On September 30, Chinese Business Wisdom published a commentary saying that bankruptcies in 10 industries have been on the rise and that waves of bankruptcies are probably not far away.
1) Shipbuilding. For example, China Rongsheng Heavy Industries Group Holdings Ltd, a leading shipbuilding company, saw its 2012 revenues slashed by 50 percent.
2) The iron and steel industry. As banks are short of cash to pay their depositors, small steel mills will most likely be the hardest hit.
3) The LED Industry. The downfall of the Junduoli Enterprise Group in 2011 touched off the bankruptcies of several LED companies. In the next couple of years, as many as 60 percent of the remaining several thousand LED companies may not survive.
4) The Furniture Industry. Orient Homes, once the largest home improvement companies in China, has applied for bankruptcy to close down its stores.
5) Small to mid-size Real Estate Developers. In the next three years, at least one-third of the real estate developers will close their doors. Estimates are that the number of companies will drop from 50,000 to 35,000.
6) The Cargo Shipping Business. In 2012, three companies that are listed on the stock exchange were up to 14 billion yuan in the red. This followed a 10.4 billion yuan loss in 2011.
7) Trust and Financial Institutions. In less than 6 years, trusts have grown substantially. The number of financial trades they conduct is now second only to banks. Since the beginning of this year, several trusts petitioned to extend the due dates of their loans and were rejected.
8) Financial Management Companies. They have been under pressure from their competitors, the trusts. Unless they receive funds from private equity or an injection of funds from their shareholders, up to 600 financial management companies may fail.
9) Private Equity. Private equity has gained a negative reputation because many of its investors ended up involved in Ponzi schemes. It is estimated that 90 percent of all private equity investment firms will close in 2013.
10) Group-buying. In March 2010, group buying went viral. As of the end of the first half of 2013, 4,570 group buying websites had closed down. The figure represents nearly 75 percent of the total of 6,218 in the group buying industry.
Source: Chinese Business Wisdom, September 30, 2013