Research On The Methods Of SMEs' Trade Finance

SMEs in China are very important in the economy. They are the engine of economic growth, the main force of technological innovation and a vital new force of the expansion of import and export trade, but most SMEs face the difficulties of trade financing in their development. Though the SMEs could use trade financing to alleviate the shortage of funds, they still have many problems in the trade financing market.This paper do research on the common trade financing methods and the trade finance system of China, US and Japan, and find: first, the relationship between SMEs and financial institutions is not clear. Commercial banks always suspect whether the SMEs could repay the loan on time, so they keep cautious before loan, the same is true even in trade financing. And at the mean while, competition exists among banks. The unclear market position of the Import and Export Bank of China cause the competition between commercial banks and itself. All of them chase large and quality enterprises, this lead the funds leave the SMEs and aggravate the difficulty of SMEs'trade financing. Then the market environment is confusion. Because of China's market economics is not mature, the relationship among market players and their activities are lacking legally definition. These cause the lacking of clear rules about risk and debt transfer between the SMEs and commercial banks in the trade financing market. Co action by these factors, negotiation that has credit security becomes the dominant trade financing product in the market. Other financing products are less used either for risk transfer is not fire, or the cost of financing is high.With further research, this paper finds because of China's industry policy has little change since reforming and opening, the support from the government is still focus on very few kinds of goods, while others could attain little. The result is China export and Credit Insurance Corporation has little help on most SMEs; so, most SMEs'have little improvement on attaining trade finance after the establishment of China export and Credit Insurance Corporation. At the last part of this paper, it tries to propose some suggestions about how to solute the problem of SMEs'difficulty in trade financing.