Analysis On The SMEs' Financing Difficulty In China

SMEs are an important force for economic activities, and play a very important part in developing economics. Supporting and Promoting the development of SMEs is the key to national economy strategy. Currently, lack of financial resources is the main for SMEs, and they still have not found financing mode that suitable for themselves. Through the study I have found that, when a large amount of SMEs gather together and form a long-term and benign interaction, they will own the incomparable advantages that the individuals don't have. Those advantages can make up for their own shortcomings, widen financing channels, and abundant financing sources.The financing mode of enterprises is divided into endogenous financing and exogenous financing. Endogenous financing is that the economy finances money through the internal accumulation; exogenous financing includes direct financing and indirect financing, such as stocks, bonds, bank loans, notes Discount and so on.At present, China's SMEs don't have normal management, strong ability of independent innovation, and high profitability. And the managers generally don't have consciousness of accumulation, so they rarely consider making up for the lack of production funds. In addition, the ownership of discrimination still exist, SMEs'burden of tax is too heavy. As a result, the ability of endogenous financing is weaker; the credibility of SMEs can be imagined. It is the problem of credibility that causes exogenous financing channels blocked. Many financing methods such as equity and debt required enterprises to possess high quality, so it is very difficult for SMEs to reach the standards. Moreover, the approval process of commercial loans is too cumbersome and time consuming to suitable for the characters of SMEs'funds requirement, and they are unable to provide pledge goods that meet the requirements of commercial band. Tha lack of funding has becomes the bottleneck of the development of SMEs, we need to find solutions as soon as possible. This paper desires to make up for SMEs'deficiencies with the financing advantages in terms of industrial clusters.With the regard to the definition of SME cluster, there are many kinds of explanations at home and abroad, though the core features are the same. In the cluster, most of the enterprises are engaged in the same or similar production, and have close relationship with each other. Among the enterprises, they can share professionals, marketing, technology, information and other factors of production and infrastructure, in order to save cost, and achieve economies of scale and scope. These enterprises have the common cultural background, are familiar with each other, and root in the cluster. The cost of default is too high. So these enterprises attach importance to their own credit standings, and form a long-term and steady-going cooperation in order to achieve joint development. In addition, there is extensive and dense cooperate network among suppliers, producers, agents, consumers, government and other various agencies. They can exchange information through the network to achieve regional economic development.If we can try our best to make use of the financing advantages that industrial cluster have, the problem of SME financing can be ease to a certain extent. SMEs that can survive in a competitive cluster are usually own higher quality, better profitability and strong ability to resist risks. SME clusters own brand effect, technology diffusion effect, scale effect and so on, and these effects provide a good atmosphere for production, management and technological innovation. Strong economic strength not only increases the ability of accumulation, but also enhances the investors'confidence, and attracts more investors. Moreover, most enterprises are engaged in the same industry, that facilitates the venture investors to evaluation, especially for those who have good prospects, they can more easily enhance the investors'confidence. In addition, there is a large amount of private capital among the industrial cluster, which is unavailable for free SMEs. The capital can inject fresh blood for them as long as the government provides correct guidance and supervision.Although the financing advantages of SME cluster is obvious, there are many things need to be improved.Firstly, the formation of clusters doesn't mean that a large number of SMEs gather together simply, the local government plays a pivotal role. (â…°) The Government should intensify its efforts for the basic support. (â…±) The Government should guide and normalize the development of clusters. (â…²) The Government should take effective measures to protect the credit awareness among the SMEs. (â…³) The Government should take effective measures to promote the technological innovation and stimulate enterprises innovation enthusiasm.Secondly, we need to develop small and medium-sized financial institutions and mutual aid secured credit agencies relying on industrial associations. Commercial banks limit the quantity of loans to SMEs, one of the important reasons is that the approval process of commercial loans is too cumbersome to be suitable for the characteristics of SME financing, thus it is very necessary to develop small and medium-sized financial institutions that rooted in the cluster, and establish a long-term and stable cooperative relationship with the local enterprises in order to provide relational loans. I think that is an effective way for the financing problem. Government should broaden regulation, and support the development of small and medium-sized financial institutions. In addition, relying on the industry associations, we should build and develop the mutual credit guarantee institutions. Take Italy SMEs clusters for example, they are famous in the whole world, and the main reason is that the industry associations have player a very important role. The local government should do something in promoting building and development of mutual guarantee institution.Finally, we must improve the operating environment for venture capital, and fully mobilize private capital. For the high-tech SMEs, venture capital is an important financing channel. Now we have yet to establish a perfect mechanism for venture capital to exit, so many invertors don't want to risk. The source of venture capital is mainly from the Government, and very limited. So the local government should adopt correct measures to guide the private capital to this area, and make a good use.The financing advantages of SMEs clusters are obvious. In addition to the full use of these advantages, we also need to improve the incomplete aspects, help SMEs walk out of a pretty pass of financing and group strongly, and contribute to the development of the national economy.