"We charge interest at a rate ranging from 0.9 to 4 times that fixed by the central bank for same grade loan services in commercial banks. Since the interest rates are much lower than the black market, we are welcomed by SMEs. Our clients largely come from the manufacturing and financial investment sectors, and half of them come from other districts or other cities," said Li.
Meanwhile, CASME has initiated a 3-billion-yuan venture investment fund as a step to help the country's SMEs raise capital, the body said on Nov. 24. The fund will be established by the end of this year.
CASME will also issue an SME corporate bond with the northeastern Liaoning provincial government. It will found a bank with a planned registered capital of 10 billion yuan, according to CASME.
"Upon its establishment, the bank will provide loans only for SMEs. Companies may get as much as 5 million yuan each for their investment and development," said CASME head Li Zibin without specifying when the bank would open.
Officials propose SMEs to adjust the credit structure to survive the financing difficulty. To promote the development of the bond market and direct financing either abroad or on the SMEs board in Shenzhen bourse, were key measures to ease the pressure, said Liu He, deputy director of the Office for the Central Leading Group on Economic and Financial Affairs.
Restructuring
Apart from improving access to loans, the Chinese Government has taken other measures to support SMEs. For example, it has raised export tax rebates three times so far during the second half.
China raised tax rebates on Nov. 1 for 3,486 items ranging from labor intensive industries such as textiles, garments, toys, hi-tech and high-added-value sectors like anti-AIDS drugs.
Wang Liming, director general of the SMEs department of the Ministry of Industry and Information Technology (MIIT), said the country might further raise the tax rebates rate by one percentage point for some labor-intensive industries in the near future to help them cope with shrinking profit margins because of slacking market demands, the yuan's appreciation and rising production costs.
In addition to all this support, the government is encouraging SMEs to accelerate industrial restructuring and innovation.
"The financial crisis has exposed some interior problems with our enterprises," said Li Huiwu, deputy director of south China's Guangdong Provincial Development Research Center.
Guangdong export markets are largely destined to Europe and the United States, with the United States accounting for nearly 40 percent of the market shares. Export oriented processing businesses amount to 70 percent of the province businesses. That explains why Guangdong suffers most heavily in the country from the U.S.-born financial crisis, said Li.
According to Le Zheng, president of Shenzhen Municipal Academy of Social Sciences, Guangdong enterprises differentiate among themselves in the face of the financial crisis.
"One third enterprises are barely affected by the lash and even expand their market shares, because of industrial restructuring and technological innovation," said Le Zheng.
"Another one third of enterprises are operating normally and will survive the crisis by shrinking frontlines and improving production efficiency."
"The remaining one third of enterprises might be eliminated in the crisis, because of small business scales, deficient funds, brands and technologies," said Le Zheng.
According to Li Huiqin, party chief of Houjie Town, Dongguan City, a major exporting base in Guangdong, a fairly large proportion of the processing businesses in the Pearl River Delta, including Dongguan, were transferred from Hong Kong and Taiwan in the 1980s.
It is a miracle that these out-dated, low-end commodity producers have survived for 30 years, because of low labor and raw material costs on the Chinese mainland. It is time to upgrade the industrial structure of the Pearl River Delta against the backdrop of the financial crisis.
