Wenzhou Boss Run: Rogue Or Helplessness

Wenzhou, a city with small and medium-sized enterprises, is suffering from the biggest test since the financial crisis. If this phenomenon is not controlled in time, the economy of Wenzhou will lose ground, injury and vitality.

Facing the crisis, enterprises are transforming. In the process of transformation, how to deal well with the relationship between banks, private lending and the government? Well handled, the relationship has been smoothed, and all sides can benefit from it. If we do not deal well with each other, we will lose everything.

Wenzhou's current small business owners have reached a rather alarming level. "If you run or jump, if you change you, which one do you choose?" recently, Dai min, a small business owner in Wenzhou, made such lament in an interview with reporters. Under the pressure of usury, his company has been on the verge of shutting down production. For recent media reports, "Wenzhou and Yiwu SME owners transfer assets overseas, fake bankruptcy really immigrants", and described the road map of asset transfer, Dai min repeatedly shouted "injustice"! "If there is even one percent hope, I believe they will not run away!"

　 Boss: small and medium enterprises are in danger.

Zhou Dewen, deputy director of the Central Committee for economic development, vice president of the China Association of small and medium enterprises and President of Wenzhou SME Development Association, told the reporter that in the "disaster stricken area" of Longwan Yongqiang, there were more than 20 starting road events in August alone, involving 3 yuan in 1 billion yuan.

According to incomplete statistics, since April, there have been more than 10 runaway owners suspected of usury in Wenzhou: Portman, the chairman of Jiangnan leather, fled to foreign countries, the strict owner of the coffee shop, the owner of Ye Jianle, the boss of Wang Hexia, the boss of the giant shoe industry, the boss of Dai Zhixiong, the boss of Dai Zhixiong shoes material, the boss of the shoe industry, the boss of the shoe factory, and Huang Jie, and so on.

In Wenzhou's folk history, such a large-scale running tide is rare. Zhou Dewen believes that small and medium-sized enterprises are the main force of the national economy and the main body of State Taxation and employment. Such a large area of small and medium-sized enterprises and small business owners running on the road, business failures, will inevitably lead to weak economic growth, tax reduction, factory shutdown, workers laid off. While private lending is usurping illegally by usury, once the capital chain breaks, it will lead Guarantee Corporation to go out of business, and creditors will cause trouble and then lead to big social problems.

"For Wenzhou boss running away phenomenon, can not be generalized. In my opinion, the fact that the Wenzhou boss is a fake bankrupt is actually a biased and distorted public opinion. The reasons leading to the Wenzhou boss running on the road can be divided into two categories: one is deliberately absconding with the money; the other is due to the fragmentation of the capital chain, and the enterprises are helpless. The former is a minority, and most of them belong to the latter. If they were not desperate, they would not escape. "Zhou Dewen said in an interview with our reporter," generally, tens of millions will not run. Most of the bosses on the road are worried about policy stability and social stability. "He pointed out that some creditors had the background of the underworld, and the debtors had lost their protection when they ran away from personal safety, while the Wenzhou people had a strong sense of local values and a good face.

As early as January this year, Zhou Dewen issued an "early warning" to the society: if the current policy of monetary tightening does not change, if the government fails to rescue it again, 40% of the small and medium-sized stock enterprises will be shut down, semi closed down or even closed down in the second half of this year. Zhou Dewen recalled, "every year we have to do a lot of research to investigate the changes of internal and external factors of SMEs. After the Spring Festival, we found that some enterprises only had 1 production lines with 3 pipelines, and there were many crises. What happened next proves Zhou Dewen's judgement again and again. The deposit reserve rate is raised one month at a time, the interest rate is increased by 1 month and 1 month. As the monetary policy is getting tighter and tighter, the famous enterprises such as the three flag group, Jiangnan leather, Portman restaurant chain and Zhejiang Tianshi Electronics Co., Ltd. have gone bankrupt, and the boss has abandoned the factory and fled. {page_break}

Private lending: whether or not the original crime can be amnesty for the current predicament faced by the Wenzhou boss, Zhou Dewen has made an image analogy of "nine covers with ten pots" to describe the dilemma of liquidity funds, and to illustrate the dilemma of liquidity funds, and to illustrate a group of causes and effects: the cost rise and other factors cause the profits of traditional manufacturing enterprises to be gradually low; the traditional manufacturing enterprises are forced to transform, and the new industries are the main road of government guidance.

Once the capital chain is broken, the owners of small and medium-sized enterprises will have to wait and die, except that they will not be able to raise large sums of money to fill the huge hole in the capital chain in a short time. "These" run "business owners are mostly involved in private lending, not borrowing or lending. In Zhou Dewen's view, these "run away" business owners have almost given up their industry, or Guarantee Corporation, or lend money exclusively. "Now that money is tight, corporate profits are thinning and cash flow problems are present, they can only choose" run away ".

Recently, the number of private lending cases in Wenzhou increased. In April of this year, a number of well-known enterprises in Wenzhou went bankrupt, and the boss absconded, and a few of the ten private borrowers were crying when they fled.

In June this year, one of the shareholders of Wenzhou Tietong Electrical Alloy Industrial Co., Ltd., is the most typical case. Fan Lele borrowed money from his relatives and friends, and then used the money to lend. As a result, he could not recover any of his loans, which resulted in the failure to repay his debts. More bosses "run away" because of their inability to repay usury.

"Now there is a common phenomenon in Wenzhou, that is, the name of the enterprise is still there, and the factory is still there, but in fact, there is no operation. It is an empty shell. "Huang Fajing, chairman of the Wenzhou smoking appliances industry association and chairman of sun Feng lighter Co., Ltd., said earlier in an interview with reporters that" many Wenzhou enterprises are still alive or barely maintained. Production and operation is not the concern of the business owners. He just wants to make the enterprise a platform for financing. After obtaining loans from banks, he can enter the property market, the stock market, or lend money.

"Such an enterprise has no potential and momentum for sustainable development. If it continues to develop, it will be a fatal blow to Wenzhou's economy." Huang is even worried about how many people in Wenzhou are willing to do business again.

"Even some large scale enterprises maintain industry just to borrow money from banks. However, after obtaining loans, enterprises do not make production, but they put money at higher interest rates and earn interest rates from them. "An enterprise in Wenzhou has revealed that" a company with an annual output value of about 100 million yuan can win 1 billion yuan of bank credit. "

He said, "in many cases, there is no way for enterprises to do so. They know that loans will not be profitable if they invest in industry, and they may lose money. Instead of doing so, it is better to invest in the capital market and make it more secure. These enterprises have actually become investment companies.

Zhou Dewen believes that we must increase credit for small and medium-sized enterprises. He said that monetary policy aimed at inflation is a strong drug, which has hurt the small and medium-sized enterprises. The government should appropriately adjust the policy of curbing inflation, taking into account both the public's food basket and the survival and development of small and medium-sized enterprises. We should increase credit support for small and medium-sized enterprises, especially banks, and appropriately relax loan conditions. On the other hand, we should increase the pace of "amnesty" for private capital, and turn the illegal fund-raising of private capital into legalization and standardize it. When a lot of bona fide private fund-raising is legalized, only malicious fund-raising behavior is left, then it is easy to crack down on illegal finance and end the rampant illegal financial situation. {page_break}

At present, many small and medium-sized enterprises are facing difficulties in their operation, mainly due to rising costs, declining profits, and a small part of them maintaining normal production. The orders from home and abroad are still normal, but the liquidity of enterprises can not keep up with the daily operation and order cycle. As the financing channels of formal financial institutions have been cut off, SMEs have turned to usury as a life-saving straw. According to information released by some regulators recently, private lending in Wenzhou is about 120 billion. The monthly interest rate of the private usury is several times that of the bank loan interest rate. In addition to drug trafficking, money laundering and gambling, there is no company which has a special channel in the stock market, no formal business enterprise can afford such a high cost of capital, and this interest rate is equal to forcing the real enterprise to commit suicide. In terms of financing cost, the average real interest rate of state-owned enterprises is 1.6%, and the average real interest rate of private and small and medium enterprises is 5.4%.

The small and medium-sized enterprises that are choked with difficulties in financing will survive badly. The vitality of the whole private economy will be greatly frustrated, and the overall economic situation of China will also be affected. Private lending lurks huge risks. Over the past few years, as the price of labor and raw materials has risen substantially, the RMB exchange rate has been rising, coupled with the tight monetary policy this year, banks have increased the reserve ratio for 10 times in a row. It is more difficult for enterprises to get loans from banks. Under the pressure, they have been forced to turn to private lending. This has further pushed up private lending rates and pushed up the scale of private lending. At present, the interest rate of private lending in Wenzhou has exceeded the highest historical value. The average monthly interest rate is 3~6 points, some of which are as high as 1 cents, or even as high as 1 cents and 5 cents. The annual interest rate is as high as 180%, while the annual gross profit margin of most SMEs is not more than 10%, which is generally between 3~5%. Under the temptation of profits, quite a lot of enterprises draw production capital and invest in private lending.

　 Banks: drastic withdrawal of debt and rush of debt

"The monetary tightening policy will continue, and by the end of 2011, more than 40% of China's private enterprises will go bankrupt!" Zhou Dewen repeatedly stressed to reporters that the current situation is grim. He said that Wenzhou's SMEs are suffering from the threat of "death", which is not alarmist.

In Zhou Dewen's view, this year, small and medium-sized enterprises are in serious difficulties: financing is becoming more and more difficult, the capital chain is broken at any time, the profit is reduced sharply, the living space is tightly compressed, and it has become an indisputable fact. Loans and capital shortage are the common pressure faced by SMEs in Wenzhou. In 1-3 months of this year, new loans in Wenzhou only amounted to 66.5% of the same period last year, and 42.9% of the enterprises' funds were tight. Of the 11 companies recently surveyed, 8 said they had tightened capital flows. Zhou Dewen told the newspaper reporter that an entrepreneur friend of Wenzhou recently complained to him that "it is urgent for the loan to get into trouble." The entrepreneur's business is well developed and well developed. It is recognized by Wenzhou municipal government as a growing small and medium-sized enterprise. In order to speed up the development, loans to the bank last year were 10 million yuan, and at the end of June, there were 5 million to repay the loan. The bank's leader promised to lend him money after repaying the loan. The entrepreneur made 5 million loans through private lending, and the bank leader politely told him, "I'm sorry, but now the bank has tightened up and the bank has no loan quota." Entrepreneurs friend suddenly silly eyes, private lending high interest, simply can not afford, and has promised short-term borrowing, immediately returned, and 5 million of the bank will soon return to the loan period, how to do? Once the capital chain breaks, it means that the enterprise will stop running, so anxious that he wants to cry.

Another example cited by Zhou is an example of the collapse of Xintai group by huge loans. Hu Fulin, the boss of the group, was once a "king of glasses" in Wenzhou. It eventually brought down Xintai, but it was almost unfamiliar with the solar photovoltaic industry. In 2008, the state produced 4 trillion yuan to stimulate the economy and get rid of the financial crisis. At that time, a loose monetary policy was being implemented, and the loan officers of the bank sent the loans directly to Hu Fulin's home. After Xintai group obtained the loan from the bank, it invested 600 million yuan to enter the photovoltaic industry. Zhou Dewen recalled: "in 2008, the bank's interest rate was five or six per cent, and the general lending rate was only a little bit higher, and the short-term turnover was at most two or three points." As long as the scale of the business is acceptable, many bank loan officers voluntarily ask for loans to enterprises. At that time, Hu Fulin was "hot headed" and got more than 1 billion yuan of loans from the bank, and the scale of the enterprise expanded several times. {page_break}

But since the beginning of this year, banks have been making full efforts to recover SME loans to reduce bad debts. So, breaking a loan is like a nightmare and suddenly comes to the small and medium-sized enterprises. According to statistics, in August this year, the loan of small businesses in Wenzhou banking institutions was reduced by 37 billion 300 million yuan compared with July. After the "break off" of bank loans, Hu Fulin found that he had already paid eight hundred million or nine hundred million yuan in debt. He hoped to repay the usurious loan with bank loans, but lost the source of "breaking the wall to make up for the west".

　　 Government: responsible for no reduction in business

Hu Fulin, Xintai group, went to the United States to seek capital lending in late September. However, it was suspected to be a "runaway" and caused a great stir. When he returned to China in October 11th to accept the interview with Orient TV, he said such a thought-provoking speech: "the government has also promised to support me as vigorously as possible. The policy is as supportive as before. Banks also continue to give us credit support, so I am more confident to come back and feel secure and secure." From Hu Fulin's speech, people can feel the government's role in resolving the crisis of SMEs.

Zhou Dewen believes that in normal times, paying taxes to the government in accordance with the law is an obligation that enterprises should fulfill. When enterprises are facing a crisis of shortage of funds, the government is duty bound to help enterprises reduce their burdens. Among them, more preferential policies should be given to tax revenue, and various administrative costs should be eliminated step by step to reduce the cost of the system. Through taxation, credit, fiscal policy and other channels, enterprises should be promoted to transform from technological transformation, production technology, operation and management to change the low price competition pattern, enhance the brand influence, improve the labor productivity and economic efficiency of enterprises, reduce the excessive dependence of enterprises on low cost, and enhance the competitiveness of enterprises.

Small and medium-sized enterprises can not afford to take too much trouble. If their living environment continues to deteriorate, they may end up with a final sigh of relief. If tax cuts can be made, income expectations will be increased, so as to ensure the stability and security of the first repayment sources of financial institutions. Tax reduction can increase revenue expectations, promote effective investment in private capital, effectively promote technological upgrading and transformation of SMEs, and put more efficiency into competition and maintain a balanced market situation.