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Foreign Investment Financing in China

By EU SME Centre | Guidelines      28.06.2014     Tags: Other

Accessing finance has been a consistent challenge for European SMEs, even more so for those developing business in an international market such as China.

However, there has been a series of reforms in China’s banking system and financial market that aim to simplify financing and transaction procedures for foreign-invested enterprises (FIEs), such as RMB Settlement in Cross-border Trade, Non-residential Accounts and Supply-chain Financing.

At this stage, bank loans are still the largest source for SME financing in China. With the government’s support, some commercial banks such as joint-stock commercial and city commercial banks in particular, have launched various products and services to ease SMEs’ access to finance. For example, supply-chain financing provides them opportunities to leverage on larger companies’ credibility.

This guideline identifies key issues for European SMEs to consider when looking for funding in China. It provides a comprehensive overview of China’s banking system and foreign exchange mechanism, with an analysis of the pros and cons of major financing options for FIEs in China. You will also learn from best practices shared by three foreign companies that have successfully sought financing in the Chinese market.  

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