Impediments to SME Access to Finance and Credit Guarantee Schemes in China

Micro Retail Enterprises in China: Challenging the Stereotype

“…Although SMEs play an outsized role in the economy, the government does not currently have adequate legislation to support the growth of SMEs which is correlated with China's SMEs' generally having a lower degree of specialization and cooperation in production areas (Dudovsky, 2012). The lack of government policies regarding SMEs has created unintended challenges and barriers for SMEs' growth (Mu, 2003).…”

“…SMEs' access to financing is often blocked because of a lack of knowledge about their credit-worthiness. Three related reasons for this are thought to be that: banks generally have little information about SMEs' credit records; SMEs do not have strong incentives to open and maintain credit lines; and the transaction cost of future loans is not generally seen to be influenced by maintaining loans in the present (Mu, 2003). John Dudovsky argues that most banks do not want to issue loans to SMEs, because they assume that SMEs are riskier than other large companies (Dudovsky, 2012).…”

Promoting Private Sector Development in China: The Challenge of Building Institutional Capacity at the Local Level

“…All provinces, autonomous regions, municipal governments, and central government ministries were asked to take " effective measures to strengthen SME support especially high-tech SMEs and those innovative SMEs, which can develop new products, improve products quality and fi ll gaps in the market" (General Offi ce of the State Council, 2000; cited in Mu, 2002). A focus on establishing local 'systems' to enable the development of small private enterprises continued with the 2003 SME Promotion Law, which required municipal and county governments to create 'effective SME support systems', including organisations, programmes, and services dedicated to stimulating SME development.…”

“…Moreover, government is closest, and hence best able to respond, to the real needs of entrepreneurs at the local level. Local determination of state support for micro, small, and medium private enterprises was included in the 2000 State Council promulgation (see Mu, 2002) and the 2003 SME Promotion Law. This contrasts to a national, centrally directed strategy to support the development of a small number of China's largest public and private companies to become globally competitive leaders in their markets (Nolan, 2002;Nolan and Zhang, 2002).…”

Construction and Adoption of Net-enabled Credit Analysis Supporting System (NCASS) Using Social Information Networks

“…First of all, banks are discriminating against the non stated-owned enterprises, except SME (Yibin Mu, 2002). Secondly, the "False Data" problem is so serious that banks hardly trust any SME, and credit officers are much more interested in the "black information" of SME.…”