Research On Financial Risk Management Of Small And Medium-Sized Real Estate Enterprises

Real estate is the pillar industry of national economy that has the direct bearing on economic stabilization and development. In China, real estate operation is far away from accomplishing normalization because of late starting and weak foundation. Market economy changing and state macro-control will impact real estate significantly that make it face the highest danger among all industries. In 2009, China real estate business had a retaliatory bounce after the global financial crisis of 2008. Since then, companies began a new round situation adjustment:the strong get stronger, the weak get weaker. Formidable and large-scale corporations became the main force in market and the leading ones expanded market based on their financial strength and brand influence, merger and acquisition was aggravating simultaneously. In contrast, the cases of bankrupt of small and medium-sized real estate enterprises (SMEs) occurred frequently. From a marketing standpoint, firm diversification is demanded; few monopolies are not benefit to the development of market, and healthy growth of small enterprises is crucial as well. But the continuous development and profitability is most important to SMEs. This paper is a case study based on Shanghai Xinmei to analyze the financial risk management of real estate SMEs, and hope to offer some reference.The study makes a deep understanding of risk management theory based on literature, and chooses ISO 31000 as the theoretical foundation. The case study is divided into three steps:establishing the context, risk assessment and risk treatment. Then, the paper identifies financial risk of Shanghai Xinmei in 2010-2014 by Financial Index Analysis Method, analyzes risk by AHP and Efficacy Coefficient Method, and draws the conclusion that profitability decreasing is the main risk point. And risk treatment is discussed from four aspects as avoidance, reduction, transfer and acceptance. Generally speaking, Shanghai Xinmei needs to accept debt risk, reduce and transfer profit and operating risk. Cash flow risk is the common risk of real estate industry that needs everyone’s effort.Finally, this article makes some suggestions to real estate SMEs through the case of Shanghai Xinmei. They should concentrate on transformation of market segment, or deploy specially on particular regional market, widen financing channels, reinforce enterprise financial risk management and choose multi-business development strategy.