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The Financial Risk of Chinese Real Estate Companies

The 21st century is a century full of competitions and challenges, and the market environment of China has undergone dramatic changes. In China’s competitive market economy environment, many companies are owing heavy debt and doing debt management in order to pursuit high economic growth. With the use of the debt management, enterprises can make up for the lack of its own funds, and also get financial leverage income. But if without proper risk prevention, it is likely to cause financial crisis. Once the financial crisis broke out, if not handled properly, it can lead to bankruptcy easily. As a mainstay industry of the national economy, the real estate plays an important role in the development of the national economy. However, due to the large scale, long period and high value of the real estate development projects, real estate development enterprises have a need of huge amount of funds. The financing capacity of the real estate business is essential. The real estate industry is an industry accompanied by both high returns and high risks. In order to achieve the maximization of corporate earnings, it is necessary to focus on the prevention of financial risks. Hence, how to prevent financial risk comprehensively and efficiently has an important practical and theoretical significance to the real estate companies.

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