Technology Capital Allocation Analysis And Risk Control

The new technology, information, knowledge and other factors of production have got more and more importance to enterprises in resent years. The scarcity of these new capital elements and their importance are far more than the traditional capital. Enterprises pay more attention to technology development and independent innovation, and strive to raise the proportion of technology, which shows sustainablecompetitive advantages. But technology capital contribution did not reach the ideal situation; even the enterprise whose technical force is abundant will face the risk of large losses. It indicates that possess resources doesn’t equal with reasonable use. The technology capital create value should balanced with other capital.This case study shows the proportion between humanity capital, financial capital, physical capital and technology capital in ZTE from 2010 to 2013, and then compares it with HUAWEI and other five companies. Both quantitative and qualitative indicators are used in this study. It focuses on the analysis technology of the total amount of capital, also combined with benefit analysis to technology capital. The study shows that the mainly risks of capital allocation in ZET include:(1) the assets scale mismatch between technology capital increase; (2) the technical development of capital shortage, lack of human capital and financial capital investment; (3) technology fail to be accepted as the corporate culture. Therefore, ZTE can optimize capital allocation by design elements on the balance sheet structure, and pay attention to the quality of the inputs in the process of optimization.This study consists of five parts. The introduction shows the research background, research problems and significance, and the research methods and ideas of the proposed. The literature first introduces the theoretical basis in this paper, and then relates this topic with previous study. Then analyze ZTE Corporation by SWOT, shows the financial situation and company strategy in recent years and points out problems existing in the case. Next chapter discusses the capital configuration of ZTE, and summarizes the risk in capital allocation structure. The last chapter summarizes the conclusion:ZTE’s has very good technical advantages, but there’s imbalance in the structure of capital allocation. This will brings to the enterprise management risk, and in 2012, ZTE had a huge loss. Therefore, the enterprise must be based on "technical", focus on technology, capital allocation, guard against and dissolve the risk of capital structure.There are some defects in this paper. Due to the limited data analysis and corporate annual report disclosure, as well as for the measurement of the technology capital is still not perfect, some inevitable default in the process of analysis is insufficient. It would hope to be improved in future research.