China Evergrande’s founder: From rags to riches to under investigation

Hui Ka Yan once rubbed shoulders with top government officials in China. Photo / Getty Images

Hui Ka Yan, who grew up poor in the countryside, was a symbol of China’s economic rise. With Evergrande teetering, his future is uncertain, too.

Hui Ka Yan founded the real estate behemoth China Evergrande. His promise to transform rural villages to metropolises with middle-class comforts made him one of China’s wealthiest people. He rubbed shoulders with officials in the highest levels of government, celebrating the Communist Party’s 100th anniversary in 2021 at Tiananmen Square.

Now, he is being investigated by authorities for suspected criminal behaviour.

Hui’s life story, from impoverished village boy to property magnate, once made him a symbol of the great promise of China’s economic rise. Buyers flocked to buy Evergrande apartments in hundreds of cities across China, often years before the buildings were finished. In its heyday, the company reported bumper sales as the prices of homes skyrocketed.

Signs of trouble for Hui’s company surfaced in 2020. China’s red-hot property market started to cool after a campaign by the country’s top leader, Xi Jinping, to slow its growth. And Xi’s response to the Covid pandemic, ordering lockdowns across the country, reduced spending on properties and started to spook would-be homebuyers. In 2021, Evergrande defaulted on payments to some creditors. Its debts piled up.

Evergrande has reported more than US$300 billion in debt. The company filed for bankruptcy protection in New York in August, attempting to ease a path to settling debts with its overseas bondholders. In a filing with the Hong Kong Stock Exchange last Thursday, Evergrande announced that Hui, 64, still a billionaire but no longer China’s richest person, was suspected by authorities of criminal wrongdoing. The statement appeared to confirm news reports that Hui was under police surveillance, a form of house arrest.

Who is Hui Ka Yan?

Born in Henan province, Hui, who is known as Xu Jiayin in mainland China, was raised by his grandmother in rural poverty. His mother had died when he was 1 year old, after the family could not afford to seek medical care. He recalled walking to his thatched schoolhouse with steamed buns of cornbread that moulded in the summer humidity. He would rinse and then eat them.

Growing up, Hui said, he had intended to become a bricklayer so he could draw a regular salary. “Back then, I was anxious to be helped by others, and was eager to land a job, leave the countryside forever and eat wheat flour,” Hui said in a 2018 speech. But as universities reopened after the Cultural Revolution, he enrolled at the Wuhan University of Science and Technology and worked for a decade in a state-owned steel mill.

He founded Evergrande in the southern city of Guangzhou in 1996, as the government sought to move hundreds of millions of people from the countryside to the city. He bought hundreds of land parcels, promising to turn them into urbanized apartment towers. Attracted by middle-class comforts — such as proximity to public transport and good schools — buyers flocked to his homes, and Evergrande sold more properties than other developers.

After listing Evergrande’s stock in 2009, Hui poured his profits from the property boom into unrelated ventures. Evergrande acquired Guangzhou’s best soccer club in 2010, spending billions of dollars on foreign players in years when Xi outlined ambitions to transform China into a soccer superpower. A number of Hui’s other investments, including in electric vehicle development and traditional Chinese medicine, were aligned with the party’s priorities. The company hired Jackie Chan to become the face of a mineral water venture.

What led to his fall?

To fuel Evergrande’s aggressive expansion across the country, the company borrowed heavily. It took out loans from banks and even its employees. Eventually, the company borrowed more than it could pay back.

Hui belonged to an elite group of Chinese political advisers, once wearing a Hermès gold-buckled belt to a 2012 session of the Chinese People’s Political Consultative Conference. On July 1, 2021, he was among the guests onstage at Tiananmen Square during the 100th anniversary celebration of the founding of the Communist Party in 2021. “All I have and all that Evergrande Group has achieved were endowed by the party, the state and the whole society,” Hui said in the 2018 speech.

But later in 2021, Evergrande began defaulting on payments. Once among the top-performing stocks in the country, the company’s shares tanked amid worries over whether the company could ever repay its debts and complete construction on apartments.

Homebuyers have protested on the streets. China’s central bank put Evergrande on notice to resolve its debt. The company has struggled to sell off some of its assets to raise funds.

Once valued at US$43.8 billion, Hui’s estimated wealth dropped to US$3 billion in 2023, according to the Hurun Report, a research firm that tracks wealth in China.

Chinese officials have said nothing publicly about the investigation of Hui. Evergrande, which has suspended the trading of its shares as it negotiates with its creditors, issued statements Monday that said it had no further information to add about the situation at the company, despite the investigation into Hui.

Evergrande said it had applied for trading to resume in the shares of its main holding company and its property services unit on Tuesday. Operations at the property services unit were “normal,” the company said. It did not address the state of business at the main holding company.

This article originally appeared in The New York Times.

Written by: Tiffany May

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