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Financing Activities Currently Conducted by Small- and Medium-sized Enterprises and the Analysis of the Causes of the Problems
2011-12-06
By Zhang Chenghui, Task Force on "New Conditions, Problems and Measures for the Development of Small- and Medium-sized Enterprises", Research Institute of Finance of DRC
Research Report No 121, 2011
I. Basic Judgment: Financial Straits Facing Small and Medium-sized Enterprises Alleviated
Since the promulgation of the Law on Promotion of Small and Medium-sized Enterprises in 2002, governments at all levels have successively unveiled rules, regulations and supportive policies for the constant improvement of financial services to small and medium-sized enterprises. Objectively, the financial predicament facing small and medium-sized enterprises has really been alleviated in recent two years, which is shown hereunder.
1. Growth of loans from commercial banks to small enterprises is evidently faster than the growth of average loans and small- and medium-sized enterprises call initial attention to banks
According to statistics by China Banking Regulatory Commission, the balance of loans to small enterprises reached 7.5 trillion yuan in 2010, up by 1.7 trillion yuan and 3.1 trillion yuan respectively over 2008 and 2009, suggesting an evidently higher growth of loans to small enterprises than the average growth of total loans and a growing proportion of those loans (Table 1).
Table 1 Growth of Loans to Small Enterprises during 2008~2010
|
Year |
Loans to small enterprises |
All loans |
Proportion of loans to small enterprises in loans to non-finance companies and other sectors (%) |
Proportion of loans to small enterprises in total loans (%) |
||
|
Balance (1 trillion yuan) |
Growth rate （%） |
Balance (1 trillion yuan) |
Growth rate (%) |
|||
|
2010 |
7.5 |
29.3 |
50.9 |
19.9 |
20.47 |
14.73 |
|
2009 |
5.8 |
32.2 |
42.6 |
31.7 |
18.24 |
13.61 |
|
2008 |
4.4 |
|
32.0 |
15.9 |
17.86 |
13.75 |
Source: Report by China Banking Regulatory Commission 2010 and website of the People's Bank of China. Same below unless otherwise specified.
Exemplary investigations show that in recent years some commercial banks have diverted their previous policy of offering major credit support to large, joint-stock and foreign enterprises to the practice of focusing their business operation on profit-making small and medium-sized enterprises. According to statistics by China Banking Regulatory Commission, by the end of 2010, 109 commercial banks had set up institutions specially for small- and medium-sized enterprises, and many banks have come up with financial products offering financing services to small- and medium-sized enterprises. Some commercial banks being the first to enter into the financing area for small- and medium-sized enterprises have given priority to offering loans to those enterprises. For example, the China Minsheng Banking Corp. Ltd. has raised the financial service to small and micro-enterprises on the strategic level for its board of directors and the head office of the bank has provided major backing for credit service to small and micro-enterprises in terms of manpower allocation, credit line, risk tolerance and incentive system. In terms of credit resources, 70%~80% of the increased loans in 2010 were all spent on small and micro-enterprises; in terms of manpower allocation, another 600 people were assigned for loan service to small and micro-enterprises in 2010, and an increase of 2,500 people or so in all in the banking sector were assigned for the said service, making up 24%1 of the whole sector.
2. Small- and medium-sized enterprises have acquired a share of their own in direct financing
According to statistics, the number of small and medium-sized enterprises in the capital market and the amount of raised funds have all increased significantly over previous years. In 2010, IPO for small and medium-sized enterprises raised a total of funds of 202.8 billion yuan and IPO for business startup raised a total of funds of 96.3 billion yuan. In terms of the expansion speed, 36 companies were listed at growth enterprises market (GEM) for business startup in 2009, 117 were listed in 2010 and 47 were listed in the first three months of 2011, maintaining a fast growth. Over the past 5 years since the establishment of the offer shares transfer system, 14 joint-stock companies have conducted directional capital increase for 15 times by issuing shares totaling 160 million and raised funds reaching a total of 687 million yuan. At present, 83 enterprises have been listed, with a total capital stock of 2.9 billion yuan. In addition, by the end of 2010, by issuing such debt financing instruments as commercial paper and SMECN, small- and medium-sized enterprises had raised funds reaching an accumulative total of 6.477 billion yuan.
3. The number of financial institutions offering services to small- and medium-sized enterprises is gradually increasing
By the end of 2010, the number of institutions offering petty loans had reached 2,614 nationwide, up by 1,280 over the end of the previous year; the balance of loans had reached 197.505 billion yuan, up by 120.182 billion yuan over the beginning of 2010. The number of banks in countrywide villages and towns had reached 349, up by 201 from a year ago. The number of credit guarantee agencies for small- and medium-sized enterprises had reached 5,547 (The number only reached 97 in 2000), raising a total of 338.9 billion yuan of guarantee funds, with the amount guaranteed reaching an accumulative total of 2.5 trillion yuan and the number of enterprises guaranteed reaching an accumulative total of 1.12 million. During the same year, the amount of secured loans provided by guarantee agencies for small- and medium-sized enterprises stood at 1.1 trillion yuan2. In addition, the number of province-level credit re-guarantee institutions for small- and medium-sized enterprises reached 14.
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1International Report by Bank of Communications
2Data: Financial Survey and Statistics Department of the People’s Bank of China, China Banking Regulatory Commission and Department for Small- and Medium-sized Enterprises of the Ministry of Industry and Information Technology
