A Study On The Development Of Factoring In China And Risk Protection

In recent twenty years, international factoring, as a kind of method of international settlement and trade finance, is introduced into our country along with the rapid development of international trade. The development of factoring is fairly slow compared with the rapid growth of our trade volume. The domestic factoring is developed in recent years and its working pattern and risk control is just in exploration.First, this paper reviews the theories and demonstration research of factoring. The theories include Finance Innovation Theory, Financial Risk Management Theory and Account Receivables Management Theory. The demonstration research includes application, operational pattern and price-making of factoring.Secondly, this paper analyzes the market risk, credit risk, operational risk and legal risk respectively according to the sorts of financial risk by international convention, enumerates the characteristic of factoring risk and offers the concerned protection method against risk.Thirdly, this paper compares the different development between China and foreign countries and analyzes the reason why China's factoring developed slowly in recent years. The leading reason is that the financial institutes do not study the factoring risk well.Fourthly, this paper selects two typical factoring cases to demonstrate the factoring risks and takes the gauge of a small-size import and export company in zhejiang province using factoring evaluation model.Finally, this paper reaches the conclusion that the factoring risks can be detected and prevented and provides six countermeasures to develop our country's factoring, such as selecting the appropriate operating mode and kind of factoring, looking for the target customer and exploring the small-medium-size enterprises market, establishing a flexible price-making system, strengthening the factoring process control and protect the factoring risk.