Sunday, July 31, 2011

Alibaba’s survey finds Chinese SMEs struggling

News this week: According to a recent survey carried out by both Peking University and e-commerce company Alibaba Group, small- and medium-sized enterprises (SMEs) are finding it difficult to obtain credit from banks in China. This difficulty is compounded by rising labour and material costs. According to the survey, SMEs generate 65% of China’s GDP and 80% of the country’s employment opportunities.

As part of the survey over 2,300 SMEs in the Zhejiang Province were interviewed. Of those, 82% of SME owners reported rising labour costs as a problem for their business compared to 52% last year. Similarly, 81% of respondents reported rising material costs as a problem this year versus just 56% in 2010.

Additionally, the survey found that 20% of SMEs in Hangzhou and Wenzhou, two cities within Zhejiang Province, have at least partially suspended some production lines. In terms of obtaining credit, the survey found that 63% of SMEs interviewed require financial support, however, only 15% of those received bank loans. Approximately 50% of those without bank funding used private lending or family and friends as an alternative.

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