Supportive policies urged as profits at 30% of SMEs drop

Profits at about 30 percent of Shanghai's small and medium-sized enterprises have declined, according to an industry survey, as businesses called for more supportive policies from the government.

The survey, conducted by the Shanghai Federation of Industry and Commerce in the second half of 2011, showed that small companies were suffering higher costs, weaker demand and difficulties in raising funds, Liu Xingxie, a vice chairman of the federation, said yesterday.

SMEs accounted for 64.5 percent of Shanghai's businesses by sales in 2010, Liu said at the annual session of the Shanghai Committee of the Chinese People's Political Consultative Conference.

The findings echoed a recent national survey by Ernst & Young, which showed a third of China's top private companies either saw falling profits last year or flat earnings as in 2010.

Small Chinese companies have for decades been lobbying for easier access to credit, especially when China tightened its monetary policies last year to tame inflation and the weak economic momentum in Europe and the US affected the business of many small Chinese manufacturers which rely on exports to survive.

Help for small companies again became a hotly-discussed issue at this year's local political advisory session.

Li Feikang, member of the CPPCC's Shanghai Committee and chairman of Shanghai Hongnian Investment, suggested the city government set up independent institutions to evaluate the lending risks to small companies on a case-by-case basis.

Any company that is deemed qualified by the institutions should get bank loans or they would have the right to seek compensation from lenders, Li said.

Liu's federation urged the government to treat equally private firms and state-owned companies.