (Picture by CK Tan) "We
don't want to block the entrance entirely as there are customers who still come
in here to buy houses," said Li. "We unfurled a protest banner a few
days ago but stopped after the police intervened." A
police car was parked near the sales office, a deterrent to the protest
growing. Evergrande
hyped the Taicang project for its "core location" in the Yangtze
River Delta, a megacity development cluster envisioned by President Xi Jinping
to stimulate domestic consumption by drawing high-tech investment in the
country's more developed eastern coastal region. Designed
over a sprawling 5 sq. km of what used to be agricultural land, the project,
Evergrande Cultural Tourism City, involves homes, retail space, hotels and
health care centers. The highlight is a nearly completed "international
standard" theme park aimed at drawing visitors from the more affluent
Shanghai. Like
more than half of Evergrande's 800 projects nationwide, works at the park began
being gradually suspended a few months ago, as the company struggled to deal
with over $300 billion of debt and as the unpaid bills to contractors started
racking up. "There
were many security guards before, but they left," said a gardener watering
plants at the theme park entrance. "I am leaving at the end of the month,
too," she said, adding that she has four months' salary overdue. Some
70 km away at Evergrande's Riverside Mansion construction site in Suzhou City,
a man stood guard at the entrance security post. "No
money," he said when asked why there were hardly any workers. "The
contractor has not been paid by Evergrande." Identifying
himself only as Zhang, he said security guards who were paid a meager 100 yuan
per day left last month, leaving him, a building safety supervisor, to guard
the post along with a handful of odd laborers. In
its heyday, about 300 workers raced to erect a total of 19 high-rise apartments
for delivery in 2023. Behind Zhang, a few half-completed towers stood idle
without any sign of work. In
the sales brochure, Evergrande promised the comfort of an elevator shared by
just two households per floor in an environment surrounded by ecology parks. Evergrande's
half-finished Riverside Mansion in Suzhou city. (Picture by
CK Tan) Designed
to be a new luxury landmark on the outskirts of Suzhou, known for its century-old
canals and as an industrial hub, the complex has been on hold since last month. Still,
Zhang, a migrant worker from Lichuan county in Hubei province, nine hours away
by train, is staying put. "I
still have two boys to support," he said. The elder, he explained, is a
sophomore who needs 2,000 yuan a month as living expenses, while the other, who
entered college this year, needs 1,500 yuan. Construction
workers like Zhang only receive their living expenses on a monthly basis, in
his case 2,500 yuan, with the balance of another two thirds to be paid in one
lump sum before the Lunar New Year. Trying
to convince himself, Zhang said he will get his balance by year-end. "It's
my hard-earned money and moreover, I have been with the company for three years." Zhang
said he was told by the management that local authorities have intervened
between banks and Evergrande's contractors to ease loan disbursements.
"Once the payment is out, we will resume full-scale work next month,"
he said. At
the Evergrande sales office nearby, a notice at the entrance alerted buyers of
Riverside Mansion homes to a holdup in delivery due to the delay in
construction. Evergrande will honor late delivery penalties set out in mortgage
agreements, the notice said. "We
are working with the authorities to revive operations," said a
salesperson, without saying when full-scale construction could restart. A
similar situation is being played out across the country as disgruntled
homebuyers and contractors air complaints on social media. At Evergrande's
headquarters in Shenzhen, investors in its wealth management products protested
that they had not been repaid. Xu
Jiayin, Evergrande's founder and chairman, has expressed optimism it will
resolve its financial woes, even as its shares plunged and it skipped a payment
to international bondholders. "We
should raise our self-awareness, unify our thoughts and devote ourselves to
ensure the resumption of work and production to meet home deliveries," Xu
told some 4,000 executives on Wednesday, according to several media outlets
including state-owned China Securities Journal. But
with no sight of payment forthcoming from Evergrande, Li the landscaping
contractor, said he would continue his stakeout every day until his group's
plight is heard. "It
may be futile but who else could we turn to," he said with a faint smile.
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