Research On Financial Risk Of SME Manufacturing Enterprises Based On Customer Concentration

Since the 1990s,with the rise of supply chain cooperation,SMEs have become more aware of the positive role of stable customer resources in breaking the bottleneck of corporate growth,improving their core-competitiveness,and reducing uncertainty in their operations.Many SMEs have effectively improved their operational efficiency and profitability,significantly dropped the risks of their operations,by participating in supply chain cooperation and maintaining a high level of customer concentration.However,as the dependence on a few major customers continues to deepen,negative effects continue to emerge.Major customers use their dominance to shorten the.delivery cycle and increase the proportion of commercial credit,while the SMEs' bargaining power significantly declined,their profits is eroded and the profitability space is squeezed by large customers.The two influences brought by the high customer concentration strategy are intertwined,which also brings greater uncertainties to the financial risk management of SMEs.In order to comprehensively and objectively analyze the impact of customer concentration on corporate financial risk.This article first defines the customer concentration and financial risks,and divides the financial risks into founding risk,customer investment risk,fund recovery risk,and default risk according to different stages of the company's operating activities.Then,theoretically analyzes changes in customer concentration how to impact on the four types of financial risks of SMEs,and put forward the assumptions to be tested.After that,we using China's manufacturing medium and small listed companies as research samples,establish the Panel regression model to quantify the effect of customer concentration on the four types financial risks of enterprises,and test the hypothesis of the previous stage.The theoretical and empirical research results that the customer concentration of SMEs can reduce the information asymmetry between banks and enterprises,improve the ability of enterprises to obtain long-term loans,and reduce the risk of corporate financing.However,in different sub-industries,customer concentration has a different impact on the company's funding risk.For transportation tool manufacturing and electrical machinery manufacturing enterprises,higher customer concentration level will increase their funding risk;in other sub-sectors,higher customer concentration will reduce their funding risk.At the same time,higher customer concentration reflects the dependence of SMEs on their major customers.This dependence will not only impact on corporate customer relationship investment negatively,but also increase the risk of corporate fund recovery.In addition,higher customer concentration will reduce the risk of corporate default.However,if the impact of the subdivided industries in which the sample companies are located is considered,there is a large industry difference in the relationship between customer concentration and default risk.In textile light industry,metal minerals manufacturing,general and special equipment manufacturing,and electrical machinery manufacturing,the increase in customer concentration will increase the risk of company default,while the higher the customer concentration of other industry companies,the lower the risk of default.