The Analysis Of The Financing Dilemma Of SMEs And Countermeasures In China

With the deepening of economic globalization and the progress of science and technology, the small and medium-sized enterprises (Hereinafter referred to as SMEs) have become one of the most important strategic resources all over the world. SMEs have become a significant force in facilitating the stable and rapid development of economy, since their development is crucial to the improvement of people’s livelihood and expansion of domestic demand. Also, it helps to ease the employment pressure, promote the competitive system to function and speed up the process of industrialization and urbanization.On the whole, however, the domestic SMEs are faced with lots of difficulties, especially the serious financing bottleneck, for their development is restricted by policies, environment, management and perception, etc. Since the second half of2008, in particular, the international financial crisis results in a sharp deterioration of international economic situation and a slowdown of domestic economic growth, hence, more and more funds gets away from real economy. As a result, SMEs suffers so increasing cash problems that they fail to achieve the sustained and stable growth, which has become the main cause of many economic and social contradictions. During this special period of economic development, who and how to transfuse the SMEs has been a vital issue.This research analyses the current financial dilemma of domestic SMEs, namely the single financing mode and the overwhelming financing cost, in accordance with internal and external research and practice. Three main reasons account for such problems, including the credit crunch taken by all kinds of financial institutions for the sake of safety, the inherent problems of SMEs and the imperfection of correlative policies and systems. To solve these problems and to draw on the practice and experience of full-blown SMEs in the marketed countries, some countermeasures are put forward as follows. First of all, the government shall perfect correlative policies to give greater support to the financing of SMEs and perfect relevant legal systems to safeguard financing activities. Meanwhile, the government shall regulate and guide the non-government financing and develop local financial institutions. Secondly, financial institutions shall perfect their frameworks based on reality and establish a multi-layered capital market to encourage and guide SMEs to launch a direct financing. For the SMEs themselves, they shall standardize the management, improve their overall quality, perfect the credit rating system and improve their innovative abilities.