Since the second half of 2008, the central government has implemented a series of policies. Recently, the State Council has also introduced six measures to stabilise foreign demand. As the economy has still not fully recovered, enterprises in the Pearl River Delta (PRD) region are hoping that the government can grant them greater policy support in the following aspects.

Financing

Many enterprises have voiced out that while the central government has continued to introduce policies aimed at easing the difficulties faced by foreign trade enterprises in raising funds, financing remains a major headache. According to a recent survey of over 700 enterprises conducted by the Guangdong Federation of Industry and Commerce (GDFIC), capital shortage is cited by 20.22% of the respondents as the third largest impact made by the global financial crisis, after dwindling orders and excessively low profit margin. Enterprises in general reckon that although the credit market has rebounded somewhat since 2009 with the support of the many policies introduced by the state, enterprises (in particular SMEs) are still plagued by the shortage of funds.

A responsible person from GDFIC suggested that in order to ameliorate the difficulty in financing, on the one hand, great efforts have to be made to monitor the implementation of the policies promulgated by the state while, on the other, leading foreign trade provinces in the coastal regions should take advantage of their abundant private capital supply and well-developed finance industry to quicken the pace of channelling private funds to the financial sector, set up banks, and encourage financial institutions to strengthen their credit support for SMEs through such means as finance lease and operating lease.

Export credit insurance

Amidst the financial crisis, the risk of trade credit has increased as many enterprises on the mainland, threatened by the fund shortage and even bankruptcy of buyers, are exposed to the risk of payment default. At the State Council executive meeting held on 27 May 2009, it was suggested that improving measures on export credit insurance policy can help enterprises solve their problems in export. However, enterprises’ response is that to make export credit insurance a protection umbrella in its truest sense, the state has to implement more detailed supporting policies and measures. Hence, the state should consider introducing facilitation measures targeted at export credit insurance for trade of different volumes.

Domestic sale policy

The biggest hurdle facing enterprises at the moment is dwindling demand on the international market. While the central government’s policy on stimulating domestic demand and encouraging consumption has released the pent-up potential of the mainland market, making domestic sale the target of many enterprises, vast differences between the domestic market and the international market have deterred many enterprises from “testing the water”.

In order to help enterprises carve a share of the domestic market, apart from the efforts made by the enterprises themselves, the government also has to introduce detailed measures encouraging domestic sale and set up service agencies to provide professional advice to enterprises.

Burden relief policy

Both the central and local governments have introduced policies aimed at lifting charges and reducing the burdens on enterprises. On the part of enterprises, they strongly call for the steadfast implementation of these policies so that they can really enjoy the benefit. As a matter of fact, enterprises are still weighed down by the great pressure of taxes and charges. The payment of withholding tax and fixed amount tax on the local level has still not been adjusted in response to changes in the economic climate. Findings of the GDFIC survey show that although 100 items of administrative fees and charges have been revoked, a wide range of fees are still in force, these include garbage fee, staff secondment fee, embankment and flood prevention fee etc. It is suggested that in collecting the fixed amount tax, the average annual business and not only the high seasons should be taken into account.

Also, irregularities in law enforcement have added to the burden of enterprises. Some enterprises point out that in charging noise pollution fee, the noise level is often not measured from the prescribed distance. Moreover, in some regions, the rate of urban land-use tax and property tax keeps going up, imposing a heavy burden on labour-intensive enterprises which occupy large land areas.

Meanwhile, the great variety of fees charged by Customs and commodity inspection departments is also a cause of dissatisfaction of enterprises.