Aftermath of China’s Evergrande woes hits Sweden

The financial woes of China’s Evergrande Group at the risk of bankruptcy with about 355 trillion won in liabilities have spread to Sweden in Northern Europe.

According to Bloomberg on Saturday, National Electric Vehicle Sweden AB (NEVS), a Swedish company jointly developing electric vehicles with Evergrande Group’s subsidiary, Evergrande New Energy Vehicle Group, recently dismissed 300 employees, which are almost half of its entire 670 workers at a factory.

“Due to the lack of funding from Evergrande New Energy Vehicle Group, we had to cut jobs and the development of electric vehicles has been suspended,” said a member of NEVS. “We are looking for a new partner and investors,” said Stefan Tilk, the CEO of NEVS.

Evergrande New Energy Vehicle Group has been preparing for the mass production of electric vehicles next year but failed to pay a Chinese plant equipment company. Some of its employees have not received salaries for some time and free meals for researchers at its R&D center have been suspended.

　

While Evergrande Group sold shares owned by its subsidiary at the end of September to secure 1.83 trillion won but the group’s crisis will continue as it has 750 billion won of interests to pay until the end of this year. As its main business, which is real estate, has been slowing down due to the Chinese government’s regulations and its prominent electric vehicle business is struggling, some say that the group won’t be able to recover on its own.

Evergrande Group failed to pay 55.9 billion won of dollar bond interests to creditors on Wednesday. It also missed the payment of 99.3 billion won of dollar bond interests on Sept. 23 and delayed the payment on Thursday.


Ki-Yong Kim kky@donga.com