We’ve launched our China SME Confidence Index

Standard Chartered today launched its China SME Confidence Index (SMEI). Initially launched in October 2011 as the first confidence index targeting SMEs developed by an international bank in China, SMEI has been substantially revamped in order to give a deeper understanding of the activity and sentiment among small and mid-sized Chinese companies.

SMEI is designed to provide a snapshot on the business environment and outlook for China SMEs. It is based on information drawn from monthly surveys of over 600 SMEs across a wide range of sectors and locations, based on their contributions to the economy. SMEI is then calculated as a weighted average and released on a monthly basis.

In addition to the headline SMEI, our monthly surveys contain two new key indicators, “Credit Index” and “Expectation Index”; when combined, these offer a view on the general macro environment, operating conditions, investment direction and financing needs of China SMEs, as well as their expectations over the coming three months.

Compared with other economic indicators, the SMEI differs because:

• It is 100% SME focused. Corporates that enter into SMEI must meet the criteria for SMEs outlined by the National Bureau of Statistics.
• The SMEI sample distribution is designed to be comparable in terms of industrial and regional distribution of SMEs nationally.
• SMEI survey measures three aspects of SMEs – current business performance, credit status and expectations over the next three months. In contrast, most other indicators focus only on current business performance.
• SMEI is released each month before most other economic indicators. For example, September SMEI will be released on 30 September, rather than in October like most other monthly economic indicators.
• SMEI survey contains 27 question based sub-indices, which provide detailed information for in depth analysis. These range from information on production and new orders, to financing costs, liquidity stresses and banks’ attitude to lending.

David Mann, Head, Asia Macro Research, Standard Chartered Bank, commented: “SMEs are a crucial segment of China’s economy, generating over 60% of GDP and 50% of tax revenues. They outnumber large companies by a wide margin, accounting for 99% of the total number of companies in China. They also employ many more people than large companies, contributing to 80% of jobs in cities.

“We have developed the SMEI in order to fill the information gap between the growing importance of SMEs in China’s future growth strategy and a lack of quality information on this sector. We hope it will become a benchmark indicator for SMEs’ business and operating conditions, which could be incorporated into forming economic policies and business strategies by policy makers, business and financial markets.”

Read our report to find out more about the SMEI > PDF

SMEI edged marginally lower in August to 58.7 from 59 in July led by slowing productions, suggesting that overall conditions of SMEs sectors remain difficult. The deterioration in SMEs credit status was more significant, with the reading of Credit Index falling to 53.5 in August from 56 prior, due to increased cash-constraints. More positively, expectations for Q4 business conditions are stronger, with the Expectation Index rallying to 67 in August from 60 in July. These findings are in line with our general view of a still difficult Q3 but a better Q4.

Standard Chartered Bank China continues to be strongly committed to the SME sector, providing client-oriented services and supporting the sustainable growth of SMEs, demonstrating our promise to be ‘Here for Good’. It established a specific SME team in 2003, serving small and medium enterprises with tailored financial solutions from dedicated Commercial Clients and Business Clients teams.

For further information please contact:

Preston Zhu
Business Communications Manager
Standard Chartered Bank
+86 21 3851 8628
Jiachao.Zhu@sc.com

Shaun Gamble
Senior Manager, External Communications
Standard Chartered Bank
+44 20 7885 5934
Shaun.Gamble@sc.com