Chinese Small and Medium Enterprises Financing: 28 Models

Author: Wang Tiejun
Publisher:
Publish Date: 2004-10-01
Features: This book is divided into three parts (Upper, Middle, and Lower) and consists of nine chapters, providing a comprehensive, detailed, and systematic discussion on the development and financing of small and medium-sized enterprises (SMEs), 28 financing models for SMEs, and the planning and operation of SME financing.
Chapter 1 introduces the development of SMEs in China. Based on an examination of the definitions and development of SMEs in major countries (regions) worldwide, it outlines China's definitions of SMEs in different economic periods and summarizes the current criteria for classifying enterprises in China. It explains the economic reasons for the existence and development of SMEs and reviews and summarizes the history and lessons learned from SME development in China, highlighting the current state of SME development. It specifically addresses the main challenges faced by Chinese SMEs and analyzes their development from multiple perspectives. Regarding the role and significance of SMEs, this chapter elaborates on ten aspects: promoting national economic development, increasing employment, boosting agricultural economic growth and local fiscal revenue, technological innovation, vibrant markets, product exports, supporting the healthy development of large enterprises, more effective utilization of local resources, promoting institutional innovation, and providing personalized services. Finally, it discusses the government's policies and measures to support SME development, including relevant statements from Party and government documents, the "Several Policy Opinions on Encouraging and Promoting SME Development," and the main content of the "Promotion Law of Small and Medium Enterprises," as well as an analysis and evaluation of the implementation effects of the law.
Chapter 2 covers the financing overview of SMEs in China. It introduces and explains the characteristics of SME financing, including general challenges such as high difficulty, high cost, and multiple risks. It analyzes the impact of market operation patterns and the of the financial industry on SME financing in a market economy. Subsequently, it examines the financing characteristics of SMEs of different types and at different development stages, summarizing the features of financial decision-making for SMEs. In terms of international financing experience for SMEs, it highlights the establishment of a sound legal framework for SME financial support, tax incentives and support, fiscal subsidies, loan assistance, and the role of venture capital in SME financing. Regarding the financing status of SMEs in China, it introduces the current situation after analyzing the unique characteristics of SME financing in China, summarizes the four major financing difficulties—difficulty in obtaining loans from banks, difficulty in banks lending, difficulty in direct financing, and difficulty in venture capital financing—and analyzes the primary reasons for these challenges. Finally, it proposes measures to improve the financing status of Chinese SMEs, including developing local small and medium banks and other financial institutions, establishing a policy-based financial system to support SMEs, advancing SME reforms, establishing an effective loan guarantee system, expanding direct financing channels, and developing the venture capital industry.
Chapter 3 introduces and explains the basic concepts of SME financing, including internal and external financing, direct and indirect financing, financing costs, and financing risks. It then discusses relevant theories of SME financing, such as theories of financing structure and capital structure, naive capital structure theory, traditional capital structure theory, MM theory, and modern capital structure theories like the trade-off theory. Regarding SME financing and financial markets, it introduces the classification of financial markets, the role of financial markets, and major financial institutions in China. Finally, it analyzes how multi-tiered capital markets provide new historical opportunities for SME financing, covering the meaning and role of multi-tiered capital markets, the composition and role of multi-tiered capital markets in the U.S., and China's vision for multi-tiered capital markets.
Chapters 4 to 7 are the core of the book, providing a comprehensive and systematic introduction to 28 financing models for SMEs. For each model, it explains the meaning, characteristics, steps, operational procedures, applicable conditions, key points, and development status, combining theory with practice, the present with the future, and international practices with China's national conditions.
Chapter 4 introduces six debt financing models for SMEs: domestic bank loans, foreign bank loans, bond issuance, informal lending, credit guarantee financing, and financial leasing.
Chapter 5 introduces nine equity financing models for SMEs: equity divestment financing, capital increase and expansion financing, property rights trading financing, leveraged buyout financing, venture capital introduction, investment bank investment, domestic listing financing, overseas listing financing, and shell listing financing.
Chapter 6 introduces seven models based on internal financing and trade financing: retained earnings financing, asset management financing, bill discounting financing, asset pawn financing, commercial credit financing, international trade financing, and compensation trade financing.
Chapter 7 introduces six models based on project financing and policy financing: project packaging financing, high-tech financing, BOT project financing, IFC international investment, special fund investment, and industrial policy investment.
Chapter 8 covers the overall planning of SME financing, systematically discussing the basic meaning, goals, principles, and specific content and methods of SME financing planning.
Chapter 9 focuses on the specific operation of SME financing. Building on the financing theories, models, and planning discussed in the previous chapters, it selects several representative financing models and explains their operational procedures in a systematic manner, enabling SMEs not only to understand financing theories but also to familiarize themselves with financing models and master the specific operational procedures.
Guided by the principles of exploration, comprehensive summary, practicality, and systematic engineering, the author compiled this book, "28 Financing Models for Chinese SMEs," hoping that SMEs across the country can tailor their financing models to their specific circumstances, conduct meticulous planning and thorough operations, achieve financing success, and grow their businesses stronger and larger.