Harbin pumps up its SMEs

Zhengyanghe, Harbin's 104-year-old food-flavoring company, may soon be competing with nationwide brands such as Lee Kum Kee and Haday with the help of a local government fund.

Zhengyanghe is one of 100 local non-State owned small and medium-sized enterprises (SMEs) that will benefit from the new fund.

Harbin is an old industrial city and its small (by Chinese standards) output has dwindled further under the global economic slowdown.

The official statistics show the city's gross domestic product reached 286.8 billion yuan last year, up 13.2 percent year-on-year. The annual growth rate represented a drop of 0.5 percentage points from that of the first 11 months of last year due to the global economic slowdown, according to the city government's website (www.harbin.gov.cn).

The added output value of the city's industries amounted to 51.35 billion yuan, up 14.7 percent from the same period last year, the website said.

The city's government responded by setting up a 20 million yuan fund to help local SMEs.

Harbin's 1,196 SMEs accounted for 63.1 percent of its gross industrial output in 2008 and play a key role in creating jobs and in the city's growth.

Local officials estimate the fund will increase Harbin's gross industrial product by 2 billion yuan and result in 10,000 new jobs.

The government selected the 100 businesses on their ability to adjust to a changing business environment, annual sales income level (between 4 to 5 million yuan in 2008 for all 100 companies chosen), and their growth prospects. It hopes some, such as Zhengyanghe, can use the fund as catalyst to become national-level brands.

Food makers or equipment manufacturers make up 80 of the 100 businesses selected for the fund.

The fund will help the SMEs overcome financing barriers by acting as an interest subsidy. Companies that meet certain targets in research, energy saving and emission reduction and job creation will receive further financial support.

Harbin will also develop a business-to-bank platform that will help companies having difficulty getting conventional loans from banks.

The government of Harbin's Daoli district, for example, is now acting as go-between for SMEs and financial institutions in the area, and has already helped three small firms secure loans.

The fund also helps the SMEs develop qualified staff through the "Talented people program," which will train managers and technicians.

The program includes forums, instruction by experts and scholars, visits to successful businesses and special management training courses. The program trained 19,000 people in 2008. In 2009 the training program will focus on law, industry policies and job skills.

(China Daily 03/16/2009 page5)