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Source: www.asiaecon.org |

BANK OF CHINA EXPLORES NEW METHODS OF SME FINANCIAL SERVICES


Since China restructured their open market policies, small and medium sized enterprises (SME) have become a cornerstone for steady economic growth.


Since China restructured their open market policies, small and medium sized enterprises (SME) have become a cornerstone for steady economic growth.  SMEs represent the most active and vigorous sector of the socialist market economy, through their contributions to the regional economy and job market, industry structure and technological innovation of products.

Bank of China will attempt to bolster support to SMEs not only to develop strong macroeconomics, but also to increase the business development of BOC itself. 

BOC has come to the conclusion that in order to best accelerate the development of SMEs it should:

actively develop and cautiously manage; adapt measures to different conditions and offer a categorized plan; control risks and ascertain positions reasonably; offer comprehensive service and coordinate efficiently.

The development of SMEs will also be approached through: quantified market surveys, streamlined business flows, diversified product services, and standardized risk controls.  Since the onset of the global economic crisis, BOC has held special-topic conferences in order to create possible countermeasures and effective policies for SMEs to more easily cope with the difficulties.

In order to improve the flow of business, BOC created “Credit Factory”, a new business model in conjunction with the developmental characteristics of domestic SMEs. 

Using a more efficient division of labor and standard operations, the loan approval cycle has been shortened from the original two to three weeks to the current three to five days.  In the past, credit certification approval was based solely on a financial statement.  However, this proved to be a major hindrance because many of the SMEs have relatively low ratings.  The new model takes into consideration non-financial information in order to make more fair and objective appraisals of SMEs.

This is accomplished by a system that generates a clearly-defined question list, avoiding biased judgment, and artificial manipulation.  Through sample gatherings and tests, this new system has proven to function well.

“Credit Factory” was originally tested last year in Shanghai and Quanzhou.  The two pilot cities had certified 3.744 billion yuan worth of credit to 462 SMEs by the end of 2008.  It is predicted that by the end of 2009, 30 to 40 “Credit Factories” will be set up around China for SMEs.  These new SME business models will stress the concept that “returns cover both the risk and cost” and “due diligence”. 

By the end of January 2009, nearly 5700 SME’s were provided loans and BOC’s credit certification for SMEs in yuan and foreign currencies increased by 39.556 billion yuan.  This accounted for 89 percent of companies who obtained loans, demonstrating considerable growth for smaller businesses.

Source: www.AsiaEcon.org
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Source: www.asiaecon.org |


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