Helping SME’s survive financially

Oswald Wong

President & CEO, China International Develepment and Investment Corporation Limited Oswald

 

 

There is an increase in SME’s globally and especially in the GCC in different industries such as oil and gas, media, logistics, manufacturing and healthcare. To survive with increased competition as more and more people are looking at the region for better returns and easy access in free zones to set up businesses, financial planning and cash flow is imperative to survive.

 

Most businesses start with a term loan or providing a performance bond or guarantee to release cash to finance a project. Financing SMEs in the GCC is quicker than most countries but requires the right partner and correct documentation for banks to support them.

 

Our team at China International Development and Investment Corp. Ltd recently signed an agreement with an UAE based SME, Sulty Events to promote an art exhibition that we sponsored and this in turn helped the SME kick start their events business.

 

Most SME’s need that one job to prove their expertise and to be able to have a successful project in their portfolio and attract more clients. For Sulty Events, working on an International art exhibition to promote the work of artist, Shi Dachan helps them set a benchmark for all their upcoming events projects.

 

Similarly, having the support of established businesses enables SME’s to grow their operations. The UAE excels in introducing new rules and regulations to support SMEs that help them set up a successful business environment.

We also find bank lending in the region for SMEs is lower than developed economies so they need the extra support from more established businesses, often ones that can work with them collaboratively. Most SME’s do not survive purely because of lack of financial information or a financial advisor.

 

Without doubt, SMEs are the key drivers of economic growth, employment, and prosperity and UAE is has a thriving SME sector that reflects the growth of different industries around the city. We find there are more entrepreneurs in GCC than in other parts of the world we travel to for business.

 

When we deal with international trade, financial guarantees are often required in order to secure new contracts and due diligence is done on the financial credibility of all parties to meet their contractual obligations.

 

In our regular meetings with investors, entrepreneurs both in China, Asia, Pacific and the GCC, we find that SMEs use Letters of Credit for international trade, however they find out that financing organizations are likely to demand high cash margins to compensate for the risk.

 

Collectively, the business community needs to support SME’s and be a role model providing guidance on financial management, cash flow systems etc to help them thrive as their dynamism often brings more to the economy than we often admit.

 

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