Finance Companies Of Enterprise Groups In China Prospects For Development Research

Finance company is a special financial institution which emerged with the development of corporation group. When a company becomes bigger and bigger, and turns into a conglomeration, it is necessary that its financial business be managed with professional and uniform policy. The main service field shall be the centralized control of money, clients' credit, and capital management. Finance company is a special kind of financial institution in China's financial system and also a special financial arrangement. It is an important complement measure of the government for the reform and development of those big state-owned enterprises. With the help of Chinese government, the establishment of finance company becomes the most welcome pilot policy after 16 year's development. And finance company also becomes a new power that can not be ignored in China's non-bank financial institution system.Finance company has a long history in western countries. There are almost 1200 such kind companies in the United States. They are playing a very important role in American financial system. The top 25 has a total assets more than 1000 billion dollars. Even compared with the 10 biggest commercial banks, the top 5 financial companies are not in the shade. The biggest finance company is GE Capital Stock which made 5.2 billion dollars profit in 2000, occupying 41% of GE's total profit. It takes the second place of all the top 500 financial services, only less than the Citi Bank Group. In China, finance companies' profit of year 2000 was less than 3 billion yuan, although the profit ration and asset quality is the best of all the financial institutions. The Chinese government plans to build 30-50 huge international corporations. This also means that finance companies have a very large developing space and a big challenge when China became a member of WTO.The writer has divided the thesis into four parts. The first one tells us about thedefinition of finance company, discusses its cause of formation and its different evolution modes according to which finance company is divided into threetypes----capital management type, credit sale type and almightiness type. The second part introduces the characteristics and functions of finance company, and discusses its role in the combination of industry and finance. The third part compares the differences between western finance company and China's finance company, and points out what we lack. The last part put forward suggestions for the development of China's finance company facing the fierce competition of foreign financial organs.Finance companies stride a big step in recent years, but there is a big gap comparing with western ones, both in the scale and asset qualities. The biggest question is China's supervision authorities employs tough policies on finance companies. According to newspaper, a new system will be constituted recently, which gives finance companies much more freedom. It will be great for the development of China's financial system.