TITLE:
A Study on the Risk of Small and Medium Enterprises Financial Outsourcing in China
AUTHORS:
Fang Fang
KEYWORDS:
Small and Medium Enterprises, Financial Outsourcing, Risk
JOURNAL NAME:
Open Journal of Social Sciences,
Vol.4 No.10,
September
30,
2016
ABSTRACT: The domestic enterprises began to face fiercer competition, which under the rapid development in the global economy today and the market increasingly competitive. During the government work report of 2015, Prime Minister Li Keqiang first proposed that encouraging people to start their own business and to make innovations, so that can be a new engine of economic development under the China’s New Normal. The leader of the economic reform is the micro, small and medium enterprises. In addition to the support of policy from the government for SMEs in financing, the SMEs should try to reduce the cost of capital by business management. The SMEs also need to create unique core competitiveness, in order to gain a foothold in the ever-changing global market. Outsourcing as one of the important means to reduce operating costs, has been adopted by more and more enterprises. As an auxiliary function of enterprise, financial outsourcing is beneficial to reduce the management cost and improve the efficiency of management. It can also help SMEs focus on the core competitiveness of ascension. When SMEs enjoy the benefits of such financial outsourcing, they are also associated with the risk of outsourcing. If the enterprise does not have a clear understanding and effective management with the outsourcing risk, it will lead to the enterprise cannot reach the purpose of outsourcing, also called the failure of outsourcing activities. Therefore, while the SMEs choose financial outsourcing, they must have the analysis and evaluation system of outsourcing risk. In this paper, based on the above analysis of the background, we study the risk of SMEs financial outsourcing. And after introducing the content and the status quo of financial outsourcing, we discuss the financial risk when the enterprise using financial outsourcing, and classify the risk, then measure the risk response, which in order to offer the decision-making basis for the successful implementation of financial outsourcing activities.