By Liang Fei Source:Global Times Published: 2013-4-7 0:28:01
The difficulty of raising capital from banks remains a major challenge for China's small- and micro-businesses (SMBs) which urgently needs policy incentives, economists said at a discussion session at the Boao Forum for Asia Saturday.
China's SMBs saw slower growth in 2012, amid shrinking overseas demand and weaker domestic economic growth, with nearly 60 percent of the 1,000 surveyed SMBs showing no profit growth last year, according to a report released at the session.
The report said that at present nearly 40 percent of SMBs have debts, and one-third of them hope to obtain long-term financial support.
Ba Shusong, deputy director of the Financial Research Institute at the Development Research Center of the State Council, said that a large number of micro-enterprises do not have credit history, and they still consider the "three Fs" of family, friends and funds as the main sources of financing.
The report noted that 66.7 percent of SMB owners consider bank loans as the primary source of financing, but the inability to provide qualified collateral and financial reports and the long waiting time to get loans are their major obstacles.
Economists at the session called for banking reform to aid SMBs.
"Future financial reform must set better financing policies for SMBs as one of the major goals, as SMBs will be an important engine for China's future economic growth," said Hu Zuliu, chairman of Primavera Capital Group.
Zhang Xuyang, a manager at China Everbright Bank, said that there is great market potential for SMB financing, but banks should move away from their habit of avoiding the more risky SMB loans.
Innovation is also encouraged in SMB financing, such as innovative collateral products.
Besides bank loans, the report noted that small-loan companies are a growing force,
There were 6,080 small-loan companies in China by 2012. The sector saw newly added loans reaching 200.6 billion yuan last year, surging 51 percent year-on-year, said the report.
Also, Internet financing has demonstrated huge growth potential to fill in the financing gaps, such as B2B platform Alibaba, which provides loans to firms doing business through its service.