The Difficulties In Financing Of China's SME And Its Countermeasures

The world economic development in the recent several decades indicated that the small and medium-sized enterprises (SMEs) have played a very important role in providing employment opportunities, promoting technical progress, developing international trade, and maintaining the stability of economic development, etc. But SMEs face a big problem in their development, that is financing. Owing to lack of the credit mechanism and the limitation of administration, SMEs' financing has becoming a difficulty that perplexes our country and even the world. The present article analyzes the difficulties in SMEs' financing. By investigating the methods used in the solution of SMEs' financing problems in developed countries, the article discusses the policies to alleviate the difficulties of SMEs' financing in our country, especially the function of financial reformation and institutional innovation. The first chapter discusses the development and role of SMEs. By reviewing the standards for domestic and international demarcation of SMEs, it gives definition to the connotation of SMEs. It also analyzes the cognition process to the SMEs' importance in the theory field and expounded the vital role SMEs played on the development of economic society from four aspects. The second chapter focuses on the analysis of SMEs' financing mode. It investigates the financing with inside and outside sources, and expatiates on five ways used in SMEs' financing at present: loan from the bank, venture investment, capital market, financing tenancy, and hock. The third chapter analyzes the profound reasons for SMEs' difficulty in financing from two aspects—economics and system. It suggestes that SMEs' difficulty in financing will exist for long if information dissymmetry, limitation in the bank and loan, and the distemperedness in SMEs' administration existed. The fourth chapter investigates the methods used in the solution of SMEs' financing problems in foreign countries, which put emphasis on the analysis of methods and measures used in America, Japan, European allies, and Taiwan. The fifth chapter puts forward to the countermeasure for alleviating the difficulties in SMEs' financing. First, three principles should be guaranteed, which were market orienting, equal attention to direct financing and indirect financing, and finance innovation. Second, the government should exert its function fully to establish as many channels as possible for financing, which included encouraging SMEs to rebuild themselves into stock companies and complete their administration, developing risk investment and perfecting "carving out" market, cultivating small and medium-sized commercial banks and developing nongovernmental financing, releasing finance control and accelerating the innovation of finance measures, and so on.