The Research On The Financing Model Of Gome

Under the pressure of dual competition at home and abroad,appliance retail enterprises show a centralized and intense competition trend,and grow to franchise management gradually.There are two appliance retail enterprises confronting in the domestic market,that is Gome and Suning.Moreover,JD and TMALL,as the big electronic commerce business,use existing sales network to get involved in appliance retail industry.Although Gome has an online platform and offline entities two sales channels,it is influenced normally.Gome,as the oligopolistic enterprise in the chain retail enterprises of home appliance,has been added stores continuously as the main expansion mode.Gome can not close the financing gap caused by its rapid expansion only by relying on its own funds,so Gome formed such a financing mode in recent ten years.It is mainly relied on Similar financial,which means that the enterprise keeps the payment of goods to increase the book funds,and takes advantage of those funds for expansion or the extension of other businesses,rather than paying them to the supplier.This type of financing model is against the traditional market rule.It has greatly harmed the interest of the suppliers,and break of cooperation caused by it is easy to notice.However,because of Gome's large market share and wide distribution channels,many suppliers have failed to find a way out by building new chain stores.This paper,firstly,introduced the current financing model of Gome by basic situation,the financing environment,the main financing methods and the financing structure,and points out that the main financial model of Gome is Similar financial.The financial performance of Similar financial is negative cash cycle,positive net working capital,and negative net cash demand.Then,this paper made a comprehensive evaluation of financing model,the advantages are large floating capital,low debt cost.At the same time,the financing model is also has disadvantages including unreasonable debt structure,service pressure on debt,fragile fund chain,and serious commercial credit risk.Finally,this paper puts forward some suggestions on the financing mode of Gome,including improving the debt structure,mitigating the debt service pressure,optimizing the operation of capital chain to protect capital financing,and maintaining commercial credit financing channels.This paper puts forward some new ideas in view of the existing problems in Gome's financing mode.Firstly,it proposed the use of store asset securitization,this new financing won't increase the debt,but also can provide new financial channels for the development of enterprises.Secondly,increasing the company's cash flow by optimizing the operation of capital chain,in order to ease the risk of capital strand breaks caused by similar financial.Thirdly,strengthening internal control to ease the relationship between retailers and suppliers,and creating a good environment for Gome continue to use commercial credit financing by enhancing business credit and establishing an effective trust mechanism with suppliers.