In Depth: The Mystery Behind a Teetering Chinese Private-Sector Titan

Shanghai Junhe Group Co. Ltd., once a prominent private-sector powerhouse in Shanghai’s business landscape, is facing a dramatic downfall, with its offices in the city’s Mirae Asset Tower now largely deserted and its employees dismissed as of June 2024. Once renowned for its significant presence in the city—its employees previously formed long lines to use the company’s private elevator—Junhe’s headquarters today are notably empty, a situation reported by people working in the same building [para. 1][para. 2][para. 4]. The company, which had maintained a top-five revenue ranking among Shanghai private firms from 2019 to 2023 and generated approximately 135 billion yuan ($19.6 billion) in revenue in 2023, has as of mid-2024 fallen into severe trouble, evidenced by terminated employee contracts, unpaid wages for months, and a cascading collapse across its business empire [para. 3][para. 4][para. 5].

Junhe operated diversified businesses, including commodities trading, extensive industrial real estate projects under the Junhe I-Valley brand, and involvement in financial services [para. 6][para. 7]. Its I-Valley industrial parks spanned across at least a dozen Chinese cities, with one recent example being a 1-billion-yuan project in Shanghai’s Changxing industrial park, covering 100,000 square meters. However, this project remains largely unoccupied a year after completion, hosting only a handful of tenants among 12 buildings [para. 8]. Junhe’s real estate arm also extended into residential projects, such as those in Fuzhou, Fujian province. Many of these residential complexes remain unfinished, and buyers—some of whom were promised property handovers in March 2024—have experienced prolonged delays and have even petitioned government authorities for resolution, only to be told that the developer lacks the necessary funds [para. 9][para. 10][para. 11][para. 12].

The reasons for Junhe’s decline remain opaque and are complicated by a series of lawsuits brought against the company by state firms. There are also unverified reports alleging that Junhe’s founder, He Qi, who owns about 99% of company shares and hails from Fuzhou’s Changle district, left China with his family in early 2023—first to Singapore and then Japan—and has not returned [para. 13][para. 14][para. 15][para. 16]. He Qi reportedly lived a lavish, secretive lifestyle, maintaining a private “clubhouse” with luxury amenities for entertaining guests on the 37th floor of the Mirae Asset Tower, making rare public appearances and conducting business informally within his residence [para. 16][para. 17].

Over the past two years, Junhe fostered close—but ultimately problematic—relationships with local governments and their financing vehicles (LGFVs), collaborating on industrial park and infrastructure projects [para. 18][para. 19]. In the first half of 2024, over 10 LGFVs and state-owned enterprises at the district and county level initiated legal action against Junhe, although the specific causes and outstanding financial claims remain unclarified. Some analysts speculate that Junhe may have assisted LGFVs in fictitious commodities trading to artificially inflate revenue, potentially circumventing governmental borrowing limits, though these theories remain unproven [para. 20][para. 21]. Mass layoffs corresponded with the breakdown in these relationships, and former employees report a marked shift at the start of 2024 from routine official visits to confrontations with creditors demanding repayment [para. 23][para. 24].

The full extent and future of Junhe’s financial crisis thus remain unresolved, emblematic of the risks surrounding complex private sector-government collaborations in China’s evolving economic landscape [para. 5][para. 23][para. 24].