Part 5/9:
While government support can catalyze innovation and market growth, it can also breed reckless behavior among companies that perceive themselves as “too big to fail.” The case of Evergrande illustrates the catastrophic fallout when such risks culminate in failure. With BYD’s rapid expansion, parallels emerge, suggesting that the company may be straddling a similarly perilous path if its financial foundations are indeed built on unstable practices.
The supply chain financing that BYD is reportedly engaging in allows companies to use unpaid invoices from suppliers as collateral for loans, creating liquidity in the short term. However, without proper oversight, this practice can mask internal weaknesses and lead to sustainability problems if these companies face repayment challenges.