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China's Economy：Will the Bubble Burst?, Danke signs a contract with…
China's Economy：Will the Bubble Burst?
Danke Apartment
Business Model
Online Finance
Banks
Collect rent through third-party financial institutions
Third-party financial institutions hand over the rent to the landlord in the name of the tenant
If the tenant can’t pay the rent all at once, he or she can get a loan from the bank
Sublet House
Landlords and tenants
Find landlords and tenants
Renovate houses, erect water and electricity
Provide house cleaning services
Choosing big cities in China as business centers
Relations
Danke
Danke obtains subletting right from the landlord
Landlord
Landlord provides the dwelling to the tenant
Tenant
Bank
The tenant takes out a loan from the bank
Bank transmits the rent to Danke
Problems
Controversial event
Conflict of interest between landlord and tenant
Because of Danke business model, it is difficult for landlords and tenants to solve problems privately
When there is a problem with the housing, the tenant may need to bear the rent loan
Rent arrears
The tenant has paid the rent, but Danke has not passed the rent to the landlord
Unilateral termination causes a conflict of interest
The tenant would face the problem of homelessness
What is Bubble Burst?
Factors of China Bubble Burst
Real estate
E.g. Evergrande Group
Fake GDP
Setting GDP growth targets, leading local governments to falsify figures in order to achieve them
China-U.S. trade issues
Tariff competition
COVID-19
Many industries are forced to close or go out of business
This fast inflation is followed by a quick decrease in value, or a contraction.
Our Thoughts
NO IT WON'T
Deleveraging policy
When the market is known, it will not get out of control.
High savings rate
Foreign exchange controls prevent domestic funds from flowing overseas
Business Modal Evergrande Group
:red_flag:Digital Technology+Comprehensive Services
Socially Responsible Enterprise
Diversified management
Common people
First-time buyer
Integration of resources
Highly educated qualified employees
Leading Enterprise
Standardized Group Management Model
Land reserve strategy
branded advantages
High debt, high leverage, high turnover
Evergrande
Receiving complaints from
unpaid suppliers
customers
small investors
more than $305 billion debt
Why would it matter if Evergrande collapses?
Many people paid deposits for property before building begins
They could potentially lose money
Many companies do business with Evergrande
They are at risk of incurring major losses or bankruptcy
the potential impact on China's financial system.
Evergrande could have credit crunch
Suggestions on who to recue Evergrande
Beijing
The governments should step up and help find a solution
Evergrande itself
Instead of relying on governments, some people think Evergrande should save itself
The world's most indebted real estate developer
Owns
more than 1.300 projects
projects in more than 280 cities across China
Why is Evergrande in trouble?
Borrowing more than $300 billions
Beijing's new rules control the amount owed by real estate developer
Evergrande offer its properties at major discounts
Evergrande's share price tumble
Danke signs a contract with the tenant
The tenant pays the rent to Danke
Danke transmits the rent to the landlord