Research Of Diversified Financing Method Of SME In China

China has come out of the international financial crisis, the economy has bottomed out and there is no doubt a strong rebound. However, the international environment China is facing is still not optimistic. Continued economic stimulus package which the United States has adopted and the spread of European sovereign debt crisis remain a serious threat to China's sustained economic development. Therefore, finding the breakthrough from the "domestic demand" is our way to go. Meanwhile, changing from "made in China" to "created in China", and finding our advantages, is to find a new economic growth point.SMEs in China is undoubtedly the great advantage of China, China's SMEs have become an important force for innovation.66% of the patented invention, 82% of new product development, from small and medium enterprises, SMEs had already become a thriving economy, expanding employment and an important force in the formation of new industries. China's SMEs to make better development, we still need to address the difficult problems of SME financing. SMEs are small in size and weak in strength. The credibility is still low. Commercial banks usually settle more stringent loan conditions for SMEs. The credit guarantee mechanism and systems SME are not sound. Personal credit system construction is still in its infancy. These are realities that SMEs of China need to face.This paper mainly uses specification and empirical analysis. Model analysis and comparative analysis are supporting methods. Solving problems by combining the theoretical application and practical operation is the main research methods.In this paper, the stages of the enterprise are divided through the Financial Growth Cycle Theory. Meanwhile, taking the criteria for the classification of SMEs into account, the medium, small and micro enterprises can be divided preliminary. And then, according to the criteria for the stage classification of SMEs, the innovated financing methods will be separated. It allows the enterprises to choose the different financing mode according their situations.At different stages of the life cycle of SMEs, their needs for capital and risk profile of their own differ a lot. I believe the stages of the enterprises which have different characteristics can be categorized. Settling different modes of financial needs structure and applying different investment modes and policy supports is the main research content of the paper.In this paper, the stages of the enterprise are divided as initial stage, growing stage, matured stage and declined stage, according to the Financial Growth Cycle Theory. Meanwhile, taking the criteria for the classification of SMEs into account, the medium, small and micro enterprises can be divided preliminary. I argue that the criteria for the stage classification of SMEs cannot meet the need of the development in China. I offer a list of financing methods for referring. It allows the enterprises to choose the different financing mode according their situations.I have analyzed the current financing situation of SMEs and the situation that most of SMEs of initial stage and matured stage in China lean to use own fund and non-governmental financing way rather than other ways. The paper will introduce some available financing ways to SMEs of initial stage. Meanwhile, I focus on the growing stage considering most SMEs in China are growing type. I separated growing SMEs into two types, the SMEs in Eastern China and the ones in Middle and Western China. Both of the two types have their advantages and disadvantages. Offering them different various financing methods will more suitable. Those are on the contents of the paper.Making the division of SMEs in China clear is the premise of the research on SMEs'finance. First of all, I define that what kinds of enterprises are SMEs and offer a classification standard of SMEs. I expose the defects of the standard of SME classification through analyzing the standards of developed countries. The current dividing standards are not available to SMEs of tertiary-industry. It cannot meet the need of development of China. I support that China should detail the definition, adding micro enterprise type. That will fit for the current development. We should also highlight the combination of the Financial Growth Cycle Theory and the selection of financing for SMEs. Enterprises have to take the size and the stage of the business while they select the financing mode. The flaw of the paper is that there is no statics to demonstrate that the financing mode of categorizing the stages of SMEs is the most suitable financing mode for SMEs'development, as it is the division of the general theory.