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Funds a problem for small businesses

Updated: 2012-03-02 08:05

By Xu Junqian (China Daily)

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Funds a problem for small businesses
Reporters line up and wait to receive their press cards for the upcoming two sessions at the hall of the Chinese People's Political Consultative Conference in Beijing on Thursday. [Photo / China Daily]

SHANGHAI - Small and micro enterprises, a key engine driving the growth of the Chinese economy, may receive more financial support as the central government takes measures to solve their capital shortage.

On Monday, Guo Shuqing, chairman of China Securities Regulatory Commission, said in an interview with the People's Daily that the commission is working to make it easier for small- and medium-sized enterprises (SMEs) to offer debt.

Guo added that the government will keep building a "multi-level capital market", offering different financing channels for different enterprises.

Guo's comments send a positive signal to millions of private businesses in China where many SMEs cannot stay afloat because of capital shortage amid tightening policies last year, experts say.

"It is just a matter of time with regard to the legalization of private lending, and that should just be one of the multiple choices for entrepreneurs around the country to sustain their businesses," said Zhou Dewen, chairman of Wenzhou SME Development Association.

Zhou said he hoped his proposal that private lending should be legalized would be taken into consideration during the forthcoming annual session of the National People's Congress, China's top legislature.

According to a report about micro enterprises, which are defined as enterprises each with an annual turnover of less than 30 million yuan ($4.8 million), 43 percent of the interviewed enterprises in Central China said they were "nagged" by a capital shortage.

More than half of the businesspeople in the Pearl River Delta have never been on loan. While in the Yangtze River Delta, where private lending is popular, borrowing money from acquaintances and friends still ranked first as the most sought-after channel for small businesses to get funds.

"They may look like trivial issues at first glance," said Wang Tong, marketing director of Alibaba Finance, which compiled the report with Peking University.

"But after deep research, or perhaps just a second look, you will find that micro enterprises create most of the country's jobs."

Since 2011, Alibaba has helped fund 76.3 million small and micro enterprises registered on Alibaba, the country's largest e-commerce site. The loans require no mortgage and the lending rate is "low". By the end of 2011, nearly 100,000 enterprises had received loans totaling 15.4 billion yuan through Alibaba.

A number of policies have been introduced by central and local governments to help as well.

Qingdao, Shandong province, for example, issued an order on Wednesday banning local commercial banks from charging administrative fees and encouraging college graduates to work for micro enterprises.

In Shanghai, similarly, the city's industry and commerce administration canceled the annual administrative fee levied on micro enterprises this year.

 

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