Study On Cross-Border Financing Leasing Business Model

Since 2008, major economic entities around globe have been implementing QE policy on different levels, caused by which one of the results is low interest rate. Now days our macro economy is slowing down on its pace, financial market is more fluctuant due to liquidity strain, the real economy sectors are still facing shortage in funds. Benefit by the loosening restriction on capital account and regulatory policy, growing numbers of companies has sought out foreign market to replenish funds for daily operations.Cross-border financing can be divided into two categories which are direct financing and indirect financing. There are some distinguish features about aforementioned financing methods. For instance, the cross-border direct financing is aiming for foreign capital market of which the foreign currencies supply scale and funding cost is much distant from domestic market. In the meantime, comparing to strict process of conducting cross-border direct financing, indirect financing sounds more viable to most domestic companies. There are three comprehensively used model of cross-border indirect financing:oversea facility secured by onshore guarantee, onshore facility secured by oversea guarantee, refinancing under L/C. And all these models are based on cross-border guarantee with acceptable range of risk. However due to the urge domestic demand for funds, companies tend to choose easy way to introduce oversea funds into the country which also is the major concern before they decide which method to adopt. In this thesis which stated threes detail case of cross-border indirect financing, including companies like stated owned entity, local government owned entity and common private companies. By analyzing these three detail cases, this thesis suggests how different types of companies use foreign invested finance leasing companies to borrow oversea funds. And through drive analysis and strength analysis to conclude that using foreign invested finance leasing companies is the most viable option for domestic companies conduct cross-border finance. Meanwhile this thesis also makes suggestions about questions companies might encounter regarding cross-border finance.