Pudong improves credit environment to stabilize market and boost the economy

Ti Gong

Pudong has taken comprehensive methods to improve the credit environment for local enterprises to ensure stability of the market economy and boost momentum.

Despite businesses being hit hard by a global pandemic, it is a crucial year for Pudong as it stands at the 30-year turning point of its opening up and development.

To lead companies through the financial crisis, caused by the novel coronavirus, the local government has introduced backup policies to concentrate on growth.

It covers stability in employment, financial operations, domestic investment, basic living needs and stable industrial and supply chains.

For business starters, those with a good credit record get fast-tracked into the market more quickly with less registration procedures.

For example, small companies such as convenience stores, hotels and restaurants can get their business licenses registered in real-time without having to wait as before. So far, more than 900 companies have benefited from the simplified procedures, with a success registration rate of 98 percent.

During a business expansion phase, more support, in terms of cash flow and working areas, will be provided to create a healthy ground for a company’s steady operation.

Companies will benefit from more comprehensive credit services in loans, renting and logistics, some of which have already been implemented at the modern industrial service park in Jinqiao Town of Pudong.

Su Shu, founder of an Internet medical firm in Jinqiao, said her company was in need of dozens of work places for the surging demand amid the pandemic.

The credit service launched by the Jinqiao Management Committee has greatly reduced the company’s costs for new work places by 40 percent — a huge relief for the company’s cash flow.

For larger competitive corporates, fairer environment will be set up, in terms of property protection rights, freedom of trade and tax payment convenience. Enterprises leading in credits can be provided with one-stop services for fast authorization, quick confirmation and rapid rights protection.

They can also enjoy simplified measures at customs such as a low inspection rate, exemption from guarantee and priority clearance. The taxation department also provides convenient services, such as green channels, special assistance and the expansion of invoices to tax-paying enterprises.

Alliance with banks

Pudong has been cooperating with key banks, as the local financial bureau reached a consensus with 10 banks to guide enterprises with financial difficulties.

During a financial conference this week these banks signed strategic agreements with 100 corporate representatives. The banks include Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China, Bank of Communications, Shanghai Pudong Development Bank and Bank of Shanghai.

The deal stipulates that special credit support, worth 160 billion yuan (US$22.60 billion), will be provided for more than 10,000 small-and-medium-sized enterprises in the area, mainly focusing on basic living needs, employment stability and the new online economy.

Bank of Shanghai vice president, Huang Tao, said that the footsteps of Pudong closely follow the construction of a credit environment that is critical to social development and provides detailed plans for financial assistance.

“The action of Pudong not only meets the actual needs of the current Chinese economy, but also in line with its theme of ‘30 years of development and opening up,’ which will effectively reduce financing costs for commercial banks and enterprises,” Huang said.

Huang made it known that private enterprises play a pivotal role in innovative technology, adding that factors such as asymmetric information, a lack of collateral and financial irregularity have hindered the development of private businesses.

Supporting small firms

A comprehensive platform was thus launched during the conference to enhance the sharing of information between enterprises and financial institutes.

The latest financial policies and online credit services will be accessible to enterprises through the platform, on which banks can sift targeted customers after assessments based on credit information are collected.

Currently, seven credit products have been launched on the platform providing nearly 3.5 billion yuan in loans, which are expected to serve nearly 5,000 Pudong enterprises this year.

More firms can be saved from financial difficulties as 65 billion yuan, from bank credit lines, are being set aside for small and micro businesses.

Zhang Hong, director of the Finance Bureau of Pudong New Area, says small and micro enterprises in Pudong can submit applications to the 10 cooperative banks or the local financial bureau for financial support.

Zhang mentioned a barber shop, which benefitted from rent credit to help the business get back on its feet, after the subsequent virus lockdown, thanks to the aid from the bureau and relative banks.

“This barber shop in our area has been operating with a good credit record for more than 20 years. It was on the verge of closing down after being hit hard by the epidemic. They only need as much as 300,000 yuan to cover their rent and survive,” said Zhang.

After the virus outbreak, a chain restaurant in Pudong also faced going into liquidation because of no income. It received 5-million-yuan relief from banks under the bureau’s assistance within a short period to pay daily operating expenses, such as wages and rent.

Zephyr Intelligent System (Shanghai) Co, a start-up based in Pudong providing technology on the safety of new energy vehicle batteries, received substantial financial aid from the local government and major banks during the epidemic prevention and control period.

Li Fei, chairman and CEO of the company, said, “This is a win-win situation for banks and enterprises to maintain a good business environment. We are lucky to be trusted and will further implement operations according to the law for our healthy development.

“In the past, it could take you up to two months to get the loan, but now the amount of time is reduced to one week or two. We have received a credit loan taking up almost 30 percent of our sales volume.”