China’s private companies making a pig’s ear out of paying their bills as economic slowdown bites
- Record numbers of Chinese firms are defaulting on their bonds, while also taking longer than ever to pay their suppliers, says trade credit insurer Coface
- A majority of companies expect lower growth this year, up from a third last year, as private sector bears weight of China’s slowdown
Few companies are more symbolic of the horrible year experienced by China’s private sector in 2018 than Chuying Agro-Pastoral Group.
The pig breeder from Henan, a province in Central China’s Yellow River Valley, defaulted on a bond worth a total of 1.5 billion yuan (US$223 million) last year. It then made headlines in China in November when it offered to repay holders of debt it had defaulted on with ham or pork products.
To compound matters, large numbers of its livestock starved to death, with the company not having the money to feed them, local media reported.
“Nobody wanted the note to become overdue,” said Mr Liu, who works in the company’s bond department but who preferred only to provide his surname. “But since this has taken place already, we can only search for a method to reach a resolution and protect the rights of our bond holders.”
The company has warned that it is set to lose 3.3 billion yuan (US$491 million) this year, despite having turned a small profit in 2018, according to local media reports.
“In 2018, the pig breeding market wasn’t too good. We do not have an African swine flu problem within our company but the overall pig breeding industry in China was certainly affected by the swine flu problem,” added Liu.
