China's SMEs in financial crunch: report

NANNING -- China's small and medium-sized enterprises have been hit by multiple difficulties as the overall economy falters and export demand weakens, according to a new report.

The report was jointly released by China International Cooperation Association of SMEs and the municipal government of Yulin in southern Guangxi Zhuang autonomous region on Sunday.

The report said most of China's SMEs face difficulties as slowing domestic and overseas market demands and soaring consumer costs have aggravated their business environment, especially for labor-intensive sectors such as small suppliers for iron and steel firms and automobile producers.

Official figures suggested that SMEs made up 97 percent of China's 12.5 million licensed companies by the end of 2011.

The report said the SMEs are facing a tougher financial crunch this year than before.

It cited figures from the National Bureau of Statistics that only 8.6 percent of the SMEs that needed bank loans got money they applied for in the first quarter, which was down by 1 percentage point from the same period of last year.

The report foresees that a large number of SMEs may shut down during China's on-going economic restructuring, eliminating high energy-consumption and pollution-yielding firms.

The organizers of the report called on local governments to provide more financial support and tax and regulation fee cuts to help SMEs through the tough period.

They also pointed out that upgrading technology and improving management is a fundamental way for SMEs to survive the crisis.