Financing And Risk Management Of China's Strategic Emerging Industries

Strategic emerging industries appear with the development of modern science and technology, They conform to the trend of the times. The strategic emerging industries are based on the significant developmental needs and important technological breakthroughs. They have intensive knowledge, low resource consumption, development potential and good overall efficiency. If we want to occupy a seat in the international competition, we must accelerate the development of new industries,such as energy conservation and environmental protection, information technology and high equipment manufacturing. The research on the financing of the strategic emerging industries is not only to improve the plight of the financing of enterprises, but also to improve the returns to investors and provide an opportunity for the development of a new generation of technology companies. With the market economic structure adjustment and upgrading of industrial structure and industrial competition, companies must resolve the liquidity problems. With the strategic emerging industry financing model, the companies can choose their own financing model to increase the amount of credit funds of the companies themselves. The funds are used to expand production and enhance the capability of independent innovation. Strategic emerging industry financing model supports an investment channel for the investors. Through strategic emerging industry financing model, investors are not only in cooperation with a company, but also in cooperation with the upstream and downstream enterprises in the whole industry. They access the more complete information and much smaller risk. Strategic emerging industry financing model has brought significant economic benefits for the community. Reasonable and effective financing model makes the low industry financing costs and bring the emergence of significant economies of scale.This paper is based on the theory of industrial structure and industrial relevant theory. We use the ordered dependent variable model to analysis the factors of the strategic emerging industry financing model. Ordered dependent variable model not only has the characteristics of discrete choice models, but also due to observed values of the variable ranking.Firstly, we reviewed the literature of the strategic emerging industries and pointed out the China’s strategic emerging industries at this stage. Secondly, we expressed the connotation of the strategic emerging industries financing model and defined that the strategic emerging industries financing model was a model that after financial institutions observed the business situation on the upstream and downstream industries, the financial institutions support the financial products and services to the companies in the strategic emerging industries. Then we supported that the theory was the theoretical basis of the development of strategic emerging industries. They provided a theoretical support and help for the strategic emerging industry financing model.Then we made the theoretical analysis and empirical testing to the strategic emerging industries financing model. Theoretically the indirect financing in which the credit market played an important role was the sources of funding for the development of the strategic emerging industries. But the strategic emerging industries developed as the main form of SME whose firm size and performance was difficult to achieve standard of the credit markets. They were at the disadvantage. So in order to improve the strategic emerging industries financing structure, it must be necessary to explore and innovate the financing model. We supported four financing models such as endogenous financing, short-term borrowings, long-term loans and equity financing and made ordered dependent variable model to analysis the financing mode. Then we got the formula of the factors on the financing mode. By using the sort method we obtained short-term loans was the preferred mode of financing models. Equity financing was the last modes of the financing models. The empirical results showed that the larger the scale,the stronger the ability to grow, the greater the possibility to choose equity financing. In reality, a large scale company had volume business and longer-term liquidity. They could obtain much more money by equity financing to meet the funding needs than short-term loans and internal financing. At the same time, the large scale company had stronger growth ability,advanced technology and high quality talent. So their ability of profit was strong and easier to access to capital markets than small businesses.Finally, by determinating the model of financing,we analysis the internal and external factors of the financing risk and made the empirical research. Using logit model to quantify the risk probability of strategic emerging industries financing, we made the probability represent the financial security which was the size of the financing risk. If we brought the data into the model to predit. The larger the probability was, the higher the financing security was, the littler the risk was. We expounded the Var size by the data and provided a reference for the development of financing decisions. And we gave the recommendations about how to manage the financing risk and reduce the financing risk factor.