Long before rescue talks, China's property giant Country Garden struggled to build homes, pay bills - CNA

"FACING LOSSES"

While disputes and delays are par for the course for any large developer, and data in China is often incomplete, the court documents shed light on a contrast between the image Country Garden presented publicly and some of its challenges behind closed doors.

In a case over alleged delayed delivery of apartments in the central megacity Chongqing, the local Country Garden subsidiary told the court it owed 60 million yuan (US$8.2 million) in project payments and "faced severe financial losses and was unable to cover its liabilities", according to a verdict handed down in June.

It said it was, "insolvent and overwhelmed, and even if the court reduced the damages at its own discretion, it may still be hard for the defendant to fulfill its obligations in the future".

Other court cases feature similar examples from last year and early this year: They involve sums as small as 267,475 yuan in arrears for 50 per cent of an elevator installation fee or 2.8 million yuan demanded by an electrical installation company.

Some large contractors decided to skip the court process altogether, according to a steel supplier based in south China. He told Reuters "the priority for us is to get our money back through negotiations instead of filing a lawsuit, which is very time-consuming and won’t necessarily yield a satisfactory result".

Country Garden owed the supplier, who did not want to be identified due to the sensitivity of the situation, an equivalent of several million dollars for reinforced steel bars.

He was promised half of the owed amount in unfinished apartments. The other half was to be paid in cash, but the supplier has so far only received a quarter of the payment.

"The situation deteriorated from the second half of 2022, and it’s become even worse from the start of this year, when the payment to us was delayed,” said the supplier.

The impact of Country Garden’s cash crunch has reverberated even after the missed August payments.

A week after that, contractor Qiao Jingjing, said his construction site in Xinzheng, a city of 1.2 million in Henan Province, also stalled.

Qiao, 38, was left with 20,000 yuan in unpaid wages for two months of his work. He said his company, Jujiang Group, which was a subcontractor at the site installing aluminum sheets, is owed more than 770,000 yuan.

Country Garden did not respond to questions about the payment or delivery disputes.

Qiao said apartment buyers and construction workers kept coming to Country Garden offices seeking information.

"But Country Garden's sales staff have never given us any reply to these questions: When will the construction resume? When can the property be handed over to the owners? When will the workers get their wages?”

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