Research On The SMEs' International Trade Financing In China

After china's accession to the WTO, as the international trading environment continues to improve, a substantial increase happens in Chinese exports. By the end of 2008, the annual exports has come to 1428.55 billion U.S dollar, 17.2 percent higher than the last year, of which small and medium-sized enterprises account for more than 60 percent, and thus small and medium-sized enterprises have become an important force in the areas of China's foreign trade. With the rapid development of foreign trade, SMEs'need for capital becomes even stronger. However, financing in the international trade has become the main obstacle for the SMEs in terms of business development. It is crucial to identify and solve these problems, which also have an important significance to develop international trade and open up international markets.This article is divided into five parts. Part I, preface, first of all it raises the meaning of this article: the Chinese SMEs play a core part in the promoting the development of china's foreign trade, but the difficulties in financing has become the bottleneck restriction factors for the SMEs'development, so it is vital to find how to solve this problem. Second, a review is made in the studies of SMEs'financing problems, followed by the description on the article structure. Finally, it mentioned the innovation and inadequate about the author's idea about this article.The second part of the article analyzed the development of Chinese SMEs. First, it demonstrated the conception of SMEs from the qualitative and quantitative divisions, and simply introduced the classification criteria for SMEs in the United States, European Union and Japan. China has been using the quantitative standards, and according to the different characteristics of different industries, takes the number of employees, sales and total assets as the criteria of classification. Second, it expressed the importance of SMEs for the China's national economy, and pointed out the important role of SMEs from two perspectives—mutual relying on relationship between the SMEs and large enterprises, and SMEs'ability to provide many job opportunities.The third part outlined the international trade financing. First, introduce the meaning of international trade financing and the development process, and made a detailed analysis of three characteristics on the differences between the trade credit financing and traditional banking operations, which are the lower access to the threshold of international trade financing and financing cost; self-pay; regulatory traits of international trade financing. Secondly, the author classified the modes of international trade financing in accordance with the deadline and objects, such as the red letters credit, loan packaging for the exporters, as well as import bills and international factoring for the importers, and analyzed the roles, scope of application, flow process and characteristics.The fourth part analyzed the status of international trade financing for SMEs in China and influencing factors. Through data analysis on two groups of banking business, we can see that the difficulties in financing for SMEs have alleviated with more importance of banks on the international trade financing of SMEs, but this situation has not fundamentally changed. At the latter part of this chapter, it focused on the analysis of factors impacting the international trade financing for SMEs. Internal factors include the lack of high quality business men, risk unawareness, weak self-credit, serious mutual security between related enterprises, etc. External factors include the banks'lack of high–quality clerks, focusing targets of trade financing in banks, high threshold of banks for SMEs'trade financing, banks'lack of a unified body of risk management, single mode of international trade financing in banks, mismatching between business volume and market potential, imperfect regulations of China's trade finance, inadequate credit system in China, and lack of support from China Import and Export Bank and China Export& Credit Insurance company to the SMEs, etc.The last part, that is the fifth part, the author made a superficial discussion on the improvement of the SMEs international trade financing in China. First, it analyzed the enlightenment from the SMEs in developed countries: they take advantages in the complete construction of SMEs financing systems and full advocating function of Import and Export Bank. Then, the author proposed recommendation on the SMEs trade financing: first, the construction of credit system, the country should strengthen and improve the credit system, and banks should set up a credit evaluation system for SMEs, and SMEs should enhance credit awareness. Second, enterprise management, the enterprises should improve their own quality, establish the risk cost consciousness and set up scientific and reasonable mechanism for personal training. Third, banking business, banks need to step up innovation of financial products, improve internal risk control system, and raise the professional quality of bank staff. Finally, it is the government that has to elevate the support to the international trade financing.Based on the china's specific economic condition and unique characteristics of SMEs, this paper focused on the domestic SMEs financing and analyzed the status in international trade financing and impacting factors. And referring to the related experiences in developed countries, together with SMEs'development condition in China, the author proposed the feasible suggestions on solving difficulties in international trade financing.