A Study On The Identification And Classification Of Zombie Enterprises In China's Steel Industry

In recent years,as a result of the global economic downturn,the policy orientation of countries has been adjusting and dividing,leading to a change in supply and demand,and overcapacity has become one of the main problems affecting the current operation of the Chinese economy.The report of the 19th National Congress also clearly stated that it is necessary to further promote supply-side structural reforms,constantly optimize the economic structure,adhere to capacity reduction,destocking,de-leveraging,cost reduction,and short-changing boards,optimize the allocation of stock resources,and expand quality incremental supply.Realize dynamic balance between supply and demand.At present,zombie companies are both the focus and the difficulty of capacity-reduction efforts.On the one hand,zombie enterprises can cause and exacerbate excess production capacity.On the other hand,overcapacity can also form zombie enterprises.How to complete the complete removal of zombie enterprises has become the focus of the current society.China's steel industry is a typical industry with excess capacity.It is a hard-hit area where zombie enterprises frequently occur.The steel industry as the research object,research methods for identifying zombie enterprises in the steel industry and comparative analysis of the impact of zombie enterprises on the financing of normal enterprises will be This will provide insights into the deeper understanding of the financial characteristics of zombie companies and how to identify the right ways to identify zombie businesses in different industries.In addition,providing advice on the classification and disposal of different types of zombie enterprises will help improve the efficiency of the recovery of zombie enterprises and promote the sound development of the market.This article first introduces the research background and significance,research content and research methods of the zombie enterprise problem,then proposes innovative points and summarizes and reviews the zombie enterprise's connotation and identification methods proposed in related researches of domestic and foreign zombie enterprises.Then,the five kinds of domestic and foreign mainstream zombie enterprise identification methods summed up are identified and screened one by one by the Chinese listed steel industry zombie enterprises.Based on this,the formation characteristics of China5 s zombie enterprises and the reality of the steel industry are taken into consideration to combine the steel industry.The indicators related to prosperity degree further analyzed and compared the results of these five methods,and selected the zombie enterprise discriminating method that was most suitable for China's steel industry and revised it to use it as a method for identifying the zombie enterprises in the steel industry.List of listed companies in the iron and steel industry from 2007 to 2016.Then,based on the list of selected zombie enterprises,calculate the financial indicators and financing costs of zombie enterprises and normal enterprises and compare them,examine the dependence of normal enterprises on external fiunds,and analyze the financial status of zombie enterprises with poor external financing costs.The reasons for the relatively low external financing costs of the lower,normal corporate financial conditions are higher.Through a case study of the steel industry,we found that:(1)The results of five kinds of zombie enterprises identified by the identification method of the zombie enterprises in the iron and steel industry vary greatly,among which the steel industry is defined by the FN-CHK method and the actual profit method.The situation of zombie enterprises is in line with actual market conditions.Therefore,the identification method of zombie enterprises in the steel industry should be based on these two identification methods.(2)The profitability,solvency and growth ability of zombie enterprises are far less than that of normal enterprises in the same industry.Supporting zombie enterprises cannot make zombie companies turn around,and the government and banks continue to subsidize zombie enterprises to a large extent.Taking up the resources of normal enterprises,leading to difficulties in financing for normal enterprises,higher financing costs,weaker ability to cope with risks,etc.,breaking the rules of fair competition in the market.In the long run,it is not conducive to the development and progress of the industry and easy for bad loans.The problem has been caused by concentrated outbreaks.According to the conclusion of this paper,the following suggestions are put forward:Firstly,we should correctly identify zombie enterprises to clean up zombie enterprises;Second,not only do governments need to pay attention to zombie enterprises,but banks also need to pay attention to and make a difference.Banks should strengthen their supervision of zombie loans and guarantee the quality of credit funds;Finally,the government should improve the legal system,put in place supporting policies and set up special agencies to work together to protect zombie enterprises from a series of social problems,such as a large number of laid-off workers who will become socially unstable after the collapse of zombie enterprises.