Evergrande Wealth Management Products - A Ponzi Scheme?

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In an interview with local media, an Evergrande financial adviser said the products were a type of “supply chain finance”. While the money from retail investors may in years past have gone to its suppliers, the Evergrande executives in Shenzhen receiving retail investors said this was no longer the case.

One of the executives of Evergrande’s wealth management division said Hubei Gangdun was just a shell company. “Proceeds from the Wealth Management Products have been used to bridge various funding gaps faced by the parent company,” the executive said. “There is no need to thoroughly examine where the money actually went.

“Some WMP proceeds were used to repay previous products but sales plummeted, making it difficult for the business model to continue,” he admitted. - This is essentially the definition of a Ponzi Scheme.


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