Financing Of SMEs, Causes And Countermeasures

With the executing of reforming and opening up policy, China has witnessed a fascinating economic growth and given birth to a great number of energetic SMEs. The development of SMEs has played a vital role in China's booming economy by promoting technological innovation, enhancing employment rate, stabilizing the balance of international payments. And it has created mass opportunities for the spread of entrepreneurship. In China, 42 million SMEs take 99.9% of the whole companies, making a contribution of 58% of GDP, 59% of the production and 50.2% of the total tax revenue. Furthermore, SMEs absorbed most labor force with better outcome of alleviating serious problems daunting labor relations. As the major part of the export economy of China, SMEs has become the most important and vigorous entity in general. On the other hand, the further development of market economy in China also placed higher requirements to SMEs in the first decade of this information blowout century. Consequently, having a better understand of the problems that SEMs are currently facing is practically significant and can be critical to achieve sustainable economic growth.First of all, this thesis holds the opinion that financing problem is currently among the most important ones concerning the developments of SMEs. On the one hand, investments, research and daily operations of SMEs are directly influenced by the outcomes that whether the SMEs could get enough capital they need. On the other hand, having difficulty getting enough capital for SMEs is a worldwide headache, which is even more severe in China. Therefore, how to narrow the gap and meet the needs of capital demand is fundamental and essential for the development of the SMEs in China.Secondly, the thesis considers that the financing difficulty of SMEs has various causes which are restricted by the stakeholders in financing market. Theoretically, the difficulty can be explained by the theory of information asymmetry and"double finance gaps". In practice, it can be explored through the activities of SMEs themselves, big or small banks, venture capital organizations, private equity funds and government services. On the bases of theoretical and practical researches, the thesis tries to discuss the responsibilities and conflicts of the stakeholders mentioned above and probe the reasons of financing difficulty from several aspects, such as structural reformation, market orientation, function conversion and management operation with the principles of business administration and economic analysis.Finally, the thesis puts forward corresponding approaches to solve the financing problems and insists on the construction of an all-side SME financial system which includes the improvement of debt and equity financing market, the self improvement of SMEs and the enhancement of government financing services.