Poradenství v oblasti financování malých a středních podniků v Číně
European Small Business Portal nabízí část věnovanou informacím o případných možnostech financování EU pro malé a střední podniky. Evropská komise nedává přímé dotace nebo půjčky jednotlivým společnostem, ale pomocí webových stránek financí EU můžete najít místní finanční zprostředkovatele, které poskytují EU úvěry/záruky.
1. Build relations with Chinese banks, private investors and government authorities
In China, international and domestic banks are still the primary source of external channels of funding for European SMEs. It is important to maintain a strong relationship with banks in your home country so that they can give instruction to their China branch to open a credit line.
Many other financing institutions outside the banking system also offer funding solutions, including financial leasing companies, credit guarantee companies, and micro loan companies. Although the financing cost could be much higher, it does provide alternative channels to fill a funding gap.
The Chinese venture capital and private equity market is relatively challenging for foreign SMEs, as local investors tend to prefer pre-IPO cases with fast growth prospects, while SMEs usually do not have the required market position, contact networks and market knowledge to expand fast enough.
In some industries such as clean technology, energy, biotechnology and pharmaceuticals/medical equipment, where the Chinese government encourages technology transfer, opportunities are however more apparent and the investment scope can span into pre-revenue cases.
2. Look out for EU funding available in your home country
The European Small Business Portal offers a section dedicated to information on possible EU funding opportunities for SMEs. The European Commission does not make direct grants or loans to individual companies, but the Access to EU Finance website can help you find a local financial intermediary which manages EU loans/guarantees.
3. Check out alternative financing solutions
Other channels for funding include financial leasing, equity financing, government grants and crowd financing. For EU SMEs, family and friends, local and regional financing opportunities tend to be more realistic in the early stages of development.
For European SMEs engaged in online trading, major Chinese e-commerce platforms (for example Alibaba and JD.com) have started to offer micro-loans (typically a loan size between RMB 1000 to 10 million) to their existing merchandisers to finance their operation needs. The platforms use information instead of assets to be sure of their loans, so a proven record of strong online sales and satisfied customers will be essential.
4. A word on licensed credit guarantee companies (CGCs)
If you do not have fixed assets in China to pledge as collateral when applying for bank loans in China, a CGC may be an option. In China, CGCs were created to help SMEs get access to bank loans. A CGC will charge prospective borrowers a significant fee however, and, in exchange, serve as a guarantor to the bank, pledging to pay for any losses in the event of a default. In effect, the CGC had sold insurance, also known as a credit default swap (CDS) to the bank for a risky loan, with the borrower forking over the premium.
Make sure you approach a reliable CGC however. Talk to a credit officer from the main banks in China for references of credible CGCs that they do business with.
To get further advice on issues relating to access to finance for China, contact our Advice Centre.
A well-drafted contract is one of the elementary conditions for securing your position in business. Various factors such as geographical distance, language and cultural barriers, and a different legal system make concluding contracts in China, or with Chinese business partners, even more challenging.
To help European SMEs with their business contracts, our Advice Centre now offers a contract checking service as part of its Technical Solutions. Companies get greater peace of mind and assurances over contract clauses, ultimately saving them time and money, and minimising risk. A few examples of the contracts that we have helped revise recently include:
- non-disclosure agreements for companies active in the design field
- contracts with local agents for distribution of products, including food and beverages
- employment contracts for foreign employees
- sales and purchase agreements on exporting products to China, including machinery tools
Most recently, an EU SME asked us to review one of their sales contracts which they had prepared with the help of lawyers in their home country. Though the contract appeared comprehensive and was well accepted in Europe, it was drafted without knowledge of the Chinese law and local practices. Payment provisions were not clearly addressed, running the risk that the client would not receive money since the Chinese bank would not allow the Chinese partner to transfer payment in the foreign currency.
The contract had correctly included a clause on governing law - in this case foreign law - however a provision on dispute settlement was omitted. This would further complicate matters in case of a dispute, as it would likely mean that the local Chinese court would deal with the dispute being the default competent authority in this case. The local court would have to make its decisions following the foreign law with which it is unfamiliar.
In many of these cases, having advice from experts familiar with local regulations and practicalities of doing business in China is crucial for European SMEs' success in the Chinese market.
If you need help to review your business contracts, contact our Advice Centre.
To find a list of professional service providers, including lawyers in China, search our online database.
The European Small Business Portal offers a section dedicated to information on possible EU funding opportunities for SMEs. The European Commission does not make direct grants or loans to individual companies, but the Access to EU Finance website can help you find a local financial intermediary which manages EU loans/guarantees.
