Small firms’ credit crisis under control

%3CP%3E%3CFONT%20face%3DVerdana%3EEvening%20lights%20shining%20from%20surrounding%20factories%20shatter%20the%20dark%20silence%20dominating%20buildings%20owned%20by%20the%20Zhengdeli%20Shoes%20Company.%20Piles%20of%20unfinished%20shoes%20sit%20the%20company%27s%20warehouse%20and%20workshops.%20A%20few%20security%20guards%20stand%20by%20a%20gate%20where%20workers%20sporadically%20come%20and%20go.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EThis%20was%20the%20scene%20after%20news%20broke%20that%20the%20company%27s%20boss%2C%20Shen%20Kuizheng%2C%20committed%20suicide%20to%20escape%20debts.%20The%20company%20is%20located%20in%20Wenzhou%2C%20China%27s%20entrepreneurial%20capital.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EShen%20is%20just%20one%20of%20at%20least%2080%20businessmen%20in%20the%20eastern%20coastal%20city%20who%20have%20disappeared%2C%20committed%20suicide%20or%20declared%20bankruptcy%20to%20invalidate%20debts%20owed%20to%20individual%20creditors%20pooled%20from%20the%20informal%20lending%20market%20and%20employees.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3ENews%20of%20the%20incidents%20has%20even%20made%20waves%20in%20the%20central%20government.%20During%20a%20visit%20to%20Wenzhou%20on%20Oct%205%2C%20Premier%20Wen%20Jiabao%20urged%20financial%20support%20for%20cash-strapped%20small%20businesses.%20However%2C%20a%20multi-department%20investigation%20has%20shown%20that%20the%20crisis%20has%20largely%20been%20kept%20under%20control.%3CBR%3E%3C/FONT%3E%3C/P%3E%3CFONT%20face%3DVerdana%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3E%3CSTRONG%3EInvestigators%20deny%20massive%20collapse%3CBR%3E%3C/STRONG%3EPrevious%20media%20reports%20stated%20that%20small-%20and%20medium-sized%20enterprises%20%28SMEs%29%2C%20which%20contribute%20to%2060%20percent%20of%20China%27s%20industrial%20output%20and%20create%2080%20percent%20of%20the%20country%27s%20jobs%2C%20have%20faced%20an%20unprecedented%20crisis%20this%20year%20as%20they%20struggle%20to%20survive%20a%20liquidity%20crunch%20amid%20the%20country%27s%20tightened%20macroeconomic%20control%20policies.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EHowever%2C%20the%20People%27s%20Bank%20of%20China%2C%20or%20the%20country%27s%20central%20bank%2C%20the%20Ministry%20of%20Industry%20and%20Information%20Technology%20%28MIIT%29%20and%20the%20National%20Bureau%20of%20Statistics%20%28NBS%29%20came%20to%20a%20different%20conclusion%20based%20on%20recent%20investigations%20conducted%20in%20southeast%20China%27s%20Guangdong%20Province%20and%20the%20eastern%20provinces%20of%20Zhejiang%20and%20Jiangsu%2C%20the%20country%27s%20most%20developed%20regions.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3E%22A%20massive%20collapse%20of%20small%20businesses%20does%20not%20exist%2C%20even%20though%20some%20SMEs%20have%20been%20confronted%20with%20cash%20shortages.%20The%20number%20of%20SMEs%20keeps%20increasing%2C%20as%20broken-down%20enterprises%20are%20fewer%20in%20number%20than%20newly%20founded%20ones%2C%22%20said%20Wang%20Wenbo%2C%20an%20NBS%20official%2C%20at%20a%20conference%20held%20by%20the%20Chinese%20Academy%20of%20Social%20Sciences%20on%20Monday.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EA%20final%20report%20from%20the%20investigations%20has%20not%20yet%20been%20issued.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EInvestigators%20found%20that%20shifting%20over%20to%20real%20estate%20speculation%20dragged%20many%20SMEs%20into%20cash%20shortages%2C%20forcing%20them%20to%20halt%20operation.%20They%20concluded%20that%20the%20country%27s%20macroeconomic%20control%20policies%2C%20aimed%20at%20cooling%20inflation%20and%20reign%20in%20the%20runaway%20property%20market%2C%20did%20not%20lead%20to%20the%20funding%20shortages.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3E%22Many%20business%20owners%20actually%20prefer%20tightening%20measures%2C%20because%20loose%20monetary%20policies%20can%20boost%20the%20prices%20of%20raw%20materials.%20Policy%20changes%20are%20not%20the%20key%20to%20their%20cash%20shortages%2C%22%20Wang%20said.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3ESMEs%20that%20have%20focused%20on%20their%20primary%20businesses%20face%20little%20financial%20difficulty%2C%20the%20investigation%20showed.%3C/FONT%3E%3C/P%3E%3CFONT%20face%3DVerdana%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3E%3CSTRONG%3EGovernment%27s%20efforts%20to%20weather%20crisis%3CBR%3E%3C/STRONG%3E%22Small%20enterprises%20should%20be%20a%20priority%20for%20bank%20credit%20support%20and%20enjoy%20more%20preferential%20tax%20policies%2C%22%20Premier%20Wen%20said%20during%20his%20visit%20to%20Wenzhou.%20%22Banks%20should%20increase%20their%20tolerance%20for%20the%20non-performing%20loan%20%28NPL%29%20ratios%20of%20small%20enterprises%20and%20reduce%20the%20cost%20of%20securing%20credit.%22%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EWen%20also%20requested%20a%20crackdown%20on%20the%20high-interest%20informal%20lending%20market%2C%20which%20operates%20outside%20the%20country%27s%20banking%20industry.%20The%20informal%20lending%20market%20between%20companies%20and%20individuals%20provides%20high-interest%20loans%20to%20many%20private%20entrepreneurs%20facing%20a%20cash%20squeeze.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EIn%20response%20to%20Wen%27s%20appeal%2C%20the%20Zhejiang%20provincial%20government%20has%20sent%2011%20work%20groups%20to%20oversee%20a%20bank%20bailout%20of%20private%20firms%20suffering%20from%20the%20liquidity%20crunch.%20A%20total%20of%2025%20banks%20in%20Wenzhou%20pledged%20on%20Tuesday%20to%20increase%20lending%20in%20order%20to%20help%20private%20firms%20weather%20the%20debt%20crisis.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3E%22The%20government%20will%20help%20those%20companies%20that%20are%20trapped%20in%20the%20financial%20crunch%20but%20have%20the%20ability%20to%20survive%20the%20difficulties%2C%22%20said%20Chen%20Derong%2C%20vice%20governor%20of%20Zhejiang%20province.%3C/FONT%3E%3C/P%3E%3CFONT%20face%3DVerdana%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3E%3CSTRONG%3EHope%20returns%3CBR%3E%3C/STRONG%3EDespite%20the%20debt%20problems%20facing%20many%20of%20Wenzhou%27s%20SMEs%2C%20it%20seems%20that%20some%20of%20the%20city%27s%20runaway%20bosses%20are%20returning.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EHu%20Fulin%2C%20president%20of%20the%20Xintai%20Group%2C%20China%27s%20largest%20eyeglasses%20manufacturer%2C%20fled%20to%20the%20United%20States%20from%20Wenzhou%20on%20Sept.%2021%20to%20escape%20a%201.5-billion-yuan%20debt.%20He%20returned%20to%20China%20on%20Monday.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3E%22I%20hope%20my%20company%20can%20overcome%20the%20current%20difficulties%20with%20the%20government%27s%20support%2C%22%20Hu%20said%20upon%20arriving%20in%20Wenzhou.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3ESun%20Fucai%2C%20board%20chairman%20of%20the%20Aomi%20Fluid%20Equipment%20Co%20Ltd%2C%20also%20returned%20to%20Wenzhou%20on%20Monday.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3E%22I%20believe%20my%20company%20will%20get%20back%20on%20track%2C%20as%20the%20government%20has%20pledged%20strong%20support%20in%20helping%20me%20get%20bank%20loans%2C%22%20Sun%20said.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EThe%20MIIT%20is%20set%20to%20unveil%20a%20new%20policy%20to%20help%20small%20businesses%20to%20get%20through%20financial%20difficulties.%20However%2C%20the%20cash%20shortages%20are%20a%20chronic%20problem%20that%20cannot%20be%20solved%20all%20at%20once%2C%20Xie%20Sanming%2C%20an%20official%20from%20the%20MITT%2C%20was%20quoted%20as%20saying%20by%20the%2021st%20Century%20Business%20Herald.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EThe%20average%20net%20profit%20margin%20of%20China%27s%20SMEs%20was%20less%20than%203%20percent%20from%20January%20to%20July%2C%20much%20lower%20than%20the%20international%20average%20of%206%20percent%2C%20according%20to%20a%20report%20released%20by%20the%20MIIT.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EThe%20report%20also%20said%20that%2012.7%20percent%20of%20small%20businesses%20have%20posted%20losses%2C%20with%20the%20size%20of%20the%20losses%20rising%20from%2022.2%20percent%20in%20the%20first%20two%20months%20of%20this%20year%20to%2046.9%20percent%20in%20the%20first%20seven%20months.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3E%22We%20hope%20the%20government%27s%20relief%20measures%20can%20not%20only%20pull%20SMEs%20through%20financial%20difficulties%20but%20also%20boost%20their%20industrial%20transformation%2C%22%20said%20Yang%20Xiaoping%2C%20chairman%20of%20the%20Zhejiang%20branch%20of%20the%20China%20Banking%20Regulatory%20Commission.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3E%28China%20Daily%29%3CBR%3E%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CBR%3E%26nbsp%3B%3C/P%3E%3C/FONT%3E%0D%0A%3CP%3E%3CBR%3E%26nbsp%3B%3C/P%3E%3C/FONT%3E%3C/FONT%3E