LIFAN AUTOMOBILE COMPANY IS ON THE VERGE OF LIQUIDATION

Lifan automobile manufacturer is drowning in debts and might start liquidation proceedings soon. The Chinese company, which gained popularity in Russia, has been literally overwhelmed with lawsuits. According to Chinese experts, the total amount of claims of suppliers and dealers is almost 3 billion yuan (about 28.5 billion rubles).

It is necessary to recall that "Lifan" is a classic example of the rapid growth of the PRC economy in recent decades. The company, which emerged in 1992, was a small moped repair service - then the company had only 9 employees. Within 12 years, Lifan turned into a large-scale production company, including factories and equipment for the production of auto and motor vehicles.

In 2014, the founder of brand Yin Mingshan had a fortune of $ 1.4 billion, and the sales of cars in China itself amounted to 145 thousand units within a year.

Given that Russia is one of the first countries where Lifan has launched the production of cars (almost immediately after the release of the first car in China), the experts are wondering how the alleged bankruptcy will affect Russian consumers.

13 years ago, the production of Breeze model was launched at the Derways plant in Cherkessk. At first it was the assembly of large units supplied from China, and a few years later the production of cars with welding and painting has been launched. According to experts, about 50 thousand Lifan cars are driven on the Russian roads today. How the repair and warranty service of consumers will be carried out in case of liquidation of the Chinese business is not clear yet.    

The main reason for the debt is the decline in sales of Lifan cars in their historic homeland.

The brand has lost its appeal in the eyes of Chinese consumers, finding itself at the bottom of the sales ranking, catastrophically lagging behind the competitors. Given that such a development of the situation is the result of the last five years, many experts predict the possibility of liquidation. Can the company survive?

There is still a minimal opportunity for this. It is known that the production of Lifan includes a business related to the motor vehicles, the demand for which is quite high. In addition, the brand owns large plots of land that can be sold for a good. For example, according to the information from the open sources, the manufacturer plans to sell the land plot on which the plant in Chongqing is located in the nearest future.   

If the deal is concluded, then the company will receive a profit from 1.5 to 2.5 billion yuan.

Given that Lifan, in accordance with the court decisions that has already been made, should pay the compensation of 1.8 billion yuan to the plaintiffs, the funds from the sale of land can be very helpful in saving the company from further ruin and liquidation.