(CFEN.com中国财经报update translated by Andrew van Buren, our China correspondent)

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Chinese sportswear fabric maker Taisan may benefit from pro-SME procurement policies. Above: Taisan's fabric used in sports apparel.

IN ORDER to help alleviate the tightened credit environment and less robust operating climates confronting China’s small and medium-sized enterprises (SMEs), the Shanghai Municipal Government Purchasing and Procurement Center and Pudong Development Bank have joined forces with the local government to create a more hospitable lending and procurement environment for SMEs.

Additionally, the provinces of Jiangsu and Heilongjiang as well as an assortment of cities across the country have also launched similar programs.

According to sources, in order to support SMEs several regional governments have been striving to find solutions to various supply bottlenecks.

Recently the State Council, the equivalent of China’s Cabinet, published its “Proposals to promote SMEs.”

Most link the support of regional government purchasing and procurement centers to the wellbeing of mid-caps in the country.

The recommendations fall into eight broad categories of official support for SMEs with the most important overriding sentiment being the urging of regional government purchasing centers to boost support for concerned firms in order to enhance opportunities for SMEs in their respective jurisdictions.

The State Council paper calls for government procurement officials to give priority to SMEs in all purchasing decisions whenever feasible to help boost and stabilize their revenues.

An official close to the matter said that to promote the directives in the Cabinet release, all state-controlled or state-influenced budgets are to urge purchasing managers to prioritize SMEs when considering procurements.

Regional governments that have not yet adopted such pro-SME procurement policies are strongly urged to do so post-haste.

In Shanghai, the Pudong Development Bank issued a statement saying it was fully participating in the program in terms of both encouraging an activist SME procurement policy as well as promoting a pro-financing regime for concerned companies.

As concrete proof of its commitment to the policy, Pudong Development Bank is showing its allegiance brick-and-mortar style.

The lender has set up an information window at the Shanghai Provincial Government Purchasing and Procurement Center and established a service hotline to facilitate purchases and loans for SMEs.

The two services offer a comprehensive bulletin board of potential SME suppliers as well as a considerable database of goods and services often in demand from government procurement officers.

Jiangsu Province, which lies to the north of bustling Shanghai, is not willing to fall behind its affluent municipal neighbor.

According to 2008 statistics, SMEs accounted for a staggering 99% of all provincial government procurements that year!

The provincial finance chief Pan Yonghe said: “In order to promote procurement of SME goods and services, our province has prioritized several projects to buy from SME-based orders and this has become established policy for us.

Project management and management consulting are also quite dependent on the professional services of SMEs, and we benefit from this.”

Pan added that the frequent orders gracing the books of SMEs in the region also help to boost the brand name of the companies involved, which helps them expand beyond the Delta region and also boost their recognition nationwide.

“The success of SMEs in Jiangsu in winning provincial procurement orders is worthy of imitation in other regions, and the pro-SME purchasing policy has displayed concrete success.”

The Yangzte River Delta is not the only region seeing both high compliance and success rates with the pro-SME procurement policy.

In the far northeastern province of Heilongjiang, the local government announced that from the beginning of this month, it has been providing favorable financing credit guarantees for local SMEs that meet certain requirements, and this policy will continue uninterrupted throughout 2010.


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