The Financing Predicament Of HY Group And The Countermeasures

With the further development of China’s reform and opening up, the private enterprises in China are in unceasing development and growth, but the financing problem has become a bottleneck impeding the further development of these business enterprises. This paper takes Zhejiang HY Group as an example, based on the research of academic references at home and abroad. First, the paper retrospects the development process of HY group, from a township enterprise at begin to a group company now. Then, the analysis of the financing situation of HY is presented in the following four aspects: the enterprise’s operation capability, profitability, debt paying ability and cash flow. On the basis of the financial analysis, the financing Dilemma HY Group Co., Ltd. and other private enterprises are facing in the capital market is analyzed from two aspects: internal factors and external environment of the enterprise. The following five points are the leading internal factors of financing problem: high financing cost, high debt to asset ratio, fast expansion of the main business, single profit model and sideline investment loss. Other external conditions include strict requirements of financing institutions, imperfect mechanism of credit guarantee, multi-layer capital market faultiness, mismatched financing service system and so on. For the problems existing in the process of financing, this paper puts forward countermeasures to alleviate the funding difficulties of private enterprises from different levels using the method of linking theory with practice. First is to optimize the financing structure, expand financing space; second is to lay emphasis on the financing maturity, adjust the debt to assets ratio; third is to strengthen internal management, improve financing capability; the last but not the least is to create the cooperation between banks and enterprises, pay attention to the enterprise image in the market. In addition, this paper puts forward some innovation ideas at the end of the article. In this paper, a comprehensive system is built for domestic and foreign literature in the process of analysis, including the latest achievements of professional scholars who study the theory of financing, so this paper will have strong guiding significance of financing of private enterprises in china. In the process of investigation, a lot of relevant information about HY group company was collected, including the historical development of HY, the company’s current financial status as well as market dynamics in recent years. Beside the enterprise information, the data about Chinese chemical fiber industry trend are also collected and concluded. Hope this paper can provide some useful suggestions and good countermeasures to the Chinese private enterprises which are facing financing problem, and do some help to the sustained, rapid development of China’s national economy.