NPC report: 45% of Chinese zombie companies are in real estate and 51% are in steel
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In terms of regions, the proportion of zombie enterprises in the eastern part of the eastern region with higher economic development level is relatively low, while the proportion of zombie enterprises in the southwest, northwest and northeast regions with lower economic development level is higher; in terms of ownership, zombies in state-owned and collective enterprises The proportion of enterprises is the highest. The proportion of private enterprises and Hong Kong, Macao and Taiwan and foreign enterprises is similar, and far lower than the proportion of zombie enterprises in state-owned and collective enterprises. In terms of scale, the proportion of zombie enterprises with large enterprises and medium-sized enterprises is the highest. However, due to the relatively small base, most zombie companies are still small businesses; by age, as the age of enterprises increases, the proportion of zombie companies is getting higher and higher. Among the enterprises established 1-5 years ago, only about 3% of the enterprises are zombie enterprises; and among the "old" enterprises that have been established for more than 30 years, about 23% of the enterprises are zombie enterprises.
According to the report, there are five main reasons for the emergence of zombie enterprises: the collusion between government and enterprises between local governments and enterprises, the vicious competition between local governments and state-owned enterprises, the aftermath of large-scale stimulus, the impact of external demand, and the bank’s Credit discrimination.
The report proposes five recommendations for reducing bots: First, reduce government intervention in companies, especially with respect to industrial policies. Don't give subsidies to companies that are inefficient or hopeless, or force banks to lend. Second, improve the SASAC's assessment indicators for state-owned enterprises, and be wary of the fact that state-owned enterprises are bigger and not really strong and better. Third, strengthen the bank's budget hardening. Strengthen supervision of the banking system and reduce the administrative intervention of local governments in banks within their jurisdiction. Fourth, multi-channel solutions to excess capacity, encourage mergers and acquisitions, restructuring and diversion, and accelerate the establishment and improvement of social security nets. Fifth, the key to accelerating the pace of reform of state-owned enterprises is to clarify the positioning of state-owned enterprises. Further classify and reform state-owned enterprises to determine which types of state-owned enterprises should undertake political and social functions, and which types of state-owned enterprises are purely market-oriented enterprises. For the former, limit the number, treat it as a special enterprise; for the latter, strengthen the market-oriented assessment and encourage it to be stronger and better.
Appendix Status of China's Real Estate Enterprises: Strong, Strong and Weak, Zombie
Our observation and analysis of real estate enterprises has produced an observation point, which is divided into four categories: national real estate central enterprises, national real estate private enterprises, local real estate state enterprises, and local real estate private enterprises. The first category is flourishing and the financing cost is low. Moreover, there is a combination of bigger and stronger; the second category, because of strong capital strength, leading product quality, leaders also have close ties with government high-level, associations, industry and commerce associations, so local governments are often given different levels of cities. With the support of different strengths; the third category, local real estate enterprises, but the lack of aggressiveness, trapped in the requirements of regional development restrictions, human resources can not keep up with the requirements of the times, if not reformed, most of the current seems similar to the zombie state, more obvious For example, the real estate companies in the transformation of regional housing offices such as Nanjing and Shanghai; the fourth category is local private enterprises, which are small in scale and have great pressure on land acquisition. Under the impact of large foreign companies, they basically have no ability to fight back, and often choose to withdraw from the market or cooperate. Development because they are in a weak position in financing, products, and risk portfolios.
In general, in the Chinese real estate market, the total assets of listed companies have gradually increased, and the scale of the trend has become obvious. Vanke, Evergrande, Poly and China Shipping, and other traditional listed real estate listed companies rank among the progressively larger companies, and their leading edge is further expanded. At the same time, the scale is far below the industry average, and the scale growth rate fluctuates greatly. The number of enterprises lacking growth stamina is quite large, and the profitability is not optimistic. The debt level is high and the financing channels are narrow. It is worthy of great attention.
Moreover, the large state-owned enterprises, national private enterprises Poly, China Shipping, Greenland, Wanda, Evergrande, and Vanke fully utilize the financing platform of the A+H market, increase financing, product innovation, research investment, and cross-border resource integration, and have already adopted local state-owned enterprises and private enterprises. I was behind me, so that many local businesses did nothing and could not do anything. For large-scale enterprises to invest in urbanization and urbanization research and policy research, the investment is tens of millions of research funds, staffing and cross-border resource cooperation is also a big deal, financing is also in the middle and outside of bank fund trusts, which have formed a partial monopoly The threshold.
Enterprises enter easily, continue to struggle, and form zombies
The data shows that in 2012, nearly 700 small and medium-sized real estate enterprises in Beijing were difficult to maintain operations and canceled; in 2011, Jiangxi Province cancelled a total of nearly 600 real estate enterprises, and 361 real estate enterprises were cancelled in Shaanxi; Sichuan in the first half of 2011 A total of 423 housing enterprises were cancelled in the province. It is conceivable that the number of "zombie" companies struggling to survive on the brink of bankruptcy and relying on government subsidies to survive barely is not rare.
According to the statistics of a certain province in the west, in the boom of the real estate market, as long as there is 2 million yuan of funds, you can apply for registration of a real estate company, engaged in real estate business, in accordance with the requirements of qualifications, the development of a project with a qualification of less than four grades can be 30,000 yuan. Square meters, the lower threshold makes many companies enter the real estate sector.
Previously, the chairman of the domestic real estate company Zhongkun Group once said that the project of 500 million yuan could earn 50 million yuan. Industry insiders even admit that once in the real estate sector, 50 million yuan can incite 500 million projects and get a 100% return. Developers only need to have 20% of the funds to buy land, they can start in advance, and wait until the planning permit, construction permit and other documents are ready. Once the pre-sale is started, the house can sell the money for the advance payment, construction cost, advertising money and other expenses. The small real estate development model is simply the “legend†of the business world.
But now, this profiteering model is difficult to continue. Policy regulation, monetary tightening, and market downturn have pushed up the pressure on these small and medium-sized housing companies that have entered the real estate market to “gold rush†and are forced to become zombies.
Government's "land finance" dependence delays zombie
The real estate market was overheated, housing prices remained high, and real estate investment accounted for a large proportion, leading to profit-seeking businesses entering the real estate market. In the process, some real estate developers and the government gradually formed a community of interests. On the one hand, due to the prosperity of real estate, it can be expected to bring huge benefits to the local government. Therefore, the government encourages the development of the real estate industry and lowers the barriers to entry. Everyone has a share: SMEs, state-owned enterprises, and even the government's own platform. The company conducts real estate development; on the other hand, the government relies heavily on land finance, and real estate has become a straw for local debt. When many companies blindly entering the real estate development sector are difficult to maintain due to various reasons, the government cannot let its bankruptcy go out of its own interests, but rely on financial support to support it.
According to the “Results of 36 Local Government-Level Government Debt Audits†published by the National Audit Office, as of the end of 2012, 17 of the 18 provincial capitals and municipalities directly under the Central Government promised to pay their debts with land sales income, with a ratio of 95%. In 2011, the Audit Office’s comprehensive audit of government debts across the country showed that as of the end of 2010, the debt balance of the local government’s debt repayment commitment to use land transfer as a source of debt repayment was 2.55 trillion yuan. In 2012 and 2013, the debt service period reached the peak of debt repayment, accounting for 17.17% and 11.37% respectively. In this context, government departments are eager to sell land into the real estate market, which has spawned a large number of real estate companies that lack experience, capabilities and resources. At the same time, they have also laid the groundwork for real estate companies to become zombie. After the new round of development boom, these SMEs often lack the ability to withstand market risks, suffer huge debts, and lack effective means of profit. It can only be temporarily maintained by partial subsidy or non-market development.