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Portraits of Wenzhou Enterprises in the Pilot Financial Reform

portraits of wenzhou enterprises in the pilot financial reform

“Wenzhou Being approved as a pilot zone for comprehensive financial reforms has powered me with great confidence in developing the real economy.”, Hu Fulin, president of Zhejiang Center Group, an once runaway boss in the debt crisis striking Wenzhou last year, has much expect for Wenzhou's pilot financial reform. Hu Fulin is a signal. His runaway, his later return, or his present confidence, reflects the change of Wenzhou entrepreneurs' mentality from the outbreak of the debt crisis to the start of the financial reform in Wenzhou.

It has been five months since the announcement of the pilot financial reform in Wenzhou by the State Council on March 28, 2012 with a pack of relevant policies coming out. What are feedbacks from Wenzhou entrepreneurs, direct interested parties of the financial reform?

Runaway bosses: more confidence in the real economy

Hu Fulin is a symbolic character in Wenzhou's debt crisis last year. The runaway of dozens of Wenzhou bosses drew a national attention and to some extent pressed for the current financial reform.

With the help of the Wenzhou government, Hu is sparing no effort in solving his debts. At the moment, his newly-developed leather and shoes material market is at the stage of inviting businesses.

Undergoing the crisis last year, Hu has now new thoughts about building up the real economy. In his understanding, the financial reform in Wenzhou is aimed at guiding the private financing into a legal and transparent development, promoting the role of the finance in better serving the real economy and providing experience for a potential national financial reform. He also added that the dedication to its own industry would be his company's constant choice in the future.

Small and micro enterprises: willingness to try

Many Wenzhou enterprises are among the list of China's top 500, but as a fact which can not be ignored, it is those small, medium and micro factories around the city that support the economy of Wenzhou. In Shuangyu Town of Lucheng District, Wenzhou, called China Shoes Capital, with an area of 6.5 square kilometers, millions of shoes are produced and shipped in containers to other parts of China and the outside world.

When talking about her company's situation, Zhu Meihua, manager of Wenzhou Aodeli Shoes, frowned, "Though we use a factory of around five thousand square meters, we just rent it. In this way, we cannot get a loan with the factory. There are many factories like us."

Similar to many other small and micro enterprises in Wenzhou, Zhu mainly replies on her acquaintances to get financing. When introduced some new channels brought about by the financial reform, she said she would like to have a try if possible.

Explorers: the first in new businesses

Zhu Aiwu, president of Kobron Group, one of China's top 500 private enterprises, has a special instinct and a strong desire for new business opportunities, which is typical of Wenzhou people.

Started by China Construction Bank in 2009, Cangnan Jianxin Rural Bank is one of the first batch of rural banks setting foot in Wenzhou. Zhu is the first to take a share in it to start her exploration in the finance. However, she has received no dividend ever since its establishment three years ago.

Hence, she has a cautious and wait-to-see attitude toward the current financial reform in Wenzhou. "If there are some true opportunities in the reform, I still would like to be the first."

In addition, Zhu hopes that the financial reform can change some of the present loan policies of banks. "Now many banks offer enterprises loans on the condition that they also buy other products and services, which burdens borrowers. I hope that the cost of a loan will be cut down after the reform."

Private placement bonds: the financial reform is a rare opportunity.

Bond financing was once the right only to big companies. Now, Wenzhou is taking an active part in expanding bond financing to small, medium and micro enterprises with relevant policies of the reform. On July 24th, the first SME private placement bond in Wenzhou was successfully issued by Jiangnan Valve Co., Ltd. with a two-year bond duration, a 9.2% coupon rate and a RMB 50 million issuance scale.

According to Huang Zuoxing, president of Jiangnan Valve, SME private placement bonds do not take much advantage over bank loans, considering the financing cost. However, it is a great opportunity in the financial reform, which does not only expand the financing platform and channel of small and medium enterprises, but also promote his company's intangible assets. "We can say Jiangnan Valve has a more transparent finance and a more standard corporate structure through this issuance, which gets us closer to our initial public offering."

Overseas businessmen from Wenzhou: the future establishment of a fully-private overseas Chinese bank

Ying Fengjuan, vice chairman of Wenzhou Overseas Chinese Federation, is devoted to the establishment of a fully-private overseas Chinese bank in Wenzhou. She hoped that the restrictions on fully-private banks could be loosened to set up an overseas Chinese bank in Wenzhou.

Along with the implementation of Wenzhou's financial reform, the voice for an overseas Chinese bank in Wenzhou is also rising. Liao Zonglin, chairman of the European Federation of Chinese Organizations, expressed their willingness to invest in an overseas Chinese bank in Wenzhou if policies allow.

As told by Ying, the main obstacle in establishing an overseas Chinese bank in Wenzhou still lies in the appeal for a fully private bank. Though there is still a long way to go in the policy, they will keep trying.

"Wenzhou's financial reform, in spite of various doubts, anticipations and delights, is an undoubtedly great opportunity for the city. There are risks and also interests. The key is who will grasp the opportunity." Hu Jianyong, president of a leather company in Wenzhou said.

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