Why is Foreign Capital Fond of Guarantee Industry?

    The reason that foreign capital prefers to guarantee industry comes from the concept of quasi-finance. Loaded with financial capital, the foreign investment banks are quite familiar with the business opportunities and risks in the field of finance.

    Although China has entered into the WTO, the financial institution has not been fully opened. On the contrary, the guarantee industry is actually a quasi-financial business. Therefore, the foreign banks used the guarantee industry as a springboard to invest in Chinese market before they fully step into the investment market.

    Another reason is the lacking of credit management structure in Chinese society presently. Besides the barrier to Chinese market, there exist some credit worries to the foreign capital.

    Financial asset securitization is the third reason. In today’s America, more than 70% financial assets are securitized, however it is only a research topic in China nowadays. During the process of financial asset securitization, guarantee is one of the necessary tools.