Abstract
In this study, we have a research of the Zhejiang SMEs business operation and financing difficulties analysis and the bank’s coping strategy. Since the beginning of 2011, Zhejiang SMEs have fallen into business difficulties under heavy pressure from “3shortage and 2-high”, namely, shortage of money, shortage of electricity and shortage of labor and high cost and high taxes. This even leads to the “tide of enterprise collapse”. In such a dilemma, problems of financial shortage and financing difficulties of SMEs are quite prominent. Besides, main financing channel of Zhejiang SMEs is the private credit market while loans from banks accounting only a minor proportion. Thus, enterprises have relatively vulnerable capital chain and large capital liquidity risk. Banks shall actively deal with this problem, pay much attention and strengthen risk management, strengthen asset preservation and effectively improve the risk management level of banks.
Highlights
SMEs began to face business difficulties from the beginning of 2011
Based on the above analysis, we think that the bankruptcy of some Zhejiang SMEs is apparently a common feature of capital chain rupture, but basically, this is because that these enterprises excessively expanded their scale in the business development process; eager to make profits, they failed to be dedicated to their main business and the enhancement of their own core competitiveness; they fell into business difficulties because they could not deal with impacts from external economic environment changes
We can see that banks must actively deal with business operation and financing difficulties of Zhejiang SMEs so as to effectively control credit risks
Summary
SMEs began to face business difficulties from the beginning of 2011. Comparing the situation in 2008 with the strike of the international financial crisis, economic situation currently is gradually restoring and no major fluctuation has occurred in fundamental level, but SMEs seem to drop into a situation worse than that in 2008. Economic depression in 2008 was mainly caused by inadequate demands due to the recessed oversea economy under the strike of the financial crisis, but difficulties of SMEs at the current stage have essential difference from problems in 2008: currently, there are plentiful internal and external demands, but more difficulties for production and business operation These difficulties can be summed up as “3-shortage and 2-high”, namely, shortage of money, shortage of electricity and shortage of labor and high cost and high taxes, which are detailed as below: Higher production costs: The problem of high raw material purchase price and low product selling price is quite prominent. SMEs will suffer from serious impact by electricity shortage
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