The Current Situation and Development Trend of Supply Chain Finance

Industry Status

--Supply chain finance is in its infancy in China

Supply chain financial products are rooted in all aspects of the supply chain chain, and based on the different main actors involved. Supply chain finance can be categorized into six main modes, in which core enterprises, third-party payment, logistics enterprises, and e-commerce platforms have their own competitive advantages by virtue of their own experience and accumulation of resources to master the information flow, logistics, capital flow and other core data of a certain supply chain transaction, while financial institutions such as commercial banks and P2P platforms have their own advantages in the capital side.

Specifically, P2P lending platforms are far superior to commercial banks and other traditional areas in terms of information processing capabilities, as well as approval efficiency and speed of innovation, and P2P has a low financing threshold and diversified risk preferences for funding sources, which can satisfy the personalized needs of small and medium-sized enterprises in the industrial chain.

Supply chain finance is a new direction in the field of supply chain management and the development of the financial sector in recent years, and its emergence and development mainly provides financing channels for small and medium-sized enterprises (SMEs), and the main business forms are accounts receivable financing, inventory financing, prepayment financing and strategic relationship financing.

Overall, supply chain finance is still in its initial stage in China, but benefiting from the continuous development of accounts receivable, inventory volume and financial leasing market, supply chain finance is developing more rapidly in China.

The supply chain finance market is witnessing rapid development with the continuous broadening of funding sources and enhancement of risk control tools. According to market research data, from 2015 to 2018, the market size of supply chain finance is growing at about 14% per year, and the market size of China's supply chain finance market reaches 22 trillion yuan in 2019, an increase of 26% compared with 18 years.

The development trend: blockchain will help the industry upgrade

Supply chain finance centers around banks and core enterprises, manages the capital flow and logistics of small and medium-sized enterprises (SMEs) upstream and downstream of the supply chain, and changes the uncontrollable risk of a single enterprise into the controllable risk of the supply chain enterprises as a whole, which, compared with the traditional financing model, provides supply chain finance with unique Compared with the traditional financing mode, supply chain finance has unique advantages. However, although national ministries and commissions are encouraging the rapid and healthy development of the supply chain finance industry, there are still many problems and challenges in the process of traditional supply chain finance business.

In traditional supply chain finance, there are information islands in the supply chain, the core enterprise credit is not transferable, the lack of credible trade scenarios, the performance risk can not be effectively controlled, and financing is difficult and expensive.

However, the business pain points in the traditional scenarios of supply chain finance are exactly where emerging technologies such as blockchain can be utilized. Blockchain is a fusion of peer-to-peer communication, digital encryption, distributed ledger, multi-party collaborative *** knowledge algorithms and other areas of technology, with the characteristics of non-tampering, traceability of data on the chain, which is very suitable for multi-party participation in the supply chain finance business scenarios.

The important reason why traditional supply chain finance cannot meet the financing needs of small and medium-sized enterprises (SMEs) is because of information asymmetry. Blockchain, as the "wind mouth" of current information technology, is a credit machine that can eliminate those pain points in supply chain finance. Blockchain technology coupled with supply chain finance has become one of the important solutions to break through the bottleneck of SME financing under the existing supply chain finance. The solutions of blockchain technology for the pain points of supply chain finance are as follows:

Blockchain technology can release the credit of the core enterprise to the multi-level suppliers of the whole supply chain, improve the financing efficiency of the whole chain, and enhance the efficiency of the whole supply chain in terms of the flow of information, credit transfer, business scenarios, payment back control, and SME financing.

--For more data, please refer to China Supply Chain Management Services Industry Market Outlook and Business Model Analysis Report by Prospect Industry Research Institute.