Customer Concentration And Corporate Value From A Liquidity Perspectiv

In 2020,under the influence of COVID-19,the total output value of China’s construction industry still reached 26,394.703 billion yuan,up 6.2% year on year.Benefiting from the rapid development of downstream real estate,the upstream decoration industry continues to prosper.From 2012 to 2020,the compound annual growth rate of China’s building decoration industry has reached 11.5%.However the competition pattern of the upstream and downstream industries is very different.The concentration degree of the upstream decoration industry is low,while the concentration degree of the downstream real estate industry is high.The downstream leading purchase ability is strong,leading to the upstream decoration industry customer concentration is generally high.The slow pace of consolidation in the upstream industry has led to increasing customer concentration.Through browsing relevant literature,it is found that the researches on customer concentration and enterprise management in China mainly focus on large sample studies,and the research results show that the relationship between customer concentration and enterprise management risk is U-shaped.Due to the lack of literature on case analysis,this paper analyzes the path of big customers’ encroachment on enterprises from the perspective of liquidity based on the actual situation of QZC and how encroachment affects enterprise value,which to some extent improves the theoretical gap between customer concentration and enterprise operation.At the same time,we hope to provide reference for other enterprises in supply chain management by analyzing the case of the major customer of Quanzhu Holding occupying enterprise liquidity.Based on the theory of information asymmetry and transaction cost,this paper analyzes the influence of big customers on the liquidity of Quanzhu Shares.Information asymmetry leads to an increase in the operating risk of Quanzhu Stock due to receivables.Through the event analysis method,the market reaction of large impairment of accounts receivable of Quanzhu Stock’s major customers is observed to verify the impact of the release of operating risks brought by major customers on enterprise value.Due to the strong bargaining power of the key customer,THE company was forced to accept harsh cooperation agreements during the cooperation,including the purchase of materials from the key customer,which resulted in the extremely low gross profit rate of the key customer project.Finally,as the proportion of revenue from key customers increased year by year,the investment in working capital of QZC increased.However,it took a long time for customers to collect money and the profits from key customers’ projects were extremely low.As a result,QZC was short of cash flow and forced to conduct a series of extreme financing behaviors.Due to the liquidity encroachment of customers on Quanzhu Stock,the r&d investment of Quanzhu Stock decreased,and the development strategy of "two wings and one arrow" focusing on smart technology was hindered.This paper finally draws the following conclusions: 1)Due to the existence of information asymmetry,high customer concentration leads to a large number of accounts receivable,which increases the business risk of enterprises.2)High customer concentration makes enterprises need to accept harsh terms in cooperation,which reduces corporate profits.3)Too high customer concentration leads to the effect of customer encroachment,which leads to the lack of sufficient cash to support strategic development and makes the enterprise lose its future competitiveness.Combined with the above conclusions,this paper puts forward relevant enlightenment: although large customers can bring stable income to enterprises and promote enterprises to form scale effect,in actual operation,enterprises should do well in supply chain risk management,such as receivables risk transfer and internal management optimization.