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Abstract
Translation from original language as provided by author
Through electronic finance companies, an e-business group achieves centralized funds management. This practice represents a general trend in the management of modern conglomerates and a profound transformation in the management of an e-business group. Such management can increase capital utilization efficiency, reduce capital costs, optimize resource allocation, and improve cash flows. It can also enable the e-business group to clearly understand its member companies' dynamic capital flows and achieve real-time risk monitoring. Thus, it would improve the group's overall capabilities for granting credit and financing, providing relevant guarantees for its members, particularly for pillar companies. At the same time it can help members cope with difficulties arising from complex economic situations as well as a corporation's cyclic financial fluctuations. During the past decade, centralized funds management by electronic finance companies has moved through three stages of development from a reactive stance to a difficult beginning and, finally, to key breakthroughs. To date great progress has been made in the amount and rate of capital centralization, the amount of capital settled, and in providing financing support for member companies. Centralized capital management is beginning to yield economic benefits. However, problems still exist in such areas as industry awareness, capital centralization, capital stability, capital centralization among listed and holding companies, and finance companies' service capabilities. Improper resolution of these issues could affect the implementation of the group's strategic development plans. After analyzing the e-business group's financial data, its plans to accommodate the scale of businesses specified in its strategic development programs and future funding sources per investment plan, we expect that the percentage of centralized funds and overall capital will double by the end of the 12th Five-Year (2011-2015) Plan. The capital balance of electronic finance companies and their financing balance will grow fivefold. All these moves are meant to guarantee the funds required by the e-business group during the 12th Five-Year Plan. To fulfill the core target of centralized funds management during the 12th Five-Year period and to achieve overall centralization of funds, the e-business group's administrative support should complement the market services of its electronic finance companies. The e-business group should strengthen its administrative support and implement general financing guarantee systems, while the finance companies should improve their market services, enhance their financial servicing capabilities, and ensure capital security. In addition to the centralization of funds in RMB, the finance companies should also emphasize that in foreign currencies, enhancing the centralization of funds in listed companies, while closely watching the change in regulatory policies and their impacts on the centralized management of funds to allow timely countermeasures. The electronic finance companies must address the full breadth and depth of e-business demands for financial services, enhance centralized management of funds, and strive to achieve a win-win situation that can benefit member enterprises, financial service firms, banks, and the whole e-business
