Study On The Risk Of Over-financialization Of Homa Appliances And Its Countermeasures

The financialization of real enterprises has been a hot topic in recent years.China’s financial industry has always maintained a high rate of return on assets,especially in the field of Internet finance,which has always been envied by the public for its high interest rates and rapid returns at the time of its rise.As a real enterprise,especially a manufacturing enterprise,its return is often not comparable to that of the financial industry.Profit-seeking has led many real companies to enter the financial industry and become more involved in related capital arbitrage activities.The financialization of enterprises can indeed bring certain benefits to enterprises to some extent,but the relationship between real enterprises and finance should be that finance serves enterprises,however,the excessive financialization of many real enterprises in reality can lead to finance overriding manufacturing,resulting in manufacturing enterprises being reluctant to invest their profit proceeds in expanding reproduction,and if this is not stopped,it is likely to cause the whole society as a whole If this is not prevented,it is likely to cause a decline in the overall economic efficiency of society as a whole.Homa Appliances is a refrigerator manufacturing company,in recent years into the field of Internet finance,but ultimately led to the company facing risks,on the verge of delisting.Therefore,Homa is a good target for research on the financialization of manufacturing companies,which has certain research value.Based on the literature review,this paper analyzes the motivation of financialization of Homa Appliances by combining shareholder value maximization theory,diversification and connected transaction theory,and then measures the level of financialization of Homa Appliances by applying the ratio of financial assets,the ratio of financial investment income and the Richardson residual model.After that,we analyze and study the risks caused by the financialization of Homa Appliances and conclude that(1)Homa Appliances is over-financialized.This paper simply estimates the existence of over-financialization of Homa Appliances through the percentage of financial assets and the percentage of financial investment income by indicators.This is further verified by constructing a model.(2)The depth of over-financialization of Homa Appliances is at the top of the home appliance industry.By comparing the financialization level of Homa Appliances and 20 listed companies in the home appliance industry,it is found that no home appliance company has a residual greater than Homa Appliances except GREE,and only three companies,including Homa Electric,have over-financialized for more than 5 years.This proves that the depth of Homa’s over-financialization is at the top of the home appliance industry,and Homa’s over-financialization is too concentrated in terms of time and scope.(3)By verifying Homa’s excessive financialization,the analysis concludes that Homa’s excessive financialization poses four types of risks to the company.The excessive financialization of Homa Appliances inhibits the company’s main business investment and creates the risk of centrifugal diversification.Second,the allocation of excessive resources to the Internet finance sector without proper equity fund raising led to excessive financial leverage and debt risk.At the same time,the imperfect audit mechanism of the platform and the credit risk of users led to the inability to pay back,plus the suppression of policy risks,which eventually led to the company facing huge losses.Based on the analysis and conclusion of the case,the following suggestions were made: from the enterprise level,it is necessary to diversify into similar industries as much as possible,control the direction and degree of financialization and make risk response strategies in advance;from the government level,it is necessary to provide a good financing and business environment for real enterprises,and at the same time,implement financial control for real enterprises to prevent blind expansion.