Cash injection to open new growth vistas for UK SMEs

Small and medium-sized businesses are the life-blood of the British economy. ZHOU HERAN/CHINA DAILY

Shanghai Nord to lend $250m, mainly to cash-strapped firms

It is something countless British technology startups face: in a tightened economy, despite insisting they expect their revenue to grow quickly, the chances of getting sufficient funding are slim.

The Daily Telegraph in London reported last year that as many fledging firms continue to struggle, more than half of the small and medium-sized enterprises in the United Kingdom had resorted to using credit cards for working capital.

The same percentage used bank debt to finance growth, while just 3 percent of UK entrepreneurs had managed to obtain equity finance.

It has been like this for years, in fact, ever since the dotcom collapse left a yawning funding gap that many simply fell into.

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However, one Chinese company now hopes that this gap in the market can be lucrative.

Shanghai Nord Engine Asset Management Group, a 5-year-old private-equity-focused firm, says it plans to inject 150 million pounds ($250 million) directly into the British SME market, and open its first overseas operation in the country in September.

Zhu Yang, its president, says he defines SMEs in Britain as companies whose turnover is below 20 million pounds.

"If we invest 3 million pounds in each, we can invest in dozens," he says.

Zhu claims his firm is the first Chinese institution focusing on the British SME market.

He and his team plan to target technology companies, particularly those with strong commercial, research and development capabilities, and they will then work to help them access the Chinese market.

"But companies must prove to us they have potential and must have a strong will to grow their business with China." Zhu says.

The Confederation of British Industry, the UK's leading business lobbying organization, says SMEs play a crucial role in driving growth, opening new markets and creating jobs.

They account for 99.9 percent of British private companies and provide 60 percent of the private sector workforce.

But many experts, including Yao Shujie, head of the School of Contemporary Chinese Studies at the University of Nottingham, think more should be done to encourage overseas investment and support for such a vital segment of the economy.