Case Study On The Causes And Countermeasures Of Gome Telecom Equipment Co.,Ltd. Financial Distress

As our country's economic growth rate slows,the competition among companies is turning into more intense.When a company cannot accommodate to the fierce competitive environment,it will be difficult to achieve profitability,and thus fall into financial distress,especially in the electronic communication industry.After China's telecommunication reform in the 1990s,the rapid development of communication technology has realized the leap from 1G to 5G.We have excellent industry development conditions and the world's largest consumer market for communications equipment.So communications equipment manufacturers continue to grow and mature,communications technology also ranks among the world's forefronts.Nevertheless,because of the gap between technique and trademark,the domain shows a trend of concentration of the head.The main effect is that non-head companies will fiercely divide up the few remaining market shares.This has left many companies into financial distress.This article studies the Gome Telecom Equipment Co.,Ltd.(hereinafter referred to as Meixun).In 2016,the company acquired Dejing Electronics.Next,it shifted its main business to manufacturing and selling mobile devices,which include the production and sales of its own-brand phones,as well as its ODM and OEM businesses.However,Meixun has been affected by the changing market environment and its level of operation has been descending.After three consecutive years of losses,the company was taken on the market risk early warning,the company also immediately into financial distress.This article divides into four chapters to continue the study to the case.The first chapter mainly explains the theory of financial distress,and previous research.In the second chapter,I will introduce the case profile and industry status of Meixun.After that,I will research the characteristic of Meixun's financial distress and analyze the financial target of Meixun.The third chapter I will analyze the reasons of Meixun's financial distress.This article mainly finds the following reasons.This article mainly finds the following reasons.Among them,the external causes mainly include the deterioration of the financial environment,the mobile phone market competition intensifies,and the new tendency of ODM businesses.The internal causes mainly include poor corporate management,poor mergers and acquisitions,weak financial management capabilities,and short of financial distress early warning.In the fourth chapter,the countermeasures that can help Meixun solve the financial distress are put forward,including improving the company's internal control system,enhancing the conversion of business pattern,reinforcing financial management,and building a financial distress early warning system.Among them,in terms of completing the company's internal control system,I will make proposals to Meixun through the use of the five-element theory of internal control.In terms of advancing the company's business transformation,Meixun can consider selling continuing loss-making subsidiaries,enlarging investment in scientific research,and optimizing the industrial structure.To reinforce the financial management capabilities of Meixun,the focus is to strengthen corporate fund management and expense control.Finally,it is necessary to establish a financial distress early warning system to prevent financial risks.At the end of the article,I will summarize and draw conclusions through the overall study of the Meixun case during the period of financial distress.The innovations of this article are as follows.For one thing,this article chooses the Mei Xun of the communication industry as the research object,while the current scholars' research on the financial distress of the industry is less.At the same time,this company can better represent the non-head companies in the communication industry.Other similar companies in the same industry can refer to the relevant substances and conclusions of this article,So they can be better prepared to resist financial distress.For another,this article uses Z-score Model to predict financial distress,which verifies the effectiveness and feasibility of financial distress early warning in actual cases.