Debt crisis of E China SMEs eased after govt support
Updated: 2011-11-06 08:14
WENZHOU - The debt crisis of small and medium-sized enterprises (SMEs) in Wenzhou, an economic hub in East China's Zhejiang province, has been eased one month after Premier Wen Jiabao visited the city and urged stronger financial support to SMEs.
Fifteen "runaway bosses," who had disappeared or declared bankruptcy to invalidate debts owed to individual creditors, have returned to, or resumed contact with the city over the past month, and some of the cash-strapped SMEs have restarted operation after getting financial support, said a spokesman with the city government at a press conference.
Five enterprises, after getting a fund injection of 50.8 million yuan ($8 million), have entered the reorganization process, the spokesman said.
To give the financial support, the local government, financial organizations and companies were mobilized to help the SMEs. The new lending in the city reached 5.45 billion yuan in October.
The aid was given after Premier Wen visited the city on October 5, emphasizing the importance of SMEs on securing local jobs and urging bank credit support and preferential tax policies.
Since this year, one-fifth of the city's 360,000 small and mid-sized businesses have stopped operating due to cash shortages and nearly 100 business owners disappeared or declared bankruptcy to invalidate debts owed to individual creditors pooled from the informal lending market, causing public panic, according to the city's council for small and mid-sized enterprises.