Analysis Of Funds Management Of The Real Estate Enterprises In China

Since the1990s，housing reform began in China，abolished welfare housing systemgradually. At that time, the real estate industry began to flourish and has become thepillar industry of national economy, while leading to the development of construction,steel, property management services, mechanism and more than50surroundingindustries. The process of urbanization has brought a broad market and developmentopportunities for real estate enterprises. Continuous exploration and development of thetheory of modern enterprise management has become the booster for real estateenterprises. However, during the last ten years, the development of the real estateind’ustry hasnt proceeded smoothly with repeatedly state regulation of the real estatemarket and internal integration of the industry. As one of main players in the market, thereal estate enterprises have been facing financial strain test several times.In recent years, the strong demand of rigid housing and investment promote high-speed expansion in the real estate business with new development properties for saleeverywhere. Prices climbing，buyers queuing day and night, the booming land market,high land prices, these phenomena of the real estate market have increased worries ofthe real estate bubble. In this context, in order to curb housing prices and strictly controlunreasonable investment demand, the state has issued a series of regulation policiessuccessively since2010. Policies, such as protective houses, the limited purchase policy,limited credit policy, property tax, etc. have played an important role on cooling theoverheated housing market, preventing real estate bubble expanding, and guiding thereal estate market to develop health’y. As we can see, its very hard to get high returns assoon as investing in the real estate market as we do in2009, while funds supplydecreasing, pressure on the stock increasing, funds management of real estate enterpriseput to the test once again.Funds is the fundamental guarantee of the business to continue and the lifeblood ofbusiness survival. Funds management is an important enterprise management functionthroughout all aspects of enterprises management. The real estate industry is a typicalcapital-intensive industry, managing capital smoothly or not decides the status of anenterprise to survive in the industry. Establishment and maintenance of a virtuous cycleof funds in order to prevent funds strand breaking is the goal of funds management inthe real estate enterprises. The high cost of real estate projects, huge amount ofinvestment, long cash conversion cycle put forward higher requirements on enterprise funds management. Problems of funding cycle at any part will directly lead to financialcrisis. Therefore, funds management directly relates to the survival and development ofreal estate enterprises. Although, the real estate enterprises have established appropriatefunds management system and capability of funds management has been strengthened,funds management in the fund raising, the use and reflux stage still keep a series ofquestions, whi’ch isnt enough to meet the increasingly fierce market competition.Therefore, rfom their own point of the real estate enterprises, based on the fundsmanagement theory, combined with relevant case studies and data, this paper analyzesthe problems of funds management of the real estate enterprises in China and proposescorresponding solutions rfom fund-raising, use and reflux.This paper is divided into six parts：The first part is an introduction, elaborating the importance of research on fundsmanagement of real estate enterprises. The background is that the state has implementeda series of policies on the real estate market, which makes the real estate enterprises faceincreasing funds risk. This chapter focuses on comparing the status of domestic andforeign research on funds management, pointing out that although our researches onfunds management of real estate enterprises have made certain achievements, researcheshave focused on the source of funds and lake of the use of funds and the reflux stage.The second part is about the funds management theory of real estate enterprises,expounding the concepts of funds management of real estate enterprises, funding cycle,features of funds management, introducing the status of real estate market as well asfunds management theory.The third part analyzes the problems of funds management of real estateenterprises, rfom three aspects of fund-raising, fund use and reflux. We can find that atthe stage of fund-raising, the way of financing is single, highly dependent on bank loans,blindly financing; At the stage of fund use, companies hoard huge amount of land,which leads to funds occupation, a large amount of loans caused by high input in theproject construction, ignoring the control of project costs, ineiffcient use of funds; Atthe stage of fund reflux, high stock causes precipitation of funds, slowing funds reflux.The fourth part analyzes the causes of problems of funds management in the realestate enterprises. These problems are the results of narrow financing channel，inaccurate budget, ignoring risks for high proifts, low proportion of own ifinds，lack ofeffective cost control measures，policy control and ineffective promotion.The fitfh part takes Vanke’s funds management as an example，introduces its experience on funds management and draws some inspiration in the funds managementof real estate enterprises in China.Finally, combining the theory analysis and enlightenment, this paper puts forwardcountermeasures to improve the funds management of the real estate enterprises inChina, rfom the aspects of diversification ifnancing, developing a unified capital plan,maintaining corporate credit, strengthening the funds budget control and assessment,increasing the proportion of own funds, the implementation of dynamic costmanagement, taking funds reflux measures based on changes in the market, reducingfunds occupation, improving promotional tools.