Am I Crazy? Like most people, I have a question: When is China going to

Mr. Yan’s recent rise as one of China’s most renowned and successful entrepreneurs points to a moment that the country is experiencing right now. In fact, he’s riding on it. In 2017, Mr. Yan

Mr. Yan’s recent rise as one of China’s most renowned and successful entrepreneurs points to a moment that the country is experiencing right now. In fact, he’s riding on it.

In 2017, Mr. Yan acquired a US$8.4 billion purchase of Country Gardens Limited, the property conglomerate that makes up the bulk of Evergrande’s portfolio. He soon launched an aggressive acquisition program, bringing the company’s total debt to US$54 billion.

Investors speculate that the debt-laden Evergrande, once again, could soon see share prices sag and its real estate market dry up as the Chinese economy slows. As it stands, under Mr. Yan’s leadership, Evergrande’s stock continues to plunge.

First, a little background: In 2008, Mr. Yan took the reins at Evergrande. Evergrande was a leader in the mid-2000s real estate boom but went on a rocky run in the years that followed, suffering years of losses as the financial crisis strained its finances. Mr. Yan wrestled the company to profitability by slashing costs, spinning off subsidiaries and identifying promising new areas of development.

A focus on the luxury segment, particularly housing for high-paying overseas and Chinese buyers, was Mr. Yan’s signature strategy. After Mr. Yan took over, the company recruited architects and interior designers from Europe and the United States to help showcase the quality of Evergrande’s projects.

To win customers over, Evergrande presented buyers with lavish show homes. Legend has it that the construction workers who helped put the shows together were rewarded for their hard work with Cadillacs.

In 2011, Mr. Yan acquired Hengxin Real Estate Development, a Chinese real estate developer that specialized in building luxury hotels. The company was the first ever acquired by Evergrande, representing a watershed moment for the company. Hengxin went on to develop an ambitious luxury high-rise, the 1599, which cost in the neighborhood of US$25 million. Designed by seven-time architect-of-the-year Wen Ye (Beijing-based Li-chang Peng has designed another noteworthy project in the Evergrande portfolio, the Phoenix Centres), the 1599 has 46 stories and offers 914 rooms.

The 1599 is emblematic of Mr. Yan’s vision for Evergrande. He dreamed of building a future-facing luxury complex at the heart of Beijing, inspired by Karl Lagerfeld’s Chanel flagship.

Mr. Yan has even moved to help Evergrande’s entry into the United States with an investment into the glitzy Hilton Garden Inn New York Downtown Trump International Hotel and Tower. In total, Mr. Yan owns 26 hotels in the United States, as well as several luxury residential buildings, hotels and duty-free stores.

Meanwhile, Mr. Yan’s fundraising practices continue to draw scrutiny. In 2017, Sino-Forest’s Mr. Yan partnered with US hedge fund firm Tiger Global Management, a firm known for its extensive ties to China’s political and financial elites. The partnership caused an outcry from many US investment groups, who believed Mr. Yan’s tactics, if true, would leave Evergrande’s accounts vulnerable to receivership.

Mr. Yan denies any wrongdoing. In February 2018, the Federal Bureau of Investigation interviewed Mr. Yan, his siblings and Evergrande’s chairman regarding fraud allegations. The FBI declined to comment.

Since 2017, Evergrande has also been under fire in China. In October, the China Securities Regulatory Commission announced a probe into Evergrande, noting that state-owned entities hold a 30.8 percent stake in the company, making it China’s biggest property developer. In a sign of increasing international instability, Evergrande has already seen its shares tumble once since then.

While analysts have speculated that Mr. Yan might be indicted by China’s government, most believe this would be unlikely because Mr. Yan still has ties to the country’s political and business elite.

Still, Mr. Yan is proving an excellent lesson for others in China, where real estate developers face skyrocketing debt and continued state oversight.

Though questions persist as to whether the government will investigate or discipline Mr. Yan, his company’s difficulties are pointing toward the real question: Is China finally getting wise to the realities of the country’s real estate bubble?

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