Following the economic downturn in the mainland and the collapse of the real estate market, the once prosperous and wealthy construction company Shandong Tianyuan Construction Group is under scrutiny for continuous delays in commercial bill payments, a sharp decline in project funds, inability to pay salaries, and facing numerous lawsuits.
Recently, industry insiders revealed to Epoch Times that the collection of construction project funds in the construction industry is becoming increasingly slow. From around December 25, 2011, to December 29, 2024, with no holidays taken yet, the project funds have not been fully collected. Before the Chinese New Year, the company cannot afford to pay labor and material costs, and payments can only be made after the eighth day of the lunar new year, depending on the availability of funds.
“It used to be considered difficult to collect project funds in the years 2014, 2015, and 2016, but no one expected it to be even harder after 2022, it’s like night and day, the difficulty in 2015 is like a drop in the bucket compared to now,” one insider said.
It was disclosed that the well-known Shandong construction company Tianyuan Construction Group paid over 13 million yuan in salaries in 2021, over 80 million yuan in 2022, over 30 million yuan in 2023, and over 10 million yuan in 2024. The project funds saw a steep decline from 2023, coinciding with the economic downturn in mainland China.
Before the Chinese New Year, in order to collect money, the company held meetings where project managers were asked to confront key personnel of the project owners. For instance, at a certain health school that did not pay the project funds, project managers made complaints by calling the government hotline. Due to the lack of funds allocated, the education system had to deduct the school principal’s management score. Unable to manage, the principal had to borrow money from several teachers. A project team member then went with a POS machine to swipe the cards of teachers for around 6,000 to 7,000 yuan each, thereby collecting the project funds.
Furthermore, project departments are actively requesting payments by bills of exchange or cash checks from the project owners to avoid the group withholding the subsidiary’s project funds. They specify the subsidiary as the payee, not in cash, as once the cash is directly transferred to the group account, it cannot be recovered. In the past, they wanted cash and not bills of exchange because exchanging an outstanding bill of exchange for cash incurs fees.
“2024 was too difficult,” the insider said, project managers are overwhelmed by the pressure of project funds. As the project funds are difficult to obtain, once the money arrives, the group company withholds it and does not allocate it to the subsidiary companies. Project managers are in a dilemma, especially during holidays when funds are tight, construction teams and material suppliers aggressively demand payment, causing project managers to avoid appearing at the company.
It was understood that after the resumption of work on the eighth day of the Chinese New Year (February 5), due to poor market conditions, many subsidiary project departments only had first-level management personnel like project managers reporting to work, with other regular personnel not informed to return to work. Rumors suggest that in one subsidiary, salaries have not been paid for a year and a half, while in some subsidiaries, salaries are paid every six months, and only half of the Lunar New Year bonuses are paid. Basic salaries have been halved in 2024, from 7,000 to 8,000 yuan to 3,000 to 4,000 yuan, with performance bonuses eliminated, returning to the levels of 2014-2015. Some employees are forced to take five days off per month without pay.
Previously, expenses like fuel and entertainment were reimbursed within 1-2 months, but now fuel expenses are not reimbursed promptly. Reimbursements now take a quarter or two to process, forcing management personnel to advance expenses.
For instance, in the renovation industry, when the market was good, the company set higher labor fees, but as the market deteriorated, the company squeezed costs and lowered labor fees, extending payment periods. Previously, the labor fee for installing aluminum alloy doors and windows was 50 yuan per square meter; now it’s down to 35 yuan per square meter, returning to prices of a decade ago. With such low prices, construction teams are unwilling to work.
“For construction teams that started early and grew big, the company owes a lot and delays payment for a long time. Some may use real estate to offset debts. Originally, only residential or office buildings with 70 years of property rights were accepted, but now even apartments with 40 years of property rights are taken, selling for 700,000 yuan a unit. But when resold, they can only fetch 120,000 yuan in 2024,” the insider explained.
The industry insider stated that from 2011 to 2024, a span of 13 years, in terms of salaries and benefits for management personnel, project fund collection, and payment cycles for labor and materials, at every micro perspective, one can observe the rise and fall of the construction industry and the turmoil under the great economic transformation in mainland China. Everyone is struggling to survive, while all they get in return for the so-called economic boom in China are cold GDP figures and lifeless skyscrapers.
Tianyuan Construction Group Co., Ltd. (referred to as Tianyuan Construction Group) is a large construction enterprise based in Linyi, Shandong, with a national super-grade general contracting qualification and the right to engage in foreign business operations. In 2016, it ranked 460th in the “Top 500 Chinese Enterprises.”
Last year, Tianyuan Construction Group was listed in the Shanghai Commercial Paper Exchange’s public disclosure of continuously overdue commercial acceptance bills and the list of overdue acceptors. According to the credit information on the bill acceptors, Tianyuan Construction had a balance of 1,537,678,069.71 yuan and a cumulative overdue amount of 8,209,598,192.62 yuan, with 1,501,160,871.47 yuan still overdue. The information was disclosed on January 31, 2025, and made public on February 1, 2025.
There are rumors circulating that Tianyuan Construction has been heavily impacted by real estate giant Evergrande, leading to widespread delays in commercial bills since 2022. After Evergrande’s collapse, leaving a debt hole of 20 billion, Tianyuan took on some of the burden and began to struggle.
According to AIQicha data, Tianyuan Group has been involved in a staggering 5,943 judicial cases, with 2,678 cases filed, 55 administrative penalties, and 177 judgment debtors, indicating a high level of corporate risk.
When searching the judicial document website, inputting “Tianyuan Group” yielded 5,582 documents. Many cases involving Tianyuan Group as the defendant due to breach of contract have escalated from trial courts to intermediate courts and even high courts. Initially defendants in the first trial, they later become appellants in the second trial and applicants for retrials.
For instance, Tianyuan Company and Huifu Company signed a “Prefabricated Concrete Product Purchase and Sale Contract for Assembled Buildings.” Between June 2019 and April 2020, Tianyuan owed Huifu over five million yuan, with payment delays ranging from 22 to 32 months, causing significant losses to Huifu.
Tianyuan Company appealed to the Jinan Intermediate People’s Court on the grounds that Huifu Company failed to prove actual losses and lacked clear facts and sufficient evidence. In the second trial, Tianyuan Company’s appeal was rejected.
A major announcement from Tianyuan Group leaked online in 2023, where the group’s trade union chairman reported on the situation regarding legal affairs and project fund recovery, emphasizing to “maximize cash recovery” and “increase litigation to protect rights, ensuring all claims are made.”
An online post from a plaintiff seeking to “fight for debts with blood” revealed their experience with Tianyuan Group from Linyi, stating that the project funds owed have gone unpaid for years, with no access to the company premises or leaders, and legal procedures proving ineffective. Due to the overwhelming number of cases awaiting execution by the court, it is uncertain when their turn will come, and the situation has raised issues concerning childcare and basic necessities.
In June 2023, Tianyuan Group established a company in Indonesia, raising suspicions of asset transfers.
According to the information on Tianyuan’s official website, the Chairman and Party Secretary of the group, Zhang Guiyu, was awarded the title of “Outstanding Party Worker in the Country” and has met and conversed with the CCP leader Xi Jinping. However, the exact time of the photo shoot is unspecified.
The journalist reached out to Tianyuan Group to inquire about the situation regarding commercial bill acceptance, but as of the time of publication, no response has been received.