“Small and beautiful” enterprises are a key part of high-end manufacturing

VT3002-1-2X32D Looking at the development path of global high-end manufacturing, one thing is very interesting. Many of the key technologies, or breakthrough products, were not invented or manufactured by large companies, but were first introduced by many small companies or even startups. The developed countries in Europe and the United States represented by Germany and the United States have a large number of leading technology, strong innovation ability, large market share, high degree of internationalization, but very low social visibility of small and medium-sized micro enterprises – the Germans have given these enterprises a proprietary term called “hidden champions”. These “hidden champions” companies, VT3002-1-2X32D together with representative leading enterprises, have laid the international competitive advantage of Germany, the United States and other countries in the field of high-end manufacturing. Even in the automotive industry and CNC machine tool industry mentioned above, in addition to a few complete machine factories, most of the upstream and downstream parts enterprises are such “hidden champions”.

Small and beautiful, are the salient characteristics of such “hidden champion” companies. To climb the high-end manufacturing industry chain, the development and birth of a large number of such “small companies” is a necessary condition. From the exhibitors of the “Made in China Day” in previous years, you can also see such a trend, from the earliest to pay more attention to the founders of major countries such as aerospace science and industry and weapons industry, to later join Haier, Gree and other key large private enterprises related to the national economy and people’s livelihood, and then to 2022, small and medium-sized enterprises are the first “Made in China Day”. More and more small and medium-sized enterprises that penetrate into the “capillaries” of manufacturing have been seen. China now has a special term for such enterprises, called “specialized and special new little giant.”

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But neither “champions” nor “little giants” are big companies. This means that, before such a company is fully grown, the financing problem is always a key problem in the development period of the enterprise.

For such small companies, in the start-up and growth stages, successful financing often determines life and death. Whether it is technical research or product promotion, it needs a lot of funds as backing, and the traditional bank credit model is difficult to provide suitable financial services for such enterprises.

For the traditional bank credit model, some people jokingly say VT3002-1-2X32D that “sunny umbrella, rainy umbrella”, or they are more willing to “icing on the cake” rather than “in the snow.” Especially for small, medium-sized and micro enterprises in the manufacturing industry, traditional banks will be more cautious in approving loans.

This is also the result of the traditional credit model paying special attention to asset collateral and financial report for the need of risk control. However, for many small and medium-sized enterprises in the manufacturing industry, especially those engaged in high-end technology research and development, these two points may be weak. They often lack real estate and large equipment assets, and in the early stage of research and development investment, it is difficult to produce beautiful operating data and financial reports. In addition, the manufacturing industry itself is highly volatile, affected by market demand, raw material prices, production costs and other factors. This volatility can lead to unstable business conditions for Msmes, which makes it more difficult for traditional financial services to reach such enterprises.