A number of struggling small companies here in China have been making calls for more support from the banks to help their companies survive.

 

　　CRI's Zhou Jingnan with some of their stories.

 

　　Reporter:

 

　　Manufacturing and service sectors in China had a lot of difficulties in the first half of this year, due to rising costs, overcapacity and intensive market competition.

 

　　Together with the effects of the global economic crisis, some small enterprises in these industries have found it hard to gain access to loans and credit. Some were even very close to bankruptcy because of a shortage of money.

 

　　Richi Machinery is located in Ningbo, East China's Zhejiang Province. It mainly produces auto parts.

 

　　Company President Zhang Liming says currently their biggest difficulty is that they have orders worth 40 million yuan, but they don't have the money to buy the raw materials needed to complete the production process. To meet their orders the company still needs 5 million yuan, but no loans are ready for them.

 

　　"The conditions required to obtain loans are becoming higher and higher. In the past, it was easy. If you have a good reputation, the banks would lend you money; millions of yuan. But now, banks need to check many documents, like your tax payments, cash flow records, credit records and so on. Banks are responsible for their own safety, so they raise the barrier for small enterprises to obtain loans."

 

　　To solve the problem and ease the pressure of financing, local governments in China have tried to offer stronger support. Take Yongjia County in Wenzhou for example. The county has started a loan service which allows applications without the need for mortgages or guarantees.

 

　　Chen Xiaozong, Director of Enterprise Development Center in the county, says that enterprises could obtain an individual loan between 200,000 to 500,000 yuan in about three days after submitting their application.

 

　　"The application is very simple. Business owners just have to bring their license, ID, bank and tax records and electricity fees records which prove that the enterprises or factories have been working and producing."

 

　　In addition to the efforts of local governments, at the national level China plans to provide more support to the manufacturing and service sectors in order to diversify the real economy, so as to help small enterprises.

 

　　Shang Fulin, Chairman of the China Banking Regulatory Commission, emphasizes that in order to achieve this, the banking system needs a national strategy which encourages private capital into the financial sector.

 

　　"We encourage private capital to invest in stock shares or participate in the restructuring of financial institutions, so as to avoid financial and ethical risks through regulation."

 

　　If private capital is allowed in the financial sector, it is expected that access to credit would be much easier. Such a move would bring convenience and opportunities to small enterprises.