Cash-strapped SMEs see dawn break

    Updated: 2011-10-17 13:08

    (Xinhua)

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    Local self-rescue steps

    In answer to Premier Wen's appeal, the Zhejiang provincial government has sent 11 work groups to oversee a bank bailout of private firms suffering from the liquidity crunch.

    A total of 25 banks in Wenzhou pledged on Tuesday to increase lending in order to tackle the crisis.

    "The government will help those companies that are trapped in the financial crunch but have the ability to survive the difficulties," said Chen Derong, vice governor of Zhejiang province.

    Tao Lingfu, head of the Wenzhou branch of the Bank of China, promised the bank would continue to issue loans with interest rates lower than 30 percent to corporate borrowers that are having liquidity problems but able to sustain production.

    Meanwhile, local industry associations have also adopted measures to offer financial help.

    Zhou Dewen, chairman of the Wenzhou SME (small- and medium-sized enterprises) Development Association, said the association has prepared an emergency fund worth 900 million yuan ($141 million)to help private firms in urgent need of cash to sustain operations.

    "The association's member companies would make donations to the fund," he said.

    New hope rises for smes

    New policies and financial assistance taken by governments seems to be effective and Wenzhou's runaway bosses have chosen to come back.

    In the last week, three of more than 90 private entrepreneurs who had gone into hiding in recent weeks to avoid repaying high-interest informal loans returned home.

    Hu Fulin, president of the Xintai Group, China's largest eyeglasses manufacturer, fled to the United States from Wenzhou on Sept. 21 to escape a 1.5-billion-yuan debt. He returned to China on last Monday.

    "I hope my company can overcome the current difficulties with the government's support," Hu said upon arriving in Wenzhou.

    Sun Fucai, board chairman of the Aomi Fluid Equipment Co, Ltd, also returned to Wenzhou on Oct 10.

    "I don't want to spend the rest of my life living in the dark," he said.

    "I believe my company will get back on track, as the government has pledged strong support in helping me get bank loans," Sun said.

    However, officials are mulling over more, concrete measures to solving the debt problem of SMEs in a fundamental way.

    The cash shortages are a chronic problem that cannot be solved all at once, Xie Sanming, an official from the MITT, was quoted as saying by the 21st Century Business Herald.

    "We hope the government's relief measures can not only pull SMEs through financial difficulties but also boost their industrial transformation," said Yang Xiaoping, chairman of the Zhejiang branch of the China Banking Regulatory Commission.

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