Study On Financial Risk And Contagion Of Enterprise Group Private Network Communication Business

In recent years,benefiting from the rapid development of the global communication industry and favorable domestic policy guidance,private network communication has ushered in unprecedented development opportunities.Many enterprise groups in our country have set up subsidiaries to carry out private network communication business,and the upsurge of private network communication has begun to appear.However,some enterprises carry out trade financing under the guise of private network communication,although they can obtain high returns and improve performance in the short term,they have buried hidden risks for the company,which will cause risk contagion both inside and outside the enterprise group and greatly damage the interests of the enterprise itself and investors.On May 30,2021,Shanghai Electric Group issued a Notice on Major Risks of the Company,indicating that the receivables of the communication business of the subsidiary’s Shanghai Electric Communication Technology Co.,Ltd.private network were generally overdue,and the customer’s payment collection was stagnant.Since then,several listed companies involved in the private network communication business have issued risk announcements one after another,triggering an "earthquake" in the private network communication industry.By studying the financial risk contagion after the enterprise group develops the private network communication service,the risk control experience and suggestions can be summarized for the Chinese enterprise groups to cope with the financial risks and contagion which may be generated by the new trade business.This paper analyzes the financial risk and its contagion of the private network communication business of Shanghai Electric Group through literature research,case analysis,and quantitative and qualitative analysis.Firstly,this paper sorts out the literature related to enterprise groups and financial risk contagion and summarizes the specific path forms and causes of financial risk contagion.Secondly,it introduces the basic situation of Shanghai Electric and Shanghai Electric Communication Technology Co.,Ltd.,as well as the risk events of huge receivables recovery of Shanghai Electric Communication Technology Co.,Ltd..Thirdly,select the financial risk index to identify,measure and evaluate the overall financial risk of Shanghai Electric Group;Then it analyzes the financial risk contagion of Shanghai Electric Communication Technology Co.,Ltd.’s implementation of private network communication business from three aspects of contagion path,consequences and reasons;Finally,from the internal and external financial institutions of enterprise groups,the author puts forward relevant risk prevention and control suggestions to prevent the phenomenon of "trade financing in the name of fake private network communication".The results of this study are as follows: first,the financial risk infection of Shanghai Electric Communication Technology Co.,Ltd.includes correlation infection and spreading infection;Second,the consequences of the financial risk contagion of Shanghai Electric Communication Technology Co.,Ltd.exist in various forms,including the continuous decline of the solvency of Shanghai Electric Group,the gloomy performance of the stock market,the difficulty of Shanghai Electric shareholders’ loan recovery and the risk of capital loss of private network communication enterprises.Third,there are internal and external causes for the transmission of financial risks of Shanghai Electric Communication Technology Co.,Ltd..The root cause is the crisis of control of Shanghai Electric Communication Technology Co.,Ltd.,and the direct cause is related to the inadequate risk control and short-term profit-seeking psychology of Shanghai Electric.According to the causes of risk contagion,some suggestions for preventing risk contagion are put forward to provide a reference for the benign development of Chinese enterprise groups.The innovative point of this paper is to supplement the relevant research on enterprise financial risk under the special business model and enrich the research on the influence of risk contagion on multiple internal and external subjects of enterprise groups.