The Asian Development Bank (ADB) signed a contract Friday with a Chinese firm to become a minority share holder in China's leading private credit guarantee firm for small and medium-sized enterprises (SME).

Under the agreement, ADB contributed an unspecified sum to the restructuring of Credit Orienwise Group enabling the company to grow further.

It has been reported that the bank invested 10 million US dollars in the Shenzhen-based Credit Orienwise, the largest privately owned credit guarantee company in China.

William Willms, an ADB principal investment officer, said SMEs are the key promoters of increased jobs, economic growth and development. However, more than 80 percent of the SMEs in China have difficulty in accessing financial services and securing financing, while commercial banks lack experience and incentives for assessing SME credit risk.

"ADB's investment will support further SME growth by increasing access to financing, thereby enhancing sustainable private sector employment and contributing to ADB's overarching goal of poverty reduction," said Willms.

The bank said Credit Orienwise specializes in guaranteeing loans for small and medium-sized enterprises (SMEs). It has successfully provided a credit assessment service and risk mitigation mechanism, which were previously lacking in China's financial system.

A spokesman for the bank said ADB's investment will be used mainly to improve Credit Orienwise's internal information technology systems, increase its capital for growth, and help it expand from its base in Shenzhen, which borders Hong Kong, to other cities in China.

Among those attending the signing ceremony were Toru Shibuichi, country director of the ADB China Resident Mission, Kaiyong Zhang, chairman of Credit Orienwise Group, and senior officials from Chinese Ministry of Finance and the National Development and Reform Commission.

Employing 164 people, Credit Orienwise reported a revenue of 106 million yuan (12.8 million US dollars) in 2003.

Source: Xinhua