In the current financial crisis situation, the financing of Chinese small and medium enterprises, has become a major bottleneck restricting the survival and development of SMEs. First set out the impact of financial crisis on China, on the basis of discussion on the financing difficulties of SMEs mainly, analyzed the causes of, and finally presented to innovative financing methods, building effective, multi-level financing system.
SME occupies a very important position in the national economy. With the rapid development of China’s socialist market economy, in ensuring sustained and healthy development of SMEs, promotion of technological innovation, increasing job opportunities and maintaining social stability and other aspects play an increasingly important role. According to statistics, creating final products and services for SMEs per cent of the gross domestic product of the value of 85%, paid taxes accounted for about 75%, 75% per cent of merchandise exports in the total exports of goods to absorb employment estimated the number of jobs in urban 80%. However, in the current financial crisis situation, the financing of Chinese small and medium enterprises, has become a major bottleneck restricting the survival and development of SMEs.
First, the impact of financial crisis on the financing of small and medium enterprises in China
In March 2008, the United States fifth largest investment bank Bear Stearns came tumbling down because of subprime mortgages could not support the bond, which opened the prelude to the regional financial turmoil. In September, the United States announced that the Government took over Freddie Mac and Fannie Mae, triggered by the subprime mortgage crisis-financial turmoil escalated as the financial tsunami, then this financial tsunami to Cyclone-like rapid roll and United States fourth largest investment bank Lehman Brothers. Just one week, announced the filing of Lehman Brothers, Merrill Lynch was United States Bank, and United States International Group (AIG) was United States Government took over. With the collapse of three major investment banks, the financial turmoil has turned to the financial turmoil, the entire United States Wall Street was in sad hung over. The end of September, Goldman Sachs and Morgan Stanley were forced to transition to bank holding companies. Financial sector of the most famous of all five major investment banks on Wall Street fall of this once in a blue moon in turn have global financial turmoil and launched to the dollar crisis and the global financial crisis hit. Since the financial turmoil in the subprime mortgage crisis, financial crisis has had a significant impact in the global economy, slowing economic growth in the world. On China’s economy, as a “troika” exports, one of the first shock, directly affect China’s export-oriented enterprises, export growth fell, the trade surplus declined, resulting in obvious slowdown in economic growth in China, in 2008 China’s GDP growth had dropped to 9%. Sustainable development needs of a large number of SMEs in order to survive and, eager to dredge the channel of financing, resolve the dilemma. How to do the financing decision, financing methods of selection, become a priority for SMEs.
Second, the main performance of the financing difficulty of small and medium enterprises
Currently, the financing difficulty of small and medium enterprises in China is mainly reflected in the following areas: first, the comparison between financing a single, the lack of direct financing channels, according to statistics, and currently small and medium enterprises have 85% there is a shortage of, and need to refinance. From a financing point of view, enterprises with 70% money from banks, 20% obtained through private capital raised by themselves, such as forms, 7% by endogenous financing, only 3% of enterprises through direct financing. View the total amount of Bank lending, banks for SMEs invest less amount of 10%. Strong demand and limited funds for SMEs contradiction between the supply of funds is very prominent.
Second, the maturity and the manner, quantity limitations. Current loans one outstanding problem is the maturity structure of bank loans cannot meet the needs of SMEs to funding. Existing bank credit authorization under the credit system, authorized by municipal and County Bank at the basic level organs very small, most have no fixed asset lending right, and only small working capital loans permission. Normally, bank number short maturity and generally not more than, mostly for solving temporary liquidity, and fixed asset loans very strict control, it is difficult to project development and reproduction. On the loans, mainly dominated by mortgage and guarantee, there are very few enterprises enjoy credit loans.
Third, the concept of society as a whole includes a number of commercial bank credit now or keep pace with the present situation of development, for SMEs lack the necessary understanding and sufficient attention, funds investing in SMEs generally considered high risk, high cost, effort and little effective.
Third, the problem of financing under the financial crisis: causes analysis
A long time, the financing of Chinese small and medium enterprises has been highly dependent on their own money or endogenous financing. According to the information under the authority of financial institutions, in China and in SME financing structure, its own capital total 60%, while the United States only by 30%; Chinese Bank loans account for more than just 20%, while the United States is 42%. In recent years, the rapid development of China small and medium enterprises, the substantial increase in the proportion of GDP, while SME credit ratio was maintained at around 5%, has not changed significantly. Compared with large enterprises, SME Bank line of credit is very low. Reality has shown that the current financing, domestic banking financial services can’t be solved during the expansion of SMEs funding demand cannot implement relief in times of crisis to help them get out of financial trouble.
Analysis of financing difficulty of SMEs or inadequate financial services, mainly because: first, because of the domestic financial sector, relative to traditional financial services for large enterprises and domestic unified market and policy than in SME-oriented financial services and policy aspects of domestic and regional markets, there is a deadly “short-Board effect”. In times of economic prosperity in the past, some issues due to the large financial waves under the cover of no in evidence.
However, in the current economic and financial environment, the short plate and its economic interests have been exceptionally clear second chain of current financing services in China is not perfect, financing system is not sound. In the current financial services institutions, dominate large or national commercial bank, the development and implementation of financial services standards are uniform throughout the country. In such hard scales of the body, and personalize the strong demand for medium and small enterprises in the financial services usually exist in a number of subject, in which screening is also very costly, resulting in a lack of economic incentives or financial services for SMEs. Three is the SMEs themselves also has many deficiencies and congenital defects, because most of them small and medium enterprises in the start-up stage, its weaker, smaller features are difficult to meet the financing requirements, such as nonstandard and its management.
Meanwhile, the Bank under the macroeconomic risks exacerbating the situation is more “sparing loan”. Currently, Bank lending remained the main channel of SME financing. According to a survey of people’s Bank of China, China SMEs financing from bank loans. But because of the financial crisis caused significant changes in the macroeconomic environment as a whole, the adverse effects of SMEs in addition to falling demand both inside and outside, eventually mainly on supply levels increase in the cost of capital and production costs, and reduce loanable funds, coupled with the Central Bank’s credit control, financing channels for SMEs has been substantially narrowed. As SMEs operating risks and substantial increase in the level of credit risk, credit rationing is more serious, loanable funds of absolute reductions may occur.
Four, to innovative financing methods, build a valid, current levels of financing system, Central Committee “set up multi-level capital market system, the perfection of capital market structure, rich capital market product” claims, which is to promote the stable development of the reform and opening up China’s capital market and a drastic step. Established more levels capital markets can effective, and more large degree to meet diversified market main especially General SMEs on capital of demand, conducive to promote various capital flow and recombinant, for established belonging clear, and responsibilities clear, and protection strictly, and circulation smooth of modern property system created conditions; conducive to through diversified of channels promote savings and to investment transformation, reduce financial system sexual risk, reduce because investment thrown of macroeconomic fluctuations. Financing problem of SMEs mainly in the narrow financing channels, so the time to solve the financing difficulty in small and medium enterprises, to focus on the entire capital market, financing system of the efforts to build effective, multi-level, efforts to improve the financing environment for SMEs, through the financial system innovation and the innovation of financial instruments, develop financing channels for SMEs, to raise more funds to promote SME better development.
(A) we should vigorously strengthen and improve indirect financing channels, innovative financing methods, rich financing way
Indirect financing mainly refers to debt financing, which is the full enterprise after a certain period must repay the principal and interest payments of funds. Mortgage loan for SMEs in the use of traditional, to strengthen and improve the financing of the following ways:
1. Comprehensive credit. Annual inspection qualified Bank for industrial and commercial registration, through good management, reputation, reliable, longer term cooperation relationship between Bank and Enterprise businesses, can be granted a period within a certain amount of credit lines, enterprises within the scope of validity and the amount can be recycled, depending on your operating conditions staging, with borrowing, borrowing is not only convenient but also saves the cost of financing.
2. Credit secured loan. Currently many SME credit guarantee institutions have been established. Membership management about most of these agencies form, belong to the public service, industry self-regulatory, its own non-profit organization. SME guarantee institutions guarantee allows member companies to borrow from the Bank. In addition, SMEs can also seek guarantees from the security company dedicated to intermediary services service.
3. Intangible asset-backed loan. Pursuant to the People’s Republic of China guarantees relevant provisions of the Act, according to the trademark rights, patent rights and copyrights of the transfer of intangible assets such as property rights, as loan collateral.
4. Discount financing. Commercial paper mainly refers to the commercial acceptance Bill and banker. Discount for businesses, this is “the money with the money the day after tomorrow”, this financing method is widespread, active use of SMEs.
5. BOT project financing. BOT (BUILD-OPERATE-TRANSFER) or build-operate-transfer. Enterprise’s investment in public works, when enterprise projects licence given by the Government, usually in this manner. Easier to adopt BOT method supported by the Consortium, which at the time of financing is mainly mortgaged to a project consortium or financial institutions, and building, building operating profit after loan repayment, or sell a business to financial institutions or the Consortium. Investment in this way is more suitable for large public works, such as roads, bridges, large power plants, can be absorbed in the form of joint-stock Consortium as a shareholder of the company, then this company is a construction contractor the principal, and signed an agreement with the local government. Government through the Bank to give financial support, and companies must operate on the operating period, term full, the entire project became the Government.
6. Finance lease. Finance Leasing is a device made to the leasing company buy enterprise applications for financing, financing by a leasing company, to supply firms to buy the device and then leased to enterprises using the device, thereby to “thaw” instead of “financing”, the lessee arranging to pay the rent, the whole rental period, tenants have security of tenure, as well as repair and maintenance obligations. Finance Leasing is a way of financing for the direct purpose of credit, it appears to be borrowed, and essentially borrowed capital and financing in conjunction with the extension of the two. It provided for technical innovation of China small and medium enterprise device updates and a whole new way, you can ease the pressure brought cash flow due to equipment modification, avoid paying cash rent payment of assessed contributions paid in stages in the life of the equipment rather than a one-time reimbursement, making will not produce cash flow difficulties, can also be avoided due to price fluctuations and inflation increases the cost of capital.
7. Mortgage financing. Mortgage financing is as collateral in kind, in kind, transfers of ownership made a temporary loan financing. Compared with bank loans, high cost of pawn loans, small loans.
8. Buyer loan. If the market for enterprise products are reliable, but their lack of capital, poor financial management Foundation, may seek third party provide collateral or guarantee under difficult circumstances, banks can, in accordance with the contract of sale, loan support to purchasers of its products. Can charge a certain percentage of the advance payment to the buyer by the seller to resolve the financial difficulties in the production process. Or by the buyer’s issuing bank acceptance bills, Bill holder by the seller to the banks to the discount.
9. Government funds. The SME for initial, both from a financial situation of the enterprise structure, size, and other aspects still fall far short of the Bank financing or the requirements of the securities market, but these often very urgent financing requirements of the enterprise, its financing, however, not many. To this end, in support of SME development had established a number of funds, such as SME development, venture capital, science and technology development fund, supporting the International Fund For Agricultural Development, technological transformation Fund. These funds are characterized by low interest or interest-free repayments of long term, don’t even have to repay. Tech SME technology innovation fund is a policy of risk funds, it does not in itself for the purpose of profit, it is in the process of financing for development and mainly play a guiding role.
10. Private capital. At present, China’s total amount of private capital is very large, only private capital has reached 600 billion yuan in Zhejiang Province. Private capital investment in financial markets enriched the financing channels for SMEs on the one hand, easy and fast with financing, funds mobilization, low threshold advantage but on the other hand because of the various systems and related legal regulations at the present stage is not perfect, is also growing private financing behavior of financial risks and the possibility of financial fraud. To this end, the Government should take appropriate measures to encourage and protect private capital investment in financial markets. To avoid financial risks, management, operation specifications, should guide the establishment of a strong, professional investment fund, private capital of a unified management is decentralized, as an effective complement government investment, the Government should also be introduced as soon as possible the laws and regulations, intensify the supervision of private capital to effectively prevent financial fraud, reduce financial risk.
(B) to develop a direct financing channels
Direct financing of major equity direct financing, investment to the capital of the company is the company’s shareholders.
Equity on the property of different organizational forms is reflected in different ways, with capital and thawing set speed, characteristics of liquid, is a good choice for SMEs. Due to the constant Division of shares is based on all capital AG, it is the physical manifestation of the stock, as the constant and the amount of each share is very small, smaller investors can also invest, to that end, can accelerate the concentration of capital. Meanwhile, the circulation of stocks can be listed after approval, mobility, makes stocks a financing tool, issuing shares to raise without taking repayment risk financing. To this end, in addition to expanding traditional sources of indirect financing, to give full attention to the expansion of direct financing channels.
To take advantage of domestic small and medium enterprises financing channels such as plates and gem. SMEs ‘ domestic listing is basically focused on the Shenzhen second Board, since June 2004, to four years in 2008, Trojan has more than more than 270 listed companies. In the case of SMEs, public offering listing, is the main way of rapid development and growth. Public offering listing for SMEs, to increase the proportion of equity capital for enterprises, improving the capital structure of enterprises, enhance enterprises ‘ own risk-resistant ability, enhance the development potential of the Enterprise; Enterprise capital operations such as merger and reorganization of assets; conducive to overall market value of the added value of ownership and enterprise promotion. According to the People’s Republic of China of the Securities Act provides that public offering of new shares of the company, shall meet the following requirements: have a robust and well functioning organization; sustainable profitability and good financial standing; financial accounting documents without false record the last three years, no other significant violations. Apart from meet above conditions outside, also required meet China SFC provisions of hop Board sexual requirements, as recently three a fiscal year net profit are for positive and Trojan over RMB 30 million Yuan; recently three a fiscal year operating activities produced of cash flow net amount Trojan over RMB 50 million Yuan, or recently three a fiscal year business income Trojan over RMB 300 million Yuan; issued Qian equity total many Yu RMB 30 million Yuan; recently a final intangible assets (deduction land right, and surface culture right and mining right, Hou) accounted for net assets of proportion not than 20%; recently a final not exists late cover losses. For hi-tech field in the operation good, and development prospects broad, and growth sexual strong of emerging small and medium company, this year domestic and launched has venture plate market, listed conditions compared SMEs plate has reduce, requirements recently two years continuous profit, recently two years net profit Trojan not less than 10 million Yuan, and continued growth; or recently a years profit, and net profit not less than 5 million Yuan, recently a years business income not less than 50 million Yuan, recently two years business income growth are not below 30%, issued Qian net assets many Yu 20 million Yuan. For enterprises that meet these criteria, should seize the opportunity, hired sponsored bodies, accounting firms and law firms listed intermediary institutions, such as, counselling, listed materials declaration after reorganization, the China Securities Regulatory Commission audit, Roadshow enquiry pricing, issuing and listing procedures, raised funds to open market development dynamics.
To actively develop international capital markets. International capital markets for SMEs mainly in Hong Kong gem, United States of NASDAQ and the United Kingdom’s AIM, and Singapore and Japan, such as Exchange. Hong Kong venture plate market established Yu 1999, ended 2008 lasted nine years, listed company near 300 home; established Yu 1971 of United States NASDAQ listed of company has more than 5,000 over, about has near 2000 home hi-tech company; United Kingdom AIM market since 1999 development entered on track yilai, has has listed company 1000 home above, in recent years annual listed 200 home above; Singapore SESDAQ market is 170 home around; Japan emerging enterprise market established Yu 1999, so far listed company 130 home around. Because of these more mature international capital market development, market liquidity, listing process is relatively simple, short, easy, so some domestic enterprises have selected foreign markets in recent years, and by listing its rapid development. For rapid domestic growth and strong profitability of enterprises, especially enterprises with international business, overseas is also a good choice.
(C) to continue to improve the financing system
According to the characteristics of SMEs, to the establishment of specialized financial institutions or financial institutions in the creation of specialized financial services, is commonly used by many market economies in the world of financial means of support. Small financial institutions is the main channel of financing for SMEs, speeding up the development of suitable for small and medium enterprise financial and non-public financial institutions, can undermine the monopoly of State-owned commercial banks, conducive to fair competition among banks, enabling it to provide financial services for SME development. While allowing enterprises to enter the financial sector, creating private banks. These specialized banks to service SMEs can develop close long-term contacts with SMEs and trust, not including loans, they are also available in market information, business management, and many other services for SMEs, close to the banks and SMEs, establish a trust relationship, the loan is easy. Second, we must speed up the establishment of credit guarantee systems for SMEs. Credit guarantee effective way is to solve the difficulty of financial guarantee mortgage, in many countries, the funds have been established, usually by the Government to give financial support to compensate for the loss of borrower default; the other is mutual guarantee systems, from small and medium enterprises combined to common guarantees for its members. Three reasonably adjust the structure of Bank lending rates, lower financing costs.
Establish a system of direct financing for SMEs. First, to establish a venture capital fund for SMEs. Development of hi-tech SMEs rely primarily on venture capital in foreign countries. Venture investment in so-called refers mainly to equity capital (or special claims) form of venture capital with potential for development and entrepreneurship projects, with a view to quit with the relatively mature enterprise growth, achieved a form of capital operation for high returns on capital. Function is social idleness of venture capital funds gathered a certain scale of venture capital. Establish a venture capital fund, helps to accelerate the industrialization of high technology. Second, to encourage mutual assistance in carrying out financial cooperation among SMEs. Many of the functions of the Organization of the National Association of Government through the provision to encourage SMEs to help themselves and discipline activities. The normative functions of the Association of small and medium enterprises by the Government to help implement the Government’s SME support policies, industry, region, also has half-half, played a large role in self-help, self-discipline. Set up financial societies, implementing the Member system, enterprises pay certain contributions, loans can be several times the membership application, form the internal capital market for small business by region. But you must accept the supervision of the Central Bank in its operation against disrupting financial order. Third, it is a bold attempt to equity financing. Many countries in Europe and America in addition to the main Board has set up a second board market, its lower than main Board listing conditions, aimed at small and medium size enterprises established, especially high-tech enterprise financing. China’s SMEs, especially high-tech SMEs, is high risk, small scale enterprises, it is difficult to enter the domestic stock market, for which necessary to vigorously strengthen the SME Board and second board construction, for the direct financing of small and medium enterprises to create a good platform.