Core Viewpoint - Financing trade business is essentially a form of illegal lending disguised as trade activities, leading to significant operational risks for companies due to the creation of fictitious trades and large bad debts [1]. Group 1: Characteristics of Financing Trade - Financing trade typically involves signing false sales contracts where goods are never actually delivered, creating a fictitious trading background [3]. - There exists a specific interest relationship between upstream suppliers and downstream customers, often controlled by the same actual controller [4]. - False delivery documents are issued to obscure the true purpose of the transactions, confirming receipt of goods that were never delivered [4]. - Financing is provided in a disguised manner, either directly or through methods such as settlement notes, factoring, or credit enhancement [5]. Group 2: Case Study - A notable example is Dongfang Group, which inflated its revenue by 16.1 billion yuan through fictitious agricultural product trade chains, leading to penalties from the regulatory authority and forced delisting [6]. Group 3: Identifying Financing Trade in Credit Assessment - Discrepancies between logistics and cash flow are common, as financing trade lacks real logistics, only showing money flow [8]. - The presence of related enterprises in the supply chain may indicate that transactions are merely a means of providing financing without legitimate commercial reasons [9]. - Unusual payment terms between upstream and downstream entities can suggest financing activities, especially if prepayments and accounts receivable trends do not align with revenue changes [10]. - Contract prices that deviate significantly from market prices may indicate fictitious trading backgrounds [11]. - Timeliness of accounts receivable transfer notifications should be monitored to identify potential financing trade [12]. - Fixed relationships in trade enterprises, especially with large transaction amounts and low frequency, warrant scrutiny of transaction authenticity [13]. - Contracts signed with unreasonable timing, such as close dates for procurement and sales, may indicate financing trade [14]. - Abnormal gross profit margins, particularly if significantly lower than the typical range of 5%-10%, could suggest profits are primarily from interest rather than trade margins [15].