Private firms in Wenzhou often guaranteed one another’s bank loans, forming what the press called 担保圈, guarantee circles. In August 2014, the 21st Century Business Herald reported that at the end of June that year, 28 circles in Wenzhou involved 50.7 billion yuan of bank credit. The figure came from a local post that was quickly deleted.
One plastic film maker in Ruian, Huatai Group, defaulted on about 409 million yuan owed to 14 banks. Five firms had guaranteed it, and it had guaranteed six others for 284 million yuan. Eleven firms were caught in one chain.