Research On Foton Motor’s Supply Chain Finance Credit Risk Prevention And Control

In today’s society,small and medium-sized companies encounter difficulties in financing and suffer high financing costs,and the poor quality of collateral is still the problem.However,supply chain finance is an innovative model that can better solve this problem.It helps SMEs with weaker qualifications to obtain financing by enhancing the credit of participating enterprises with the help of leading enterprises.However,the kernel of supply chain finance is the same as that of traditional financing,and the measurement and prevention and control of default risk of core enterprises and their upstream and downstream need to be paid attention to.The automobile industry is one of the earliest industries involved in supply chain finance,it has the characteristics of many SMEs upstream and downstream,once the credit risk problem of supply chain finance occurs,it will produce a situation of rapid spread and wide impact.Therefore,this paper chooses Foton Motor,a large Chinese vehicle manufacturer in the field of commercial vehicles,as the case study object to investigate its supply chain finance credit risk prevention and control.The research sample includes Foton Motor and its upstream and downstream important enterprises.This paper identifies a series of credit risks faced by Foton Auto’s supply chain finance from the perspective of Foton Auto’s financial index risk,hidden security risks,bad debt risk and the transmission of upstream and downstream corporate credit risks,and then uses the modified KMV model based on the GARCH model.The default distance and default risk of Foton Motor and its important upstream and downstream partners are measured.The results show that the financial default risk of Foton Motor’s supply chain is ranked in descending order: downstream enterprises > Foton Motor > upstream suppliers,and Foton Motor and upstream The company Weichai Power and the downstream company BAIC Blue Valley default risk trends are relatively consistent.Furthermore,using the Copula function to test the conditional default risk of these three companies,and finds that when Fountain Set defaults,the default probability of both BAIC Blue Valley and Weichai Power increases by 2-3 times,further indicating that the core enterprise Fountain Set has a strong transmission of default risk.Combining the empirical findings,this paper offers recommendations on credit risk control of Foton Motor’s supply chain finance in two aspects of ex ante hindrance and ex post control,in order to provide reference for Foton Motor and similar companies in China to prevent and control supply chain finance credit risk.