SME Financing: From Market Failure to Network Externalities

36 Pages·2014·1.39 MB·English

SME Financing:
From Market Failure to
Network Externalities
Liu Fuzhong, Vice Director
Strategy and International Relations
Shenzhen Stock Exchange
Contents
I. SMEs and Their Financing Obstacles
II. Information Disclosure to Bridge Asymmetry
III. Forging a Network of Positive Externalities
IV. Working With Government To Define Market
V. Summary
深圳证券交易所 PPT
SMEs are the backbones of real economy
>15 million registered SMEs
50% of tax revenue
Chinese 60% of the nation’s GDP
SMEs
60% of exports
account for
70% of newly applied patents
80% of urban employment
• SMEs account for 99% of the total number of all
companies registered and are cornerstones for economic
growth and social well-being.
深圳证券交易所 PPT
Hungry SMEs in China
• Bank lending serves more than 90 percent of large
20 percent
enterprises, but only less than of SMEs
• The real-term lending rate for small and medium-sized
15 percent
enterprises are about at the moment,
according to China Association of SMEs.
RMB 3 trillion
• SMEs’ private lending amounted to
(USD 492 billion)
in 2013.
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Key challenges
• Information asymmetry
• Market failure for SME financing
market
• Enhance public service for SME
financing
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Multi-tiered Market Structure
• SZSE’s Multi-tiered Market Structure
• Established on 1 Dec., 1990 SME Board
Main Board
• 480 Blue-chip companies
and ChiNext
have raised
USD 167
• Established on 17 May, 2004
billion for
SME Board
• 723 High-quality SMEs
1,109 SMEs
and
innovative
• Established on 30 Oct., 2009
ChiNext
start-ups.
• 392 Emerging and high-
Market
technology enterprises
Data as of 15 Sep., 2014
深深圳圳证证券券交交易易所所 PPPPTT
Widening Sectorial and Geographical Coverage
• There are altogether 532 listed companies on SZSE that are in
strategic emerging industries, accounting for 33.08% of all the
SZSE-listed companies.
• Private sector accounts for 81% of all listed companies on SME
Board and 95% of the ChiNext market
• 93% of issuers on ChiNext and 74% on SME Board are certified
high-tech enterprises.
• SZSE-listed SMEs located in nearly Sector Distribution
Traditional Sectors Emerging Sectors
120 municipalities and cities
across China. A-share market
ChiNext
SME board
SZSE Main board
-80% -60% -40% -20% 0% 20% 40% 60% 80%
Telecom. Consumer Discretionary IT
Health Care Consumer Staples Industrials
Utilities Financials Energy
Materials
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The SZSE Supports Green Industries and
Sustainable Development
• The SZSE supports environmental, alternative energy
and new materials companies.
• More than 50 green companies are listed on the SZSE.
• Social Responsibilities Index to promote environmentally
sensitive practices.
• The SZSE has established a special fund to restore
deserts in Inner Mongolia. The project has attracted wide
participation by financial institutions and companies.
深深圳圳证证券券交交易易所所 PPPPTT
The SZSE Supports Agricultural Industries
• The SZSE collaborated with Yangling Modern Agricultural
Pilot Zone in 2012 to foster hi-tech high-value-added
agricultural issuers.
• The SZSE had listed 53 issuers in agriculture, husbandry,
fish farming and food processing by the end of 2012.
• The capital market facilitates the transition of agricultural
businesses into high value-added, modern enterprises.
 Leading Companies in the Agricultural Sector:
深深圳圳证证券券交交易易所所 PPPPTT
I. SMEs and Their Financing Obstacles
II. Information Disclosure to Bridge Asymmetry
III. Forging a Network of Positive Externalities
IV. Working With Government To Define Market
V. Summary
深圳证券交易所 PPT