Private lending crisis cripples coal city of Ordos

Private lending crisis cripples coal city of Ordos

Staff Reporter


After the housing market bubble burst in the city of Ordos in Inner Mongolia, which led to the liquidation of many of the city’s residents’ financial assets, people who funded the construction of the city have begun demanding a refund for their money from fundraisers, the Chinese-language Securities Times reports.

“The fundraisers invested the capital in the real-estate market and now the houses are unsellable. We bought a house at 6,000 yuan (US$990) per square meter but now its selling price is 4,300 yuan (US$709) per square meter,” said a resident surnamed Wu, who lives on the west side of the Dongsheng district of Ordos.

Wu added that the developer was his relative so he had invested in the project in cash. His family thought they could make a profit after the houses were resold, but now the money is gone and the developer has pledged them two units, said Wu.

Wu’s experience is common in Ordos, where wealth from the coal mining industry made the city the richest in China in terms of per capita GDP. A lot of people own several houses because fundraisers pawn houses and other assets as they are unable to pay back their debts in cash.

The newspaper reported that the collapse of private lending has also led to an increase in nonperforming loans at banks.

At the Ordos branch of Industrial and Commercial Bank of China, outstanding loans stood at 38.9 billion yuan (US$6.4 billion) at the end of 2013; and of this figure, the nonperforming loans were pegged at 762 million yuan (US$125.7 million), up by 595 million (US$98.2 million) compared with the beginning of 2013.

In addition, 3.3 billion yuan (US$545 million) was newly added to Ordos’ outstanding nonperforming loans in 2013.

The main solution for the nonperforming loans is to turn to the borrowers or guarantors, but many people have resorted to court proceedings because the borrowers and guarantors are unable to pay them back despite court rulings.


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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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