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SMES seek ways to quick profits
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CNTV, November 2, 2011
East China’s Zhejiang province is known for prosperous local private businesses and a large sum of floating private capital. But this tradition has gone through changes in recent years, as costs rise and profits shrink.
As a result, more and more are abandoning their businesses, and trying their luck in market speculation.
Zhou Dewen with Wenzhou SME Development Promotion Association said: "A friend of mine worked very hard to run his company for ten years. Yet the money he made is less than his wife who simply made some 200 million yuan by making few investments in Shanghai’s real estate market. This is not a rare case in Wenzhou."
Knowing local small and medium sized enterprises only too well, Zhou said, the rise in costs has driven many manufacturers to move their production lines to the less developed western China where market competition is less and demand growing fast. And the remaining ones are also looking for ways to make quick profits. Some of them even use the bank loans received on title for growing companies for market investment.
Xie Rongfang, Chairman from Wenzhou Shoe & Leather Industry Association, said: "It is natural for enterprises to seek higher profits from the property market, high-tech industry, or venture capital. They can use the money they make from market investment to support the companies."
Some say the local industry is turning "hollow", others disagree.
A local official Zhang Zhenyu said: "I don’t agree with the ’hollow’ industry saying. We have over 70 thousand enterprises in Wenzhou that vary in size, output and taxation. The industry is not lost."
An official survey shows private capital in Wenzhou is as high as 600 billion yuan, over 94 billion US dollars. Over one sixth of this capital is used for lending and borrowing. Insiders say smaller companies should find access to this huge pool of capital to grow businesses while bigger ones seek alternative profit-making areas.
