Zhejiang Economic and Trade Commission recently released "the first half of the industrial economy operating conditions and trends" report shows that tight macroeconomic policies, international economic fluctuations, the obvious inflation under pressure, the industrial economy in Zhejiang is in a tight running state. From January to June, the increase in total industrial added value and total profit of enterprises above designated size in Zhejiang Province dropped 5.5 and 17.8 percentage points respectively as compared with the same period of last year. From January to May, there were 10,700 loss-making enterprises above designated size with a loss of 19.6%. According to statistics from Zhejiang Administration for Industry and Commerce, more than 1,200 enterprises in Zhejiang province shut down in the first half of this year, which is not the case in Zhejiang for 10 consecutive years. Zhejiang Province, the more obvious differentiation of various industries, most of the textile industry, especially leather, chemical fiber, clothing, printing and other losses larger. Petroleum Processing Industry Due to the substantial upside-down of the prices of crude oil and refined oil, from January to May, the profit of 2.89 billion yuan in the same period last year suddenly changed to a net loss of 1.55 billion yuan. The food and paper industry to play the role of broad-based price increases, profit growth of more than 50%; pharmaceutical industry since last year out of the doldrums for three consecutive years, profit growth over the past 10 years peak; chemical and rubber industry profits soared by 50% , Rare in recent years. In addition, the shipbuilding industry has become the industry with the strongest industrial growth in the province at present, with the output value reaching 10 billion yuan from January to May; the output value, profits and investment growth of waste resources and waste material recovery and processing industry exceed 40% and 110% respectively 80%. UnionPay Analysis: CUP analysts believe that in the tightening of the background, regulation and pressure, the SMEs in Zhejiang are experiencing unprecedented pressure: The first is the risk of enterprise capital chain fracture increased There are many small and medium-sized enterprises in Zhejiang Province. Since 2007, the prices of raw materials, labor force, coal, oil and transportation have risen continuously and the market competition has been fiercer. Sales pressure of small and medium-sized enterprises has been steadily increasing. A large amount of liquidity is stuck in production and receivables With the increase of accounts receivables, the funds used for inventory increase and the demand for funds of enterprises increased rapidly. In the meantime, due to the intensified inflationary pressure in China, tight monetary policy in China has led to a marked tightening of credit supply to domestic SMEs, which has caused a serious shortage of funds for SMEs. The risk of a capital chain rupture is increasing. Some SMEs that were originally better-off faced difficulties or even bankruptcies and could not repay their borrowing funds. China's sewing machine industry leader - Taizhou, Zhejiang's "Leap Group" is due to the funding chain broke down. Large-sized enterprise groups still face difficulties, and SMEs with poor capital strength have a more difficult life. Second, the deteriorating foreign trade situation has hit Zhejiang export enterprises Zhejiang is a big province in foreign trade of our country and has contributed a great deal to our country's exports. Zhejiang exports are often used as low-cost strategies. For example, the price of an electric car is only the price of a foreign shoe, while the idea of ​​"focusing on export and domestic sales" Long-term obvious imbalance between import and export structure. This is in stark contrast to the import and export structure of "imported exports halved to" Jiangsu. Zhejiang's dependence on foreign industrial economy ranks top in the country. Over 30% of its industrial economic growth over the years has come from exports. However, under the influence of many unfavorable factors such as the sharp appreciation of the Renminbi, rising raw material prices and rising labor costs, the export situation in Zhejiang is very grim and the growth rate has plunged into the doldrums. From January to April this year, the province's small and medium-sized enterprises realized a total export delivery value of 252.786 billion yuan, an increase of 12% over the same period of last year, a drop of 10.67% from the same period of last year, dropping to the lowest point in recent years. In April, the delivery value of export products of enterprises above designated size was 81.332 billion yuan, an increase of 11.2% over the same period of previous year, the lowest growth rate for the same month in 1998. Over-reliance on exports has caused great volatility in Zhejiang enterprises when the foreign trade environment changes. Renminbi appreciation, so that the current Zhejiang Province above-scale enterprises main business profit margin of only 4.3%. In addition, due to the disorderly competition among exporting enterprises and the high level of international trade friction, many export enterprises are not faced with the issue of development but the issue of survival and the exporting enterprises are facing a reshuffle. Finally, private lending rates have risen and enterprises have been overwhelmed As the funding side continues to be tense, many SMEs can only turn to private lending to seek financing channels. In the current composition of corporate operating capital in Wenzhou, Zhejiang, the proportion of private financing has risen from 16% in 2006 to 28% now. In 2007, the lending rate of private lending in Zhejiang Province all the way rapidly rising. The four quarterly weighted average interest rates were 12.30%, 13.69%, 14.53% and 16.84%, respectively, up by 0.76, 2.76, 3.58 and 4.76 percentage points respectively over the same period of last year. However, high interest rates may not be able to solve business problems. In 2008, the number of small and medium-sized enterprises in Zhejiang overburdened loan borrowing numerous companies. Taizhou City, there have been 15 cases of run-up due to run-up usury companies; Shaoxing Shangyu days Green Textile Co., Ltd. legal representatives involved in private usury, the sudden disappearance of the end of 2007, the company cut-off. Loans can only ease the capital shortage temporarily, but due to the current economic situation weakened, corporate profitability is reduced, unable to repay high interest debt due, corporate bankruptcy is inevitable. CUP analysts reminded the survival of SMEs in Zhejiang Province is getting worse and worse, not only the result of bank credit tightening, but also the appreciation of the renminbi, the deterioration of the foreign trade environment, rising costs, and even the industrial structure of Zhejiang, the industry profit differentiation Is the best proof. It is suggested that banks should focus on the dominant enterprises with high incomes and profit margins and avoid credit risks due to enterprises that avoid large drop in profits and deteriorating their financial conditions.