Financing Problems for Small & Medium-sized Enterprises Discussed by China's Economy & Policy-Gateway International Group17 Jul 2012 • by Natalie Aster
The financing difficulties for small and medium-sized enterprises have received attention from both the public and the government, which has stressed that the problem should be a key concern for policy makers. In spite of this, these difficulties have not been solved; in fact, to some extent, they have intensified. The reasons for these problems are analyzed in this paper, and the thoughts on corresponding policy decisions are also offered, from the view of the government as well as from the banks.
According to the report “Financing Problems for China's Small and Medium-sized Enterprises” by China's Economy & Policy-Gateway International Group, there are Main Reasons for the Financing Difficulties among Small and Medium-sized Enterprises in China:
First, small and medium-sized enterprises have shortcomings. The primary funding for most of these enterprises is self-provided. When the enterprises develop to a certain size there is pressure to get investment funds for expanding production, purchasing fixed assets, and so on, and the lack of funding becomes the problem. Due to their small scale, non-standard management, unclear financial information, lack of independent innovation, diverse product line, and slight competitive edge, these enterprises cannot meet the requirements for getting normal bank loans under the current situation.
Second, there are not enough available financing methods and channels. China’s capital market has high requirements and the bond market favors large enterprises, so small and medium-sized enterprises seldom get financing in the capital markets. It is also difficult for these enterprises to make use of direct financing. Issuing corporate bonds is strictly controlled by the government, so small and medium-sized enterprises can hardly qualify for this option.
Financing Problems for China's Small and Medium-sized Enterprises
Published: May, 2012
Price: US$ 200,00
From a comprehensive view, financing difficulties for small and medium-sized enterprises are a global problem. Small and medium-sized enterprises are the main force for solving employment problems, so governments of several countries pay them close attention. The commercial banks pay attention to the innovations directed at these enterprises because high quality small and medium-sized customers promote the banks’ profitability during those times that competition for big customers is fierce.
More information can be found in the report “Financing Problems for China's Small and Medium-sized Enterprises” by China's Economy & Policy-Gateway International Group.
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