A Study On Chinese Factoring Legal Issues

Modern factoring originates from American modern business agency, with thedevelopment of transportation and communication technology, factoring developsfrom business agency into comprehensive financial services which include financing,account management, collection of receivables, credit risk control and bad debtguarantee. With the development of global trade, a buyer’s market gradually formed,sell on credit gets more and more popular, that leads to the demand of factoring growsrapidly. In the international trade settlement, factoring business volume has exceededthe letter of credit business. The huge market demand not only has given rise to theinternational factoring organizations such as FCI, but also produced internationalconventions such as GRIF, which is beneficial to the further development of factoring.The rise of the factoring in the European and American countries begins to the1960s, and after the development of more than half a century, they have formed amature factoring market. However, factoring grows up in our country only in recentyears, although with a rapid development, we are still faced with many problems. Theresearch of factoring is not enough, for example, there are disputes on the definitionof the legal nature of factoring. Moreover, our system is not sound, such as the lack oflaw, supervision, supporting system and so on. Therefore, we have to improverelevant systems on the basis of reality, and learn from the foreign advancedexperiences at the same time.This paper includes five chapters: In the first chapter, a famous factoring case happened in our country has been introduced and analyzed so that we can find out thefactoring legal issues directly, and lead to the centre of the discussion---factoring, anew comprehensive financial service. In the second chapter, the basic theory offactoring has been analyzed so that we have a deeper understanding about it,including the origin, concept, classification with related business, legal basis offactoring and so on. In the third chapter, development status and problems of factoringhave been analyzed on the basis of the data, and the legal problems of factoring havebeen introduced especially. In the forth chapter, factoring legal systems of the mainEuropean and American countries and related international treaties and practices havebeen introduced, and their meanings to our country have also been analyzed. In thelast chapter, some suggestions to our factoring system have been put forward,including legal system, supervision, industrial development and so on.