Research On The Financing Problem Of Small And Medium - Sized Enterprises In China

Since the reform and opening-up in the1980s, market-oriented economy system has been carried out in China. As the most dynamic economic cells and a useful supplement to the market economy, SMEs have obtained rapid development and been playing a more and more important role.SMEs have made outstanding contribution to real economy. By the year of2012, the output value made by SMEs has accounted for over60percent of the annual GDP. The number of registered SMEs nationwide has reached10.857million, which is99%of the total enterprises in China, and the total registered capital has reached31trillion. The non-public ownership industrial enterprises alone have realized a revenue of64trillion, creating a total profit of4trillion.SMEs have become a main stream to solve employment problem. SMEs have provided posts for over82%urban population, absorbing a majority of surplus rural labor, relieving the pressure of employment of college graduates. In all, SMEs have been playing an irreplaceable part in solving the problem of employment.SMEs have been transforming into a significant field for technology innovation. According to incomplete statistics, among all the domestic tech-innovation projects, about70%of tech-innovation,65%of patent for invention and R&D for new products are made up of SMEs.Moreover, the development of SMEs has also contributed a lot to the boost of real economy, adjusting national economy and industrial structure, expanding foreign trade and so on. To sum up, SMEs of private economy in China have turned into the main body of national economy from tutoring economies in the initial stage of reform.At the same time, however, due to the imperfection of the current economic system in China, the development of SMEs has also been affected. Problems like shortage of funds, have severely limited the development of SMEs. Capital raising, in particular, has become the cardinal question for many SMEs, apart from daily operation. Short in equity funds, and blocked in external financing, many SMEs couldn’t complete the expansion of reproduction timely, facing good market opportunities. The development is slow and they miss the favorable opportunities. With the deepening of reform of economic system in China, it has become a common problem which the government and enterprises have to be faced with that how to help SMEs to solve the financing problem, which is desiderating for solution.To solve the problem of financing of SMEs, financing channels alone is far from satisfactory. An overall analysis is required. From macro to micro economy, from policies to measures, from international to domestic ways, we have to make a research in different aspects. Solutions consist of drawing more attention from different sector of the society, using the reference of successful experience of developed countries with advanced finance industry, like USA and Japan, and analyzing from the big flaws of like management in SMEs themselves. Also, expanding the financing channels and lowering financing threshold and financing costs would be efficient.As a research topic, the main focus of this article when elaborating the financing problems of SMEs in China lies in the difficulty of financing of SMEs and the solutions to this problem.The reason of the difficulty of financing of SMEs. It is related to internal element of enterprise:value business and devalue management cause sub-standard in internal management; financial chaos, informatization level is not high; Low enterprise credibility, do not pay attention to corporate reputation maintenance; private mortgage assets insufficiency and so on, these will bring serious obstacles to enterprise financing. The financing channel ofSMEs is narrow,mainly rely on bank credit to complete; the cost of financing compared to large enterprises is too high,On the basis of the benchmark lending rate on the interest rate have different degrees of float; policy tilt of the government to the SMEs is not enough,socan’t play a significant supporting role.Measures to solve the problem of financing of SMEs. Raise concern and attention forSMEs; macro expand the financing channel, Increase the proportion of state-owned commercial bank financing for SMEs, reduce the cost of SMEs; improve the financial environment, perfecting the credit guarantee system; micro carried out policy subsidy policies, such as the generating process of the financing of SMEs bad debts in the government subsidies (allowance subsidies); the establishment of policy Guarantee Corporation, guarantee for high-quality of SMEs and so on. These measures will contribute to promoting the healthy development of SMEs in China’s positive role.