Technologically advanced companies receive priority and funding as nation pursues high-quality development
An employee (right) of China Construction Bank Corp asks a worker about a manufacturing plant's development situation in Nantong, Jiangsu province, in July. (PHOTO PROVIDED TO CHINA DAILY)
Chinese banks will increase innovative financial products and services offered to technologically advanced companies, in line with the country's pursuit of high-quality development.
Efforts in that direction are intensifying already. For instance, China Construction Bank Corp Jiangsu Branch extended a 154 million yuan ($24.22 million) loan to China Lithium Battery Technology Co Ltd, for a lithium battery project after assessing the company's innovation capacity.
With the establishment of the Beijing Stock Exchange, the challenge of further expanding the investment and loan linkage mechanism is certainly worth exploring.
Zeng Gang, deputy directorgeneral of the National Institution for Finance and Development
The State-owned enterprise specializes in research, development and production of lithium batteries, and battery management systems.
On Oct 12, CCB, a State-owned commercial lender, launched a bankwide promotion for an innovation capacity evaluation system of tech companies.
By adopting the new system, CCB is able to turn the level of a company's technological development into a key factor for the bank's credit-granting decisions.
This system helps small and medium-sized tech companies to overcome difficulties in obtaining bank loans solely via the analysis of their financial indicators.
CCB has gained access to the lists of more than 10 types of tech companies issued by different government ministries and over 16 million records of information on intellectual property rights.
Its new system, which covers 277,000 national-level high-tech and new technology enterprises, uses big data, intelligent decision-making and data visualization, plus a series of quantitative indicators, to automatically generate evaluations on the innovation capacity of companies based on their intellectual property rights.
CCB's client managers can check evaluation results on the bank's desktops, mobile app or WeChat enterprise account. For companies with strong innovation capabilities and good market potential, the bank will adopt different credit enhancement measures and accord high priority to their loan applications, said Wang Jiang, president of CCB, at a news conference on Jan 6.
As of the end of November, CCB had supported 854 of the 4,762 national-level technologically advanced "little giant" enterprises identified by the Ministry of Industry and Information Technology. CCB's outstanding balance of loans to these companies reached 24.84 billion yuan.
"We will further ramp up support in this respect to (help our country) realize high-quality development," Wang said.
"In the meantime, CCB is creating a full-life-cycle financial services system for tech companies step by step, thus integrating incubation, lending with investment services to help startups move from early stages to growth and expansion stages," he said.
Industrial Bank Co Ltd, a national joint-stock commercial bank based in Fuzhou, Fujian province, also launched a trial in Fujian for an evaluation system assessing sci-tech innovation companies on 17 parameters, including intellectual property rights, government incentives and subsidies, as well as collaboration between academia and industry partners.
Batteries of China Lithium Battery Technology－an innovative sector giant supported by CCB's loan service－are displayed during an expo in Beijing. (NAN SHAN / FOR CHINA DAILY)
Based on the evaluation system and the tax information of borrowers, Industrial Bank provided online lending services to early-stage tech companies. It partnered with government agencies, insurers and guarantee companies to establish a risk-sharing mechanism for these types of loans.
The bank explored securitization of intellectual property and the method of accepting IP as loan collateral through cooperation with IP administrations in various regions. It also combined lending with investment from external investment institutions to better help growth-stage tech companies.
China CITIC Bank Corp Ltd, a Beijing-based national joint-stock commercial lender, recently launched an online unsecured loan product－which does not require any type of collateral－for innovative tech companies. These loans are extended based on the creditworthiness of applicants. The maximum loan amount is 10 million yuan per borrower and the loan tenure is no longer than one year.
China CITIC Bank has also joined hands with other types of financial institutions in offering technologically advanced companies a series of products and services, such as loans, transaction banking, equity incentives, IPO-related services and refinancing through capital markets. In addition, it has launched multiple products for growth-stage tech companies.
The bank said it will take full advantage of the complete set of financial licenses owned by its parent company, CITIC Group, continue to focus on smaller early-stage sci-tech innovation companies, build a faster, better and more comprehensive system of financial services to promote innovation in science and technology, and strengthen targeted support for technologically advanced small businesses.
Agricultural Bank of China Ltd, another large State-owned commercial lender, vigorously improved its direct investment capacity in recent years to provide both direct and indirect financing to tech companies.
The Ningbo branch of ABC, ABCI Investment Suzhou Corp Ltd and JZ Capital jointly set up a 5 billion yuan fund in Ningbo, Zhejiang province, with a focus on supporting equity financing for technologically advanced small and medium-sized enterprises in the Yangtze River Delta region.
"China should encourage commercial banks to directly carry out systemic cooperation with private equity funds and stock exchanges. Subsidiaries of banks, like wealth management arms, can also participate in this kind of cooperation to form a more complete and more mature service system between banks and their subsidiaries. This will help satisfy financing needs of different types of technologically advanced SMEs at different stages of development," said Zeng Gang, deputy director-general of the National Institution for Finance and Development.
"With the establishment of the Beijing Stock Exchange, the challenge of further expanding the investment and loan linkage mechanism is certainly worth exploring," Zeng said.
ABC signed a strategic cooperation agreement with the BSE on Dec 10 to promote synergy in areas of client resources, comprehensive services, business innovation, technology finance and information resources, with the aim of helping technologically advanced companies to stand out from a crowd of businesses in capital markets.
As of Dec 28, ABC had established cooperation with more than 2,600 technologically advanced "little giant" enterprises and offered credit to over 1,200 "little giants". The outstanding balance of its loans in this regard was nearly 20 billion yuan.
jiangxueqing@chinadaily.com.cn
