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On the problems of the SME trade finance and Solutions

Author: WangLiHua From: www.yourpaper.net Posted: 2010-01-12 16:17:52 Read:

Paper Keywords: trade finance SME credit mechanism

Abstract:
Trade finance is an important financing channels for the development of small and medium-sized enterprises in foreign trade business, but some of the problems that exist in the trade finance seriously restricting the development of foreign trade business for SMEs. Currently, financial institutions, trade finance facilities for small and medium-sized enterprises is too low, the operating procedures are very complicated; lack of professionals, social credit evaluation mechanism is imperfect is the main reason for trade financing difficulties of SMEs in China. Perfect credit rating and guarantee mechanism, improve the quality of professionals, reform of the banking norms become the focus of work to solve the financing difficulties of SMEs trade.


In recent years, the rapid development of SMEs in China, the rising contribution to the national economy. According to customs statistics, in 2007 China's total imports and exports of SMEs reached $ 224.37 billion, an increase of 57% over the previous year, accounting for 15.78% of the total import and export, SMEs have become an important force in the field of China's foreign trade. However, due to the late start of SMEs, the accumulation of its own funds, shortage of funds has become a bottleneck restricting the further development of SMEs. Trade finance is closely associated with the physical trade, no doubt in a convenient channel for SMEs to obtain financing, but there are many difficulties of SMEs in China in the course of trade finance.

SME trade finance Problems

1. Foreign trade enterprises of professional staff needs to be improved
China's SMEs to the domestic business started with the increase in the strength of China's foreign trade policy changes, and gradually involved in the import and export business. Therefore, China's small and medium enterprises is a general lack of professional export and proficient knowledge of foreign trade manager. To carry out the content and form of the World Trade rapid expansion of trade finance also will be changed from a combination of simple, traditional settlement and financing, the development of a complex combination of a variety of means of financing, more business high demand. Foreign trade business not only to choose the appropriate trade terms, but also to use trade finance transactions to circumvent the risk, and flexible use of the means of financing attracted customers to establish long-term trade relations. Bank import trade financing instruments less well understood, in the case of banking products constantly updated, new trade finance endless varieties, most SMEs can not be a good combination of the actual characteristics suitable for the enterprise business products. Plus firms and banks is not enough communication, information asymmetry, so flexible use of various trade finance products, not only improve the operating costs of enterprises, and prone to loss of business opportunities, and ultimately affect the development of enterprises.
2. Bank trade finance facilities for SMEs too low
Of commercial bank trade finance facilities is far below the general line of credit, it is difficult to meet the financing needs of the foreign trade enterprises. And commercial banks tend to financing to a reputable large state-owned enterprise, rather than financing to small and medium-sized foreign trade enterprises. China's policy banks often due to bear a large amount of funds in foreign trade mission to attend to small and medium enterprises. Such as the Export-Import Bank of China bear capital requirements, capital goods import and export important task in the development of the country's foreign trade plays an important role in the large mechanical and electrical products, complete sets of equipment, high-tech products; China Development Bank commitment to the country part of the key projects construction funding requirements. The amount of money banks for trade finance is too low, a direct result of trade financing difficulties of SMEs. In 2008, the Chinese government come up with a lot of money to solve the problem of financing SMEs, the ways and means of the use of funds will undoubtedly affect the effect of the use of funds. Trade financing difficulties of small and medium-sized foreign trade enterprises should also be a corresponding eased.
3. Bank trade finance business types single
With the rapid development of foreign trade, China's growing number of small and medium enterprises into the international market, they desperately need to be flexible, efficient financing business to achieve the mobility of capital and enhance their competitiveness. China's banks to develop trade finance is still based on the combination of the traditional way of letter of credit and financing, such as: a reduction of bond issuing export loan package, import and export financing, or a combination of several simple means of financing, more complex services such as factoring, forfaiting carry out limited. Banks started to pay attention to the business of factoring, forfeiting and gradually carried out, but trading volume is still small, and by SMEs reputation, business type and amount of financing small and medium enterprises can enjoy very limited, small and medium-sized enterprises China's trade status is not commensurate.
4. The bank financing business processes unreasonable, complicated procedures
Trade finance is based on a specific external transactions and the implementation of financing, should be more flexible than the general mode of financing, fast. China's banking general lack of strict standards of the various forms of financing, operational processes are not up to standard, arbitrary, leading to apply for trade finance for SMEs harder than ordinary working capital loans. For example, for the loan package, many banks in China original letter of credit opened by banks with high credit ratings, in addition to the requirements of enterprises also need to confirm the effective guarantee (guarantee or mortgage). Which will be packaged loans deemed management of working capital loans, fail to reflect the advantages of its trade finance products, but more trouble than the average credit, higher cost of capital. This is one of the many small and medium enterprises in China would prefer a general mortgage factors do not want to trade finance.
5. China's social credit mechanism is not perfect
In foreign countries, financial institutions can access to corporate credit rating and credit situation through a variety of channels, will be able to evaluate the financial statements for its approved credit limit. However, China's social credit system is not yet sound financial institutions is difficult to obtain business-related public information. A simple estimate of loan officers can only be based on their own experience, the bank's customer credit difficult for other companies to carry out a proper credit assessment. And the authenticity of the corporate financial statements is difficult to guarantee the existence of some enterprises do not trust intends to default on their loans, evasion of bank debt. SMEs limited funds, this situation in SMEs is indeed more common. Banks are more willing to risk aversion from the Italian point of departure to provide trade finance business to large enterprises, some complex business, such as factoring business, because it is difficult to determine the customer's credit status, as little as possible handle.

Second, the countermeasures to solve the financing difficulties of SMEs trade


1. China should improve the credit rating and financing guarantee mechanism
In recent years, authorities have been working to solve the opaque SMEs'Credit problem. Such as: improvement and amendments to the foreign trade enterprise credit rating standards and ways of implementation; carry out the activities of small and medium-sized foreign trade enterprises credit rating; improve the credit database of small and medium-sized foreign trade enterprises face of credit information on the implementation of foreign trade openness. At present, China's social credit evaluation mechanism has made significant progress, enable financial institutions based on approved facilities for SMEs to a certain extent, but generally speaking, there is considerable lack of credit evaluation mechanism in China, can not meet the social parties face the needs of enterprise credit information. Therefore, China needs as soon as possible to improve the credit evaluation mechanisms and information flow mechanisms to safeguard the smooth development of the SME financing and operating behavior.
SME trade finance features time, high frequency, a small number of high management costs, the risk is relatively high, in order to effectively prevent the resulting credit risk of financial institutions, China is also necessary to establish and perfect the mechanism of SME financing guarantee, ultimately prevent credit risks focus on the control of the second source of repayment. Actively build up financing guarantee system for the bank from the system to avoid financial risks, but also for small and medium-sized enterprises to obtain financing to create the necessary conditions.
2. Improve the quality of corporate business people
Enterprises to business people, professional, legal knowledge, training, so that each business to a deep understanding of the concept of trade finance, features and real. The trade finance business is too smooth, skilled operators. Business people have to strengthen risk awareness in routine work, we should pay attention to the lessons learned, and continue to accumulate experience, in particular, a skilled master the knowledge of international trade and transport insurance business, and pay close attention to the international market dynamics, understand grasp commodity market changes, develop keen insight on the international trade market, and enhance the ability to identify potential risks. Enterprises to continuously enrich the staff to absorb the fresh blood, but attention should be paid to the recruitment and selection of new employees, a group of young, energetic, vibrant Dongliangzhicai services for enterprises rely on them to learn advanced knowledge and sensitivity about new things.
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