Sme in China Essay

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The Study of The Financing Problem of Chinese Small and Medium-sized enterprises Question:How can SMEs solve their financing problems and should governments be involved in raising funds for them? According to Chinese statistical yearbook(2013), there are 42 million small and medium enterprises in China which make up 99.8% of all Chinese enterprises. The number of the small and medium-sized enterprises(SMEs) which are enrolled in the industrial and commercial bureau is 4.6 million while the amount of private SMEs is about 9 times than enrolled SMEs. The value of products and services from SMEs makes up 60% of GDP in China. The total sales and tax paid both take up more than 60%. Besides, the SMEs offer 80% of all job opportunities which absorbs laid-off workers in cities and the surplus labor in rural area. SMEs in China have solved the problems by transferring the surplus labor in the country and helping them find jobs in the factories which are established by them. They are now becoming the most creative power in China. Although SMEs in China have developed rapidly, they face many problems. Lack of funds and few financing channels are the most important factors which restrict the development of SMEs. It requires the Chinese government to deal with the problems to expand the financing channels for those enterprises instead of shadow banking. This essay will discuss the reasons which cause the financing problems and attempt to find out the solution of these problems such as dealing with the shadow banking issue, setting regulations by the Chinese government and helping small loan companies to gather funds to lend to SMEs. At present the financing channels for SMEs are narrow. Except for some famous SMEs, The ability of general SMEs to gain funds is limited. Wang, Geng and Yang point out that there are only 3 financing channels for them: loan from banks, debenture
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