A Research On The Financing Strategy Of Private Steel Corporation- Jianlong Steel Under The Circumstance Of Control Of Steel Capacity

Capital is always regarded as the blood of a corporation. It's the most essential element in the production and operation of a corporation, and makes its presence in every link of the production and operation. After years of fast development, steel corporations, especially private steel corporations, are suffering from the capacity control on account of over capacity and low-end products, and facing the difficulties of profit decline, shrink of financing resource and tension of capital chain. As the leading private steel corporation in China, Jianlong Steel is facing the same difficulties. The financing of Jianlong Steel is impacted by various factors from politics, economy, finance and taxation. Therefore, it's a must for Jianlong Steel to make a clear and straightforward financing strategy to implement financing in diversified ways, guarantee the capital demand, reduce financial risk, and advance the development of the company.With using a research method which integrates literature review, case study and qualitative analysis, based on theoretical review of theories of corporation financing structure and financing of middle and small sized corporations, this paper analyzes main external factors which influence the financing of private steel corporations under the policy of control of steel capacity. The financing strategy of Jianlong Steel under the circumstance of capacity control after the global financial crisis in 2008 has also been analyzed. Suggestions are proposed for Jianlong Steel for optimizing the financing strategy in future, that is, own capital first; adopting various financing methods such as business credit, finance lease, trust and applying financial and tax subsides from government in addition to keeping current financing scale with the banks; and using direct financing methods such as bond and equity financing if possible. Meanwhile, it's a mus to reinforce financing risk control, that is, standardizing corporation administration structure, establishing scientific decision-making mechanism for financing and perfecting financial early-warning mechanism.