More and more Chinese enterprises, prompted by the need of international market and the eleventh “five years plan of economy development”, are going to invest and operate abroad. However, for lacking experiences, Chinese enterprises may encounter many new problems, which leads to a shortage of money or even gets them into fund crisis.
This paper first analyses some cases from some Chinese large-scale enterprises such as Sichuan ChangHong, Konka and China Aviation Oil in their process to invest and operate abroad. In all these cases, a break in fund chain could be seen. Then, it summarizes from the point view of the parent companies, listing the factors that lead to the break in fund chain while investing and operating abroad. These factors include the exceeding appropriate number of overseas accounts receivable; the cheats with letter of credit; too fast expansion; neglecting the necessity to elude financial account risk. In the end, this paper gives some advice on how to avoid the fund chain break risks, including setting up a complete fund chain precaution system, making a precise invest fund budget, enforcing the control of the accounts receivable, reinforcing these enterprises with the skills to fight against the fluctuation risk in the international market.
【Key words】 External management; Fund chain; Fund chain breaks; Accounts receivable
