Financial Strategy Research Of China’s Large-scale PV Enterprises

Financial strategic management is an important branch of modern enterprisefinancial management, financial strategy has a significant impact on the continuousvalue creation of enterprises. Along with the increasing changes of enterprise financialenvironment, Strengthening the theory and practice research of financial strategicmanagement gets more and more attention of the academic field and practice field.PV industry is a high-risk and high-tech industry of new energy. Due to theparticularity of the industry and the government’s support, China’s PV enterprises seizethe opportunity of rapid development, from small to large, from weak to strong, takesup half the world’s photovoltaic markets, But the financial crisis in2008, and then theEurope’s debt crisis broken out, The United States, Europe, India against China’sphotovoltaic products in the "double reverse" survey, make PV industry development inour country by the peak in the bottom, PV enterprises generally appear severe financialproblems, and the debt problem is most serious. The performance are high level of debts,cash chain tension or scission, financial risks and financial disputes highlights caused bydebt mutual insurance. Under this background, the theory of financial strategymanagement is used to help photovoltaic enterprises to formulate scientific andforward-looking financial strategy becomes very urgent and necessary. This paper carryout the discussion of general photovoltaic corporate financial strategy, and select theJiangxi LDK Solar Hi-Tech Co., Ltd.(hereinafter referred to as LDK) for the specificobject of analysis, trying to use financial strategy to guide the enterprise financialmanagement.In this paper, first of all, the financial strategy research at home and abroad inrecent years and the most relevant theoretical basis for the system were reviewed, thenthe paper analysis corporate financial strategy, designs the domestic photovoltaicenterprises’ financial strategic principles, procedures, financial strategic objectives, andthen diagnose and evaluates LDK’s financial strategy in according to the financial andstrategic framework for application. We found that the external economic environmentis the main factor of the photovoltaic enterprise financial strategic decision.Photovoltaic enterprise’s capital structure and investment effect on net assets incomerate significantly. The government’s excessive intervention of photovoltaic industry and non-standard control is the important power in photovoltaic difficulties. Flawed systemof corporate governance restricted the role of the financial strategic guidance，andmost of these issues are also deep trough of PV companies are prevalent. Finally, thispaper gives the following recommendations for LDK: In the field of investment, LDKshould focus on connotative expansion, balance the risks and benefits of investmentprojects, control the speed and scale of investment, implement the budget managementand risk warning mechanism strictly, enhance the ability to generate cash flows ofinvestment projects. In terms of financing, LDK should keep stable capital structure,strictly follow the debt maturity to match the duration of assets, and establishappropriate risk analysis, early warning reimbursement mechanism.Of course, thesesuggestions can also be proposals for photovoltaic enterprises that have similarexperiences.This paper attempts to innovate in the following areas:First, this paper presents two principles of the financial strategies for photovoltaicenterprises, and points out that the external environmental factors of PV companiesmainly determine the company’s financial strategy. PV corporate financial strategyshould be dynamically adjusted.Second, through the analysis of the current PV industry market structure, as to therelations between financing pecking order theory and trade relations, we raised the pointof view different from the previous scholars. The entry level of industry barriers andpecking order can be universally followed is not necessarily a positive correlation.China’s photovoltaic business financing strategy is not necessary to comply withpecking order theory, and equity financing should take precedence over debt financing.Third, based on the second point of view, government regulation and the role offinancial strategy photovoltaic business is closely related, we make an assumptionsbased on experience: The stronger the government restrictions on photovoltaic industry,the more Photovoltaic company financial strategy is not conducive to play a role.