Development Of Venture Capital Market Of China And Construction Of Financing System Of SMEs

Since reform and opening up, china's SMEs have grown rapidly with increased quantity in number and enhanced vitality as well as improved quality, which have become the important component to flourish the economy, to increase employment opportunity and to activate local industry, furthermore china's SMEs are also the vital driving force of system reform, economic development, harmonious society and opening up to the outside world. Although the total of china's state-owned economy is enlarging continuously, SMEs are important force concerning with national overall situation not only in the number of enterprises, but also in the growth speed and potentiality, which are one of the most vigorous resources for china's sustainable growth and stable progress. According to statistics, the SMEs accounted for over 99% of the total number of enterprises have created the ultimate product and service value of 66.7% in GDP, and paid taxes 50% of total state's tax revenue, the value of import and export volume has accounted for 60% of the total, furthermore the SMEs provided 75% employment opportunity in county and town. The average annual growth rate was at 9.85% from 2000 to 2007, but that of SMEs was 28%, and the rate has increased more than 3 times and tax beyond 4 times in five years. China's national economy has maintained sustained high growth nearly 30 years, and the SMEs have played a big role for the progress. Therefore it is of great strategic significance for setting up moderately prosperous society to promote the development and growth of SMEs.For the SMEs, difficult financing is the most prime problem except facing competition and challenges on account of their characteristic themselves. The development is inseparable from the financing although the capital of SMEs' is from self-accumulation self-financing, in fact more than half of the SMEs have to fall back on loan from financial institutions, especially the requirement are more and more intense in time of operation and enlarging investment. The experiences from all over the world show that financing is the common and key problem for SMEs. It will affect the living quality and developing speed of SMEs whether providing a good financing surrounding or not, further affecting national economic development and competitiveness. Venture investment combines the SMEs with capital market, which not only solves the problem of shortage of funds but also enhances the capability of innovation and improves management, then promote the development of SMEs. China's venture capital is just in the beginning and groping periods, and some corresponding measures must be taken to stimulate its development and solve the existing problems.The thesis analyzes the situation and cause of the financing problem for SMEs in-depth with regard to the existing venture capital market situation and financing problem, then put forward general countermeasure to solve the problem. The paper brings forward the concept to promote the development of SMEs well and fast from the aspects of venture investment and financing, financial leasing, corporate guarantees, private capital and other financing as well as support from society.