Chinese private firms ‘being held back by prejudice as a result of government support for state-owned enterprises’
- Negative stereotypes mean private companies are finding it hard to get the credit they need, warns pharmaceutical boss
- Private enterprises are a mainstay of the country’s economy but state-owned enterprises are often seen as more reliable, says Renhe’s Yang Wenlong
Chinese private companies are being held back by stereotypes that paint them as less reliable than state-owned enterprises when it comes to repaying their debts, fulfilling their contractual obligations or attracting talent, the boss of a pharmaceutical company has warned.
Yang Wenlong, chairman of the private Renhe Group, said these prejudices made it harder for private companies to get loans, adding that this unfair treatment was a consequence of the implicit guarantees the government gave to state-owned enterprises (SOEs).
Yang, who is a national political adviser attending the annual parliamentary sessions in Beijing, said on the sidelines of the event: “The collapse of many private companies is due to lack of capital.
“While SOEs are chased by bankers to grant loans, private firms are shunned, turned down or offered a much higher interest rate by lenders.”
As a result, many private companies choose to borrow in overseas markets, such as from Hong Kong banks, which offer lower interest rates, he said.