Abstract
The financial crisis erupted in 2008 makes the current global economy remain uncertain. SMEs, as an important force in China’s national economy, face a crisis of survival due to the more difficult business development. An important reason is that SMEs overlook the central position of financial management, so that the role of financial management has not been fully realized. In order to minimize the loss of SMEs to enhance their ability to withstand the crisis and master a rare strategic opportunity, to strengthen the financial management is very important.
Highlights
Since the reform and opening up, China’s SMEs develop with energy, playing an important role in economic growth and social stability
In 2008, the financial crisis triggered by the U.S subprime mortgage crisis makes global economy enter the cold
An important reason is the difference in financial management
Summary
Today China sets up many hard regulations on enterprises issuing stocks and securities. For SMEs, the main financing way is the accumulation of their own profits. In external financing, they rely on debt financing heavily, especially on bank loans. Because of SMEs’ small size, loose internal control, and poor transparency, it is hard for them winning the trust of banks. Loans from banks can not satisfy SMEs’ needs. Money are not paid in time and prices of raw materials and labor forces are rising, which makes many SMEs’ money flow stop. Due to the rise of uncertainty, banks are more careful in lending money to SMEs and set up stricter evaluation mechanism in order to avoid risks
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