Due to the global financial crisis, the province saw a decline of capital inflows from Hong Kong from January to October this year.

Yet investment in the tertiary industry rose in the past 10 months.

Based on the statistics released by the provincial economy and trade commission of Guangdong, 4,479 Hong Kong-invested projects was approved during the last 10 months in this province, which decreased 14.5% year-on-year.

Recently, a plan has been released to budget 2 billion yuan in the next two years to help Hong Kong and Macao-funded SMEs weather through the tough time.

Governor of Guangdong Province Huang Huahua said at the conference on the province’s SME development that Guangdong will adopt a series of measures to help the processing trade—especially those funded by Hong Kong and Macao investors—expand their businesses.

The budgets of 1 billion yuan for 2009 and 2010 will be used to subsidize processing trade enterprises to upgrade and relocate them in parks for industrial transformation while Hong Kong and Macao-funded enterprises will get priority, the governor added.

Are you interested in the business opportunities in China?

China is one of the world’s great growth markets and is likely to be for many years to come. Foreign companies often face difficulties in assessing Chinese market demand and enacting effective strategies because of the language barriers, culture differences, and high expense.

BPOVIA is the leading virtual assistant and Knowledge process outsourcing (KPO) service provider in China. BPOVIA is the only virtual assistant company ever been nominated for the prestigious “Red Herring 100 Asia” Awards 2008. Combines international perspective with local know-how, BPOVIA can provide our clients China business development service and help our clients doing successful business in China.

Please visit http://www.BPOVIA.com/ for details about our service.

Business experts also said that SMEs deserve more support from the central government.

Long Yongtu, secretary-general of the Boao Forum and former vice-foreign trade minister, once said at a forum to discuss the development of a central business district in Shenzhen that the world’s top 500 companies are greatly respected, but the ultimate element to decide our economic success is the development of SMEs.

The majority of SMEs are privately owned, but they will not develop into ideal state until the government ends its discrimination and gives fair treatment to firms.

Small-and medium-sized enterprises are becoming more and more important in China. And in some parts of the country, such as Guangdong province, they have become a key part of he-tech industry.

Economists agreed that government should give a hand to SMEs especially during the hard time.

As Premier Wen Jiabao urged, local governments should readjust and improve policies to support SMEs, since they play a crucial role in “promoting economic growth, increasing fiscal revenue, providing jobs and maintaining social stability”.

Are you interested in the business opportunities in China?

China is one of the world’s great growth markets and is likely to be for many years to come. Foreign companies often face difficulties in assessing Chinese market demand and enacting effective strategies because of the language barriers, culture differences, and high expense.

BPOVIA is the leading virtual assistant and Knowledge process outsourcing (KPO) service provider in China. BPOVIA is the only virtual assistant company ever been nominated for the prestigious “Red Herring 100 Asia” Awards 2008. Combines international perspective with local know-how, BPOVIA can provide our clients China business development service and help our clients doing successful business in China.

Please visit http://www.BPOVIA.com/ for details about our service.

Beside this, according to CASME, other efforts include the joint issue of an SME corporate bond with the Liaoning provincial government and the founding of a bank with a planned registered capital of 10 billion yuan. The head of CASME said the bank will provide loans only to small- and medium-sized enterprises on the establishment of the fund. And for their development, they can get as much as 5 million yuan. But he didn’t mention when the bank will open. He also noted such fund will take effect on any industrial company with sales revenue up to 300 million yuan.

The major threat to SME’s survival is the difficulties raising capital. According to the National Development and Reform Committee, because of the economic downturn and a tight monetary policy, nearly 67,000 firms with sales income exceeding 5 million yuan shut down during the first half of this year. Shrinking loan supply from banks as well as rising costs should be the main causes to those closing down.

Li said it was obviously out of proportion when SMEs contributed 60 percent to China’s GDP but only got less than 25 percent of total bank loans. However, the country has searched the ways to help SMEs amid the financial crisis due to weakening demand at home and abroad as well.

The central bank raised loan quotas for national and regional commercial banks by 5 and 10 percent respectively in the second half of this year in order to help private firms ease their financial pressure. In addition, premier Wen Jiabao will put greater attention on challenges firms will face after he inspected them in Shanghai and Zhejiang province at the weekend.

He said: “More supporting policies should be available to create a sound environment for their development.”

Are you interested in the business opportunities in China?

China is one of the world’s great growth markets and is likely to be for many years to come. Foreign companies often face difficulties in assessing Chinese market demand and enacting effective strategies because of the language barriers, culture differences, and high expense.

BPOVIA is the leading virtual assistant and Knowledge process outsourcing (KPO) service provider in China. BPOVIA is the only virtual assistant company ever been nominated for the prestigious “Red Herring 100 Asia” Awards 2008. Combines international perspective with local know-how, BPOVIA can provide our clients China business development service and help our clients doing successful business in China.

Please visit http://www.BPOVIA.com/ for details about our service.

CEO of Antal International Tony Goodwin noted that the SMEs should do so before the MNCs realize the potential of Chinese economy and start to rehire next year. In an exclusive interview by China Daily, he said hiring people will offer greater long-term benefits than firing. Corporate executives should consider formulating “long-term” human resources strategy during these uncertain times.

In China, US companies tend to react a little more aggressively to the effect of global economic downturn in reducing their workforce, according to Goodwin. In contrast, domestic and European multinational enterprises keep more restrained attitudes toward the unfolded crisis. And such kind of conservative approach is a wise one because of the underlying strength of the lager developing economies, especially China.

The fact that some MNCs are now firing people would probably cause problems for themselves in coping with the growth of business next year. However, they have provided great opportunities for small and medium-sized companies to recruit many talents they never found before. “If the financial crisis had not had happened, the smaller companies would never have stood a chance of competing with the big corporations for top managers,” said Goodwin. With so many talents, SMEs like BPOVIA in Nanjing is becoming much stronger and more effective.

He also noted that foreign companies can accelerate their localization instead of firing people to save costs. That is to hire more Chinese managers rather than bring people from their own countries.

Liew Mun Leong, CEO of Singapore-based MNC CapitaLand said the firm will have a 100 percent Chinese management in 2009.

Are you interested in the business opportunities in China?

China is one of the world’s great growth markets and is likely to be for many years to come. Foreign companies often face difficulties in assessing Chinese market demand and enacting effective strategies because of the language barriers, culture differences, and high expense.

BPOVIA is the leading virtual assistant and Knowledge process outsourcing (KPO) service provider in China. BPOVIA is the only virtual assistant company ever been nominated for the prestigious “Red Herring 100 Asia” Awards 2008. Combines international perspective with local know-how, BPOVIA can provide our clients China business development service and help our clients doing successful business in China.

Please visit http://www.BPOVIA.com/ for details about our service.

To estimate the development of German SMEs in China, German Industry and Commerce Taicang Ltd conducted a survey of more than 270 German operations including wholly owned foreign enterprises (WFOEs), joint ventures (JVs) and representative offices (ROs). The findings of the survey provide a unique opportunity to have a deep look into how German companies do business in the world’s first emerging market.

Success in China

German SMEs achieve success in China. Of all respondents, 80 percent say they have made their goals. Production companies break even within an average of 4 years, while trade and services break even within an average of 2 years after entering the market.

China continuously ranks first in the global business’s list of future prospects. All through ten years, SMEs comprised 20 percent of German companies in China. Four years ago their share rose to 53 percent.

The promotion for this trend is that the key customers moved to China and provoke a domino effect. SMEs suppliers establish operations close to their customers’ Chinese subsidiaries. The advantage of being prepared to solve potential problems sometimes plays a decisive role in sourcing decisions in China. A percent example of this effect is the scaled economies developed in cities and regions such as Taicang in Jiangsu province, which boost, promoting over 80 German companies.

Both the number and nature of German companies is changing. Traditionally dedicated to heavy manufacturing for export, German companies are shifting to the service sector. SMEs dominate these trading, logistics and consulting companies sectors.

RO, JV or WFOE?

With China’s market growth, more and more companies have expanded from a RO to a WFEO or JV, with WFOE being the most popular trend. The proportion of ROs has decreased from 50 percent in 2002 to 27 percent in the latest survey. The WFOEs has taken 80 percent of the companies with two years or less market presence. The push behind the transition are the growth of the domestic market calling for a stronger presence, and the modifications to China’s foreign investment regulations, which used to limit a JV to operate in China, now allow companies more freedom.

WFORs more often report their satisfaction with their legal framework than JVs. Eighty-six percent of WFOEs respondents said that they would stick to their strategy while only twenty-four percent of JVs take their strategy as the best choice. As a result, the trend of increasing number of business entering China as a WFOE will continue and climb.

Contrary to the common perception in the West that companies shift to only to exploit lower cost structures and export back to Europe and North America, most companies produce in China for the Chinese market. According to the survey, only 28 percent of German SME production in China is oriented for export, with many of them going to other countries in Asia.

Localized production

China’s domestic market is the current growth sector for most German SMEs, especially the young generations, sometimes names as “Little Emperors”, aged 35 and younger. This generation, many of which are only-children, is well qualified to consumerism and more open to new products unlike their comparatively conventional grandparents. Smaller families mean more women with more working time and lower costs, resulting larger household incomes.

The convenience of the on-site production enables German SMEs to compete with their Chinese rivals more effectively. In the survey, 75 percent produce goods on site, and 71 percent make domestic sourcing in China. Local content share ranges from 25 percent to 100 percent, with 56 percent marking the average. Generally, companies with longer years in China possess more local content. This strategy allows SMEs to keep prices closer to domestic levels.

Like all consumers, the Chinese want the goods providers to gear to their taste and needs. German SMEs are applying this more than ever, with 38 percent adapting their products to a great extent to meet Chinese customers’ expectations. Nearly 18 percent of respondents claimed that they do even more to adapt in low-price segments.

As German SMEs are growing more experienced in the Chinese market, they gradually transfer operations to their Chinese subsidiaries. However, they still put great importance on remaining corporate culture and contacting with the headquarters. Moreover, sensitive items such as strategic decision-making and R&D are closely overseen by the German headquarters. For example, only 32 percent of SMEs undertake a part of their R&D in China.

Are you interested in the business opportunities in China?

China is one of the world’s great growth markets and is likely to be for many years to come. Foreign companies often face difficulties in assessing Chinese market demand and enacting effective strategies because of the language barriers, culture differences, and high expense.

BPOVIA is the leading virtual assistant and Knowledge process outsourcing (KPO) service provider in China. BPOVIA is the only virtual assistant company ever been nominated for the prestigious “Red Herring 100 Asia” Awards 2008. Combines international perspective with local know-how, BPOVIA can provide our clients China business development service and help our clients doing successful business in China.

Please visit http://www.BPOVIA.com/ for details about our service.

Compared with State-owned enterprises, SMEs are much more vulnerable. Latest statistics from the National Development and Reform Commission show that in the first six months of 2008, about 10 percent of SMEs reported an average 15 percentage point drop in their industrial output growth from a year earlier to 30 percent. This indicates a significant shrinkage in their profit margins. SMEs have also been hit by the credit crunch resulting from the government’s tightening monetary policy to fight inflation.

Many reasons are unfavourable to SMEs. At a time when credit is tight, banks have understandably focused lending operations on traditional customers — large State-owned enterprises, which are much more creditworthy than SMEs. According to figures released by the China Banking Regulatory Commission, total loans obtained by SMEs in the first quarter of 2008 dropped by 30 billion yuan year-on-year.

In order to solve the problems of SMEs, the central government has taken several steps to provide the capital- thirsty SMEs with a wider access to loans. In early August, the National Development and Reform Commission said it was considering establishing a bank specializing in lending to SMEs to broaden their sources of finance. A week later, the People’s Bank of China increased the annual loan quota by 5 percent for national commercial banks and by 10 percent for local commercial banks, taking into consideration that SMEs make up a larger proportion of their clients.

In addition to the efforts made by the central government, many local private-sector trade agencies have organized financing opportunities for SMEs.

In a lot of provinces of China, more and more micro credit lenders are in the process of being established. As we all know, private capital is playing an increasingly important role in funding the growth of SMEs. Now, more private capital is being pumped into SMEs in the form of micro credit, and eases their capital shortage.

As the situation of SMEs is becoming better, it is believed that SMEs like BPOVIA will have a brighter future.

Are you interested in the business opportunities in China?

China is one of the world’s great growth markets and is likely to be for many years to come. Foreign companies often face difficulties in assessing Chinese market demand and enacting effective strategies because of the language barriers, culture differences, and high expense.

BPOVIA is the leading virtual assistant and Knowledge process outsourcing (KPO) service provider in China. BPOVIA is the only virtual assistant company ever been nominated for the prestigious “Red Herring 100 Asia” Awards 2008. Combines international perspective with local know-how, BPOVIA can provide our clients China business development service and help our clients doing successful business in China.

Please visit http://www.BPOVIA.com/ for details about our service.

Microcredit has a 14 year history in China. In October 1993, the government introduced MF, modeled from the Grameen Bank, as part of the poverty alleviation initiatives. Since then three main players have immerged – CFPA, CASS (Chinese Academy of Social Sciences) and CICETE (China International Center for Economic and Technical Exchanges), along with their international backers. All of these players have focused on using Grameen styled MF as a poverty alleviation tool for rural China, to varying degrees of success.

Today there are over 300 small microfinance pilot projects, few of which are financially sustainable. CFPA is the only one which has brought all its project sites together in a branch model. Till now microcredit association has not been able to become a legal entity due to the lack of relevant registration framework, as their members are unable to become legal financial institution. Due to this lack of registration, microcredit association’s activities are limited to some training courses, and promoting NGO microfinance regulations negotiations with the relevant government bodies. China is considered one of the last frontiers for microfinance. The market is huge, the existing providers are not providing good service and most are not sustainable.

Concerning the to be built microcredit companies in Zhejiang, microcredit lenders will be chosen from quality private enterprises whose net assets should be no less than 50 million yuan, asset-liability ratio less than 70 percent and those that have been making profits for three years in a row, with revenue higher than 15 million yuan.

The project is launched at this time when small enterprises facing financing difficulties caused by factors like soaring raw material process, and tightening monetary policy. Statistics show that because of the credit crunch, most small and medium-sized enterprises have to resort to the private lending market.