Sme Sustainable Financing Guarantees

Of the country's total registered enterprises, 99 per cent, or more than 8 million, are small and medium sized firms (SMEs), which contribute 60 per cent of China's total industrial output, 40 per cent of its tax revenue, 60 per cent of its annual export and create more than 75 per cent of jobs in urban areas. The SMEs has been an indispensable force in driving China's national economy. With the emerging of "buyer's market", globlization and China's entering WTO , however, development prospects of SMEs have been challenged.To help smaller competitors survive, the central government has announced a series of polices in support of the SMEs. The credit guarantee system is an important component of that. Because the credit guarantee system is a newly emerging thing, its mechanism and strategy need to be researched and developed. In this paper we deeply analyze the characteristics of our country's SMEs , compare the characteristics of credit guarantee systems with other countries, and present the suggestion about establishing a sustainable credit guarantee system for SMEs in China.This paper has five parts:Part one is the introduction that includes the reason to select this topic to research, a review of related researches, methodology, date resource of the research etc.Part two is a deeply analyze of the characteristics of SMEs and its regular pattern of fund raising, deduce the thesis that SMEs need credit guarantee.Part three is the theoretical framework of credit guarantee system in our country.Part four giving the multi-perspective analyses of the problems which challenged the sustainability of the credit guarantee system in our country, after investigation on the practices of the system in Zhejiang province of China.Finaly, in order to construct a sustainable credit guarantee system for SMEs in our country, this paper presents four countermeasures: First, it is important to make a law for the system, and take it seriously. Second and third, this paper suggests establishing the mechanism about risk share and management in the system. At last, this paper tries to give a mathematics model for the price determination of guarantee service.