S Foreign Trade Corporation Financing Case Analysis

China’s economy grows with the development of international trade.Many entities participate in international competition via foreign trade.However,in order to capture market share,outstanding credit sales and unending cash outflows are putting a strain on the finances of the companies.Many entities are seeking new approaches of foreign trade financing rather than ordinary loans.The procedures are convenient for trade financing for entities,which ensures the timeliness of the financing.For banks and other financial institutions,international trade has low risk and high return,which increases international transaction volume and attracts deposits.In practice,it is quite hard for foreign trading companies to obtain credit due to limitation of the companies’strength.CATIC S company is an old Chinese foreign trade enterprise.The Company experienced different periods from maturity and recession of general trade to early stage of ship trade.The financing becomes the key successful factor to the business transformation,that whether the financing meets the needs of the development,whether the financing scale keeps up with the pace of business,whether the financing instruments are effectively cost saving.However,the Company operated general trades all along,which caused simple financing models,unreasonable financing scale and capital structure,and especially the heavy financial cost due to short-term loans from commercial banks.According to the above situation of CATIC S company,this article provides insights into the Company’s profile and the development,current situation and demand of the financing activities.This article proposes a detailed solution to issues such as simple financing models,unreasonable capital structure,heavy financing cost,unreasonable financing scale,high financing risk exposure and lack of professional financing team.This article argues that the management of the Company should leverage the gearing by improving the internal resources structure,expanding the operating scale and strengthening the financing capability;should save the financing cost by diversifying financing channels,improving capital structure,centralizing treasury and credit management;should reduce the financing risk exposure by limiting the financing scale;should enhance financing capacity by reinforcing development and building professional financing team.Considering current situation,detailed finance and case analysis,and factors such as scale,models,pace,cost,difficulty and risk in financing activities,the article analyses diversification of different financing instruments to maximize financing efficiency and minimize financing cost.Based on the analysis,the article proposes strategies and suggestions to financing activities of China’s foreign trade enterprises.One of the innovation points of the thesis is the topic.In the academic circles,there are some discussion about trade financing,but research in this field is not adequate.This thesis provides more investigations on the topic considering the special characteristics of international trade entities and linking theory with practice.Moreover,by means of analysis and research of the cases of SH Ltd.,this thesis provides more choices of trade financing strategy for the target based on the conditions of the target and advantages of trade financing.