Chengdu, April 2, 2004
—The Chengdu Small Enterprise Credit Guarantee Company (CGC) was established today by the State Secretariat for Economic Affairs of Switzerland (SECO) and the Chengdu Municipal Government. They each invested $3 million in the joint venture, which is China's first credit guarantee company between Chinese and foreign government partners. CGC will provide credit guarantees to small businesses and unemployed entrepreneurs in the Chengdu area, thereby helping SMEs access finance, create jobs, and spur economic growth. The new company was strongly assisted by the China Project Development Facility of the International Finance Corporation, the private sector arm of the World Bank Group.
CPDF’s assistance has included training, support for corporate governance, and access to finance. Building on CGC's successful track of record, CPDF assisted the company in raising $6 million in new capital. Those funds will allow it to serve an additional 400 small and medium enterprises. This work included the preparation of an information memorandum and legal documentation for the new capital injection. CPDF introduced CGC to its Swiss donor partner, which will provide half of the proposed capital increase. CPDF also helped CGC to strengthen its corporate governance through the drafting of new articles of association and the appointment of independent directors on its board.
CGC was set up from the foundation of the Chengdu Small Business Credit Guarantee Company, started three years ago by the Chengdu municipality and the UK government's Department for International Development. Since then, the company worked closely with Chengdu City Commercial Bank and provided credit guarantees worth a total of 300 million renminbi to 150 SMEs and 240 laid off workers who have become entrepreneurs, helping generate 4000 jobs.
This performance attracted SECO's interest. With CPDF's assistance, the two parties agreed to build on this early success. The new company is expected to provide 250 to 400 million renminbi of credit guarantees to more than 100 enterprises a year, which in turn are expected to generate 3000 jobs annually. CPDF will continue to provide technical assistance to CGC, helping it become a demonstration case in SME finance.
Speaking at the signing ceremony, Mr. Ge Honglin, the vice president of CPC Chengdu Municipal Committee and Mayor of Chengdu, said, "The establishment of the joint venture credit guarantee company will have a significant and positive impact on the local economy and social credit system.” He expressed hope that Chengdu guarantee companies and financial institutions will leverage this opportunity to continue working with the Swiss government and gain experience and exposure to international practices in the financial sector, further equipping themselves to satisfy WTO membership requirements. He welcomed Mr. Claude Barras and the distinguished guests from Switzerland.
Mr. Claude Barras, head of the Investment Promotion Unit of SECO, commented in his address that CGC was part of Switzerland's continuing efforts to assist in China's development. He said, "I am certain this project will be a success and create a sound foundation for further cooperation between Switzerland and Sichuan. He was impressed by the province's abundant natural and cultural resources, excellent infrastructure, and improving investment environment.
Mayor Ge met with Mr. Barras's delegation before the signing ceremony. They exchanged views and ideas on Chengdu's resource advantages and Switzerland's advanced financial and manufacturing industries. They considered how best to promote further cooperation.
