Nothing can beat…

… happy family gatherings. This is what I’ve always loved about Christmas.

Guangdong: Credit Constricting

Exporters in the once-booming southern province of Guangdong and other industrial hubs have suffered in recent years from rising labor and input costs, a stronger Chinese currency, fewer tax breaks and more stringent testing standards. As local banks in Hong Kong have tightened their credit facilities, companies which Hong Kong invested businesses in Guangdong and which are dependent on credit are facing trouble.

Smart Union, HK invested and a supplier to Mattel, hasn’t paid its staff for two months, according to Reuters on Oct 17. Nevertheless, the company is said to be “not technically in liquidation” , but had to be “stabilised”.

Mainland Chinese banks are apparently no generous lenders either any more. The State Council mentioned as one of its urgent measures for the fourth quarter to encourage financial institutions to increase credits to small and medium-sized companies. Victory messages like this one from Hunan’s provincial government suggest that there is a credit crunch indeed.

In September, China Daily reported that foreign banks in China have seen small and medium-sized enterprises (SMEs) as a rising opportunity to take a bigger slice of market in the country’s financial sector. Maybe China Daily also sees foreign banks as an opportunity for China to help solve the credit crunch there, but that’s not the paper’s way of putting it.