Manufacturers’ Optimal Strategy in Supply Chain Financing

Abstract

with rapid development of socialist market economy, market competitions also become increasingly fierce. One of important guarantees for enterprise development is capital. However, in current stage, it is very hard for enterprises to borrow money from banks, especially for small and medium-sized enterprises which are caught in the plight of financing difficulty. Our state adopt encouragement attitude for small and medium-sized enterprises. But banks worry capital recovery problem during providing loans for small and medium-sized enterprises. Therefore, small and medium-sized enterprises must seek other financing approaches in order to develop. Supply chain financing is a good approach. However, supply chain financing can achieve maximization of manufacturers' benefit under certain conditions. This paper mainly discusses manufacturers' optimal strategy in supply chain financing to provide reference for enterprise financing and promote enterprise development. In most cases, small and medium-sized enterprises cannot gain banks loan, because they lack assets guarantee. The emergence of supply chain financing can effectively solve this plight. When enterprises conduct supply chain financing, supply chain partners can provide guarantee for enterprises and the enterprises can apply for loans from banks. This solves financing difficulty of small and medium-sized enterprises. In recent years, many Chinese commercial banks have carried out supply chain financing services. The whole supply chain financing system contains manufactures and retailers. Only when retailers meet manufacturers' financing conditions can manufacturers provide financing guarantee for them. I. Overview of supply chain financing Supply chain is an integral structure constructed through connection. It consists of manufacturers, suppliers, retailers and consumers etc. The whole supply chain includes core enterprises (i.e. enterprises with strong comprehensive strength and large scale), small and medium-sized enterprises. The bank as a core part of supply chain financing is the key of connecting core enterprises, small and medium-sized enterprises. Banks connect each enterprise in the supply chain into an integral whole, carry out collective credit extension, formulate rational financing schemes according to industrial characteristics and chain relations of goods transactions and guarantee integrated management of capital, logistics and various kinds of information. To promote flexible capital turnover for small and medium-sized enterprises is also an objective of supply chain financing. To fulfill financing, small and medium-sized enterprises mainly depend on good credit standing of core enterprises in supply chain financing so that core enterprises can provide guarantee for small and medium-sized enterprises. This is beneficial to financing of small and medium-sized enterprises.