Financing high-tech SMEs in China.

This thesis addresses a gap in the literature relating to the financing of technology-based SMEs in China, more specifically, it examines the sources and types of finance sought and used by high-tech SMEs in relation to the various stages of their development since China's 'reform and opening' in 1978. The central argument is that the development of high-tech SMEs in China has been strongly influenced by the availability of different sources of funding and the relationship between private enterprises and the banking sector in particular. The thesis analyses the financing of high-tech SMEs in relation to a three stage model of business development. It also draws upon concepts from institutional economies to interpret the changing relationships between high-tech SMEs and financial suppliers. The empirical evidence is based on the achieved 83 face to face interviews including 74 with owners/senior managers of high-tech SMEs and 9 with bank and government officials in the study region namely Guangdong and Guangxi.
The results show that the ease of access to finance significantly varied through the three development stages. Internal finance and funds from individuate and private firms remained the key sources for high-tech SMEs at all three stages, with bank finance and venture capital yet to become significant sources at the start-up and early stages. A clear financial gap for medium and long-term funds was identified, placing a serious barrier
on the ability of high-tech SMEs to invest in the R&D necessary for making radical and distinctive innovations at the start-up stage. Currently, the majority of Chinese high-tech SMEs are dependent on the application of existing advanced technology to products and services and rely on their low costs of production to compete with other high-tech companies.

A thesis submitted in partial fulfilment of the Middlesex University for the degree of Doctor of Philosophy.