Over 67,000 Small and Medium Sized Companies Cease Operations

Lack of financing and international slowdown causing bankruptcies and restructurings of small and medium sized businesses in China.
Over 67,000 Small and Medium Sized Companies Cease Operations
8/6/2008
Updated:
8/6/2008

CHINA—According to preliminary statistics from the Small and Medium-Sized Enterprise Department of the National Development and Reform Commission of China, over 67,000 SMEs in China were closed down in the first half of this year.

The damage is most severe in labor-intensive sectors, such as the textile industry, where over 10,000 enterprises have closed and more than two-thirds of the remaining enterprises are facing financial restructuring.

The cause, released in a report on August 3, is the international economic slowdown and domestic macro policy and regulations. Financing has become the biggest bottleneck for the development and continued operation of the SMEs.

However, statistics from the China Banking Regulatory Commission show that China’s major commercial banks provided over 2.2 trillion yuan in loans (approximately US$ 320 billion) in the first quarter of this year, of which only less than 14 percent, about 300 billion yuan (approximately US$ 43.80 billion) was provided to the SMEs. This represents an 11.1% increase over the same period last year.