A Case Analysis On Buyer’s Credit Risk Management Of CIXING Corporation

Small and Medium sized Enterprises (SMEs) is the important component of nationaleconomy. In terms of quantity, SMEs account for almost99%of the total number ofenterprises in China, which widely distribute in various industries; in the area of supportingposition and prompting economy development, SMEs have absorbed more than80%employee in both city and town and contributed almost60%of GDP. However, because ofthe shortage of physical assets and high operational risk, the financing problem of SMEs hasbeen difficult to solve by a long time. Since the decrease of out-side demand and the rate ofeconomy growth after2008, the situation of SMEs has changed. Commercial banks begin toexpand microfinance business. But how to serve SMEs and control the high risk efficientlyat the same time has been a big problem.This paper is aim to support a way to solve the problem by the analysis of the riskmanagement of CIXING Corporation’s Buyer’s Credit, and further try to provide somesuggestions on the strategies of how banks to serve SMEs. As to the methods, the analysiswill use the way of combination of theory and practice. From two aspects, analysis the riskmanagement and put forward some useful suggestions. First, introduce the theory of SMEsrisk management and relative studies about the cooperation between banks and creditguarantees. Based on the theory, then introduce the case of CIXING Corporation’ Buyer’sCredit risk management. The general situation, the structure of assets and products, thedistribution of buyers, the situation of macro-economy, the way of risk management, and theresult of risk management will be presented. Second, analyses the risk management,conclude the useful practices, and find the problems and reasons using the Game theory.Final, put forward some enlightenments or suggestions. Guarantee institution should build ascientific and comprehensive risk assessment system; build a scientific early warningmechanism; build and perfect the risk compensation mechanism; strengthen the cooperationwith rural commercial banks. Bank should participate in the cooperation positively andimprove the cost of illegal operation of guarantee institution.