Case Analysis Of The Causes Of Bankruptcy Of JG Group

Under the powerful engine of China's economic development,private enterprises have developed rapidly with remarkable achievements,and made great contributions to national economy.However,in recent years,the increasingly complex world economic environment and the more and more fierce market competition have inflicted a severe impact on private enterprises.Many of them are running out of cash and in danger of all sorts of risks.The bankruptcy of private enterprises matters not only the company's own interests,but also the economic development of nation or region and people's livelihood.Jinggong Group is a cross-industry national enterprise group.As a well-known local enterprise in Zhejiang,it has made significant contributions to the local economic development and employment market.In 2019,through the rapid expansion,Jinggong Group suffered from broken capital chain and declared bankruptcy.Taking Jinggong Group as a typical case,firstly,this paper describes the financial risk management,corporate financing management theory,diversification theory and family management theory,then briefly introduces Jinggong Group and its bankruptcy process.Then this paper analyzes the management mode of JG group and its financial situation from 2016 to 2018,and summarizes the main reasons for the bankruptcy of JG group combining with the content of in-depth interviews with relevant personnel.JG group is unable to repay due bonds and has financial bankruptcy,which is influenced by external macroeconomic environment factors and more importantly,the enterprise itself.In the past decades,JG group has been diversifying through investment,merger and acquisition.It has bought a lot of financial equity,invested in real estate,and set up hundreds of affiliated enterprises.In the case of insufficient own funds,JG group has raised 25.75 billion yuan from financing scale.High cost short-term financing supports JG group's over 50 billion business empire.With the increasing de leverage in the financial market,bonds that can't be issued at maturity break the balance of JG group's "repay loans with loans" and trigger the debt crisis of JG group.Blind diversification,poor profitability and wrong decision-making under the family management mode are the basic reasons for the bankruptcy of JG group.Finally,this thesis proposes reasonable suggestions and Countermeasures for the development of private enterprises.In terms of management,we should standardize the employment system and establish a scientific decision-making mechanism.From the perspective of financing risk,we should optimize capital structure,reduce financing leverage and actively expand how far financing channels.In terms of investment risk,we should be careful to diversify and standardize the investment process.In terms of operational risk,we should improve the efficiency of capital operation and improve the financial risk management system.Finally,we should improve the core competitiveness of enterprises,so as to improve the profitability of enterprises.The bankruptcy crisis of JG group is not formed in one day,nor accidental force majeure.the problems troubled Jinggong Group reflect the common weakness of Chinese private enterprises' risk management.In particular,private enterprises with high debt and diversified development.Therefore,this essay can provide a reference for private enterprises to improve risk management,effectively promote the healthy development of enterprises and industries,and prevent regional systemic financial crisis.