China’s small and medium enterprises struggling
They announce zero profits or losses. More than 3% will go bankrupt. The economic crisis, stagnation in exports and rise in prices affects 72% of SMEs. Hundreds of owners flee and go into hiding, leaving tens of thousands of workers without pay.
Beijing (AsiaNews / Agencies) - This year, small and medium enterprises (SMEs) in China will make no profits, many marking up losses. Under the same ownership, the situation is far worse than the 2008 crisis.
A survey conducted in Guangdong by Alibaba.com and the National School of Development at Beijing University shows that in the next six months, 72% of SMEs at the mouth of the Pearl River will have zero profits or small losses, while the 3.3 % of them will have to close down.
According to data collected, in one year the average profit of the companies has dropped by 30-40%. At the same time, the cost of materials and labour increased blocking all development. 72% of respondents in the investigation said that rising costs is their biggest problem. In the textile and clothing industries, the cost rose by 80%.
The euro crisis and stagnation of the U.S. economy has led to a fall in exports, so that many SMEs are working to only 71% capacity.
SMEs complain about the lack of credit from the State. At least 53% have never had loans other than those of non-banking organizations. The government’s credit crunch on banks - to curb inflation – has dealt a further blow to the development of companies.
Following reports that in Wenzhou (Zhejiang), at least 3% of SMEs had declared bankruptcy, the State Council has promised to help businesses with some tax breaks and possible bank loans, but so far without any solid result.
According to data of the State Council, SMEs account for 99% of companies in China and offer 80% of jobs to the urban population. They contribute to 60% of gross domestic product and 50% of tax revenues.
The fate of SMEs affects the stability and order in society. Over the past 9 months, in Zhejiang alone, 228 owners have fled, leaving 15 thousand workers without pay, amounting to about 76 million Yuan (about 7.6 million Euros).