SMEs see troubles worsen

The country's small foreign trade firms have faced increasing difficulties since 2008 and their business environment is worsening, an official of the Ministry of Commerce said Thursday.

Small and medium-sized enterprises (SMEs) are vulnerable in the market as their small scale lowers their ability to bear risks and access information, Assistant Minister of Commerce Yu Jianhua said at the Boao Forum for Asia 2013 SME Development Forum held in Boao in South China's Hainan Province.

Since the world financial crisis in 2008, small foreign trade firms, in particular, have faced increasingly tough problems such as a decline of external demand, protectionist restrictions from foreign countries and difficulty in getting international credit loans, Yu said.

Lack of orders due to sluggish international markets, heavy tax burdens, overdue payments from large companies and difficulty in getting loans are major problems facing SMEs, Li Zibin, president of the China Association of Small and Medium Enterprises (CASME), echoed Yu at the forum.

China had more than 12.4 million registered SMEs by the end of 2011, according to the latest available data from CASME.

Of these, around 5 million are foreign trade firms, which contributed 60 percent of foreign trade volume in areas including light industry, textile, toys and machinery.

Yan Yuantong, a sales manager at Jinjiang-based Hong­shun Plastic Company in East China's Fujian Province, told the Global Times Thursday that the company was struggling to survive as orders from their foreign clients dropped considerably in 2012 and labor costs were rising.

Yan's company is a toy subcontractor for Wal-Mart, Carrefour and Disney. It exports more than 80 percent of its products to Europe and the US.

"We are tight on cash as some of our big clients have delayed payment for goods which were delivered in September. But we've got to pay our raw materials supplier on time with cash," Yan said.

"The profit margin for SMEs is very narrow at between 1 and 3 percent. To help tide them over during hard times, the most urgent thing is to reduce taxes on these firms," Zhou Dewen, director of the Wenzhou Council for the Promotion of Small and Medium-sized Enterprises, told the Global Times Thursday.

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