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Insufficient Funds Derail SMEs’ Expansion Plans

Insufficient Funds Derail SMEs’ Expansion Plans China suppliers want to take advantage of the better export environment, but investment gaps are delaying capacity and capability upgrades. Some makers turn to friends and family for loans instead.

The improving global economy and export situation in China are encouraging many companies to boost investment in capability expansion and product development. Small and midsize makers, however, are finding it difficult to obtain substantial funding needed to carry out such plans.

At the height of the 2009 financial downturn, many small and midsize suppliers scaled down their operations to cut costs and stay afloat. Shenzhen Huacun Textile Co. Ltd, for instance, closed some of its factories outside Guangdong province. Now that the company wants to set up new textile production facilities, it is unable to do so due to insufficient capital. Manager Jiang Jianhua said two-thirds of the investment still needs to be raised.

Firefly Lighting Co. Ltd, meanwhile, wants to expand its market share in developed countries, including France, Italy and the US. But to do this, the company needs to ramp up R&D and promotional activities. Sales manager Dang Danping said between $500,000 and $800,000 is still needed for hiring additional R&D …