Financial assistance, support from industry giants to ease COVID fallout

Things have been tough lately for Changzhou Hengfeng Special Conductor Co Ltd, a small, high-tech enterprise in Changzhou, Jiangsu province. Since the city's COVID-19 flare-ups in April, around a quarter of the company's products started piling up at its warehouse.

"Our products previously were shipped from 8 am to 5 pm. But then, because of slowing logistics, we were only able to send out goods during limited hours in the afternoon," said Yang Nianxi, the company's head of production.

The overstocking problem left the company with a hole in its budget amounting to 70 million ($10.5 million) to 80 million yuan, creating a big cash flow problem.

Similar problems have happened to a number of small and medium-sized companies due to the pandemic. They have faced hardships like delays in supply chains, a drop in market demand and higher labor and raw materials costs.

In China, SMEs are responsible for nearly 50 percent of the nation's tax revenue and 60 percent of GDP. They also contribute to 70 percent of the nation's technology innovation and 80 percent of urban employment, according to the Ministry of Industry and Information Technology.

To help SMEs cope with the pandemic's fallout, the Chinese government has launched a package of policies. The State Council recently released a document that detailed a string of measures to prop up the ability of SMEs to survive the short-term challenges.

The document said that large, State-owned commercial banks will work to increase loans to small and micro enterprises by 1.6 trillion yuan this year.

Local governments are also expected to arrange special bailout funds for micro, small and medium-sized enterprises, and provide subsidies for rent, loan interest and other aspects to those with operational difficulties, the document added.

Hengfeng Special Conductor obtained a specialized loan of 60 million yuan from the Bank of China's subsidiary in Changzhou with the help of the local government. The bank lowered the company's interest rate, in accordance with the central government's policy, from 4.8 to 3.5 percent.

Thanks to the timely assistance, the company has resumed smooth operations, and revenue has returned to its average monthly level this month, it said.

"More efforts will be made to help SMEs lower operating costs, ease their difficulties in accessing funding and debt collections, and assist them in expanding demand," said Xu Xiaolan, a vice-minister from the Ministry of Industry and Information Technology (MIIT).

"Given that SMEs are more vulnerable to fluctuations in supply and industrial chains, MIIT is also strengthening its push to include key SMEs in a list to help them restart operations as soon as possible," she said.

Xu said average tariffs of SMEs' broadband and private internet lines will be reduced by another 10 percent this year, while encouraging digital service providers to reduce SMEs' cloud platform costs, so that they can better leverage digital technologies to boost efficiency amid difficulties.

Meanwhile, China will boost the full integration of all spheres of small, medium-sized and large companies－including industrial, supply and data chains－to promote advantageous interactions, according to a document jointly released recently by the MITT and 10 other ministries.

The move is partly designed to leverage the capabilities of established companies to help SMEs, which will help stabilize industry and supply chains, officials said.