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Small businesses welcome government efforts to help resolve funding problems

Zhang Yue
Updated: Dec 29,2021 08:58    China Daily

Small and medium-sized businesses have welcomed the State Council's recent guideline aimed at helping them better focus on boosting development and improving their competitive edge.

Since the COVID-19 pandemic began, SMEs have faced numerous growth challenges due to evolving market demand both at home and abroad.

However, policy support from the central government, particularly as the country focuses on high-quality economic growth, has encouraged many to further develop their businesses.

Gong Wenxu, a financial officer at Sinocat Environmental Technology in Sichuan's provincial capital Chengdu, said that he can sympathize with how financing hurdles can hinder a small company's growth.

Sinocat Environmental Technology, which focuses on producing catalysts for post-emission treatment and hydrogen fuel cells, was listed on the science and technology innovation board, or the STAR Market, this year and now has relatively smooth access to funding.

Previously, inadequate financing was a major problem and kept the company from expanding.

Gong said he is excited about the ways the new guideline can help smaller businesses with this issue.

"In 2017, when air quality protection was a major focus, the number of orders we received was on the rise," Gong explained. "That should have been great for business, but as orders kept coming in, we had to pay our raw materials supplier before we could access accounts receivables. This created a liquidity gap for the company. It was so notable that we had to turn half our orders down to ensure that the rest could be filled."

Focused on manufacturing-based environmental protection, the company has thrived since going public this year, with national carbon emissions peak and neutrality goals also playing a role. But as it grows, it will need to invest an increasing proportion of revenue into R&D and innovation.

"Investment in tech innovation will surely use up a certain amount of liquidity, but it is also something required by our long-term development goals," Gong said. "With the new guideline encouraging state platforms to help SMEs innovate, they will have more chances to learn from their peers."

Zhou Yan, chief financial officer for Wanka Online, a technology company in the mobile internet market in Beijing, said access to more diversified channels will better enable SMEs to innovate.

Zhou said her company will need to make a significant effort to help investors understand and believe in its ideas. "Innovation surely uses up liquidity, but it greatly contributes to our long-term goal, as a sharp competitive edge requires strong innovation," she said.