Selling off assets may help lift some of China's small and medium-sized businesses out of financial headaches by providing short term funds, a senior adviser has said.
"The ancient industry is playing an increasingly important role in raising funds for small and medium-sized companies that are often plagued by financial difficulties," said Zeng Guangyu, a member of the Beijing municipal committee of the Chinese People's Political Consultative Conference, the country's top political advisory body.
Zeng said the Chinese government should draft laws to better regulate the pawnbroking industry. It should be formally included as a proper means of financing for the country's small and medium-sized businesses.
"This will be a win-win solution for the pawnbroking industry itself as well as the growing number of small firms," said Zeng, a veteran professor of finance with the Central University of Finance and Economics in Beijing.
Pawnshops, often acknowledged as forerunners of the country's financial industry, appeared in China 1,700 years ago but were wiped out after the founding of new China in 1949.
The first modern pawnshop debuted in Chengdu of southwest China's Sichuan Province in 1987. By the end of 2003, the 1,375 shops nationwide had reported a registered capital of 9.5 billion yuan (US$1.14 billion).
These modern pawnshops have been applauded by small businesses because the procedures for pawnbroking are simple. There is no credit survey or guarantors required. The customers can get cash immediately, by pawning items ranging from home appliances, clothes, houses, cars, cameras, computers and mobile phones.
Small companies' applications for bank loans are often turned down because of their small production capacity and un-established credit standing with financial institutions.
Beijing's leading pawnbroker, the Minsheng Pawnshop established in January 2003, has so far provided 570 million yuan (US$68.7 million) of funds to its clients, 80 percent of which are small and medium-sized businesses.
In east China's Shandong Province, the 58 pawnshops had extended 1.16 billion yuan (US$140 million) to small and medium-sized firms by the end of September, 2004. This accounts for 68 percent of the province's total pawnbroking turnover for that year.
(Xinhua News Agency January 28, 2005)
|
