The Research On The Dynamic Financing Strategy And Financial Risk Of Greentown China

In the present stage of our country,the real estate industry is still the pillar industry of national economy.Systematic risks would appear in the macro-economy once the real estate industry gets into high-risk situation.As a capital-intensive industry,real estate has the features of high investments,long payback period and bad mobility.Owing to the frequent macro-control policies and competitive market,the real estate enterprise is easy to get into financial difficulties.Therefore,formulating dynamic financing strategy scientifically can not only meet capital demands of real estate enterprises for their survival and development,but also control and prevent their financial risk efficiently.Furthermore,it helps to promote the sustainable and healthy development of real estate industry,ensuring the stable and healthy growth of national economy.Greentown China Holdings Limited is a well-known real estate company in China,whose financial risk fluctuates continuously since 2006 and suffered several times of financial distress.Thanks to its timely and effective adjustments to the financing strategy,Greentown China turned the comer in the financial distress and controlled its financial risk in a certain range,but didn’t eliminate the financial risk fundamentally.This paper uses the dynamic financing strategy and financial risk of Greentown China as example.Based on the analysis of the financial risk of Greentown China,the dynamic financing strategy is divided into three stages.By analyzing dynamic financing strategy from financing scale,financing method,dividend policies and capital structure,this paper studies the internal mechanism between financial risk and its dynamic financing strategy.Finally,this paper summarizes the experience and lessens of Greentown China in terms of financing strategy and financial risk prevention,providing some useful suggestions on financing strategy and financial risk control for Chinese real estate enterprises.The following conclusions can be obtained through the research of Greentown China:First,real estate enterprises should adjust financing strategies dynamically according to their financial risk.Second,the financial risk of real estate enterprises can be controlled through dynamic financing strategy.Third,financing strategies of high financial leverage could lead to high financial risk.Forth,reasonable arrangements and innovations of debt financing for real estate enterprises can not only optimize the debt structure,but also reduce the financial risk.Fifth,absorbing strategic investors or even relinquishing control is an important way to prevent financial crisis.According to the study,this paper puts forward the following suggestions for domestic real estate enterprises:First,improving the management level is the fundamental way to control the financial risk.Second,make dynamic financing strategy scientifically can control financial risk efficiently.Third,setting up a financial risk pre-warning mechanism is a significant means of financial risk prevention.Forth,innovate and expand financing method can help to reduce financial risk.Fifth,absorbing strategic investors or even relinquishing control is an important way to prevent financial risk.The innovative points of this paper are the breakthrough point and inventiveness.From the point of dynamic financing strategy,this paper highlights the dynamic adjustment process as follows:financing strategy-financial risk-financing strategy adjustment-financial risk control",which is different from the existing focus on the enterprise life cycle perspective.For the case,Greentown China has been particular in finance innovation.For example,Greentown China was the first to issue exchangeable bonds before IPO and the first to issue high-yield bonds,etc.All of these can be the milestone in the debt management of Chinese real estate enterprises,enhancing the inventiveness of this study.