China to gives support to small & medium enterprises

Financing has long been a problem for China's small and medium sized companies. Amid the current financial climate, these companies are encountering more difficulties. Banks and related authorities are trying more measures to help these firms.

Many small and medium sized companies in east China have seen a decline in the number of orders and shrinking margins. Many are short of capital, with almost 40 percent of these firms suffering a shortage of more than 10 billion yuan. It is not easy for them to borrow money from the banks, because they have few assets to be mortgaged and a lack of complete fiscal information required by lenders.

Wang Yuejun, General manager of Zhejiang Fusheng Furniture Industrial Co., said, "We're not as normative as large companies in financial works, and our sales are not stable."

Data shows China has around 42 million small and medium sized companies which created 60 percent of the country's GDP and 75 percent of jobs. But only 15 to 20 percent of them could get loans from banks. Most banks were cautions when lending money to these firms, given their low capability to resist risks. The banks are more likely to lend money to big enterprises.

Zhao Xijun, Deputy director of Financial Securities Inst., Renmin University of China, said, "Competition will be fiercer if all the banks provide financial services only to big companies, then the returns will lower because big firms have more opportunities to raise their requirements.

Industry insiders suggested that banks should dispatch expertise to small and medium companies to provide financial consultation.

Shao Bin, Vice president of Jiangsu branch of China Construction Bank, said, "We banks should be more innovative with credit products, and provide diversified financial services."

There are also suggestions that a credit guarantee system be set up as soon as possible.

Zhao also said, "Neither the banks nor the firms can guarantee, then we need a reliable institute to take this responsibility. Currently, the role should be played by government bodies."

China's central bank has said it will continue the moderately easy monetary policy and boost lending to small and medium sized companies. The country's banking regulator has also urged lenders to support the development of small and medium sized firms. QTX CCTV