ASIAN Development Bank (ADB) invested US$10 million in China's largest privately-owned credit guarantee company Friday, making it the first foreign investor in a non-State-owned Chinese guarantee company.

Shenzhen-based Credit Orienwise Group Ltd. focuses on loans for small and medium-sized enterprises (SMEs), which the ADB says are the key drivers of jobs, economic growth and development in China.

"SMEs are the driving force of the economy, contributing to 70 percent of the employment, 56 percent of GDP, 75 percent of technological innovation, and 80 percent of new products," said ADB PRC Resident Mission Country Director Toru Shibuichi.

However, more than 80 percent of SMEs have difficulty securing financing, ADB Private Sector Operations Division Specialist William Willms said.

ADB wants to help these firms by encouraging the Central Government's National Development and Reform Commission to establish a national guarantee credit fund.

Credit Orienwise had 178 million (US$21.50 million) in revenue in 2004 and guarantees outstanding of more than 3.36 billion yuan.

The guarantee company has a number of business partners among the largest banks in China, including all of the big four State-owned commercial banks, as well as the smaller city commercial banks.

ADB's investment will be used to improve information technology systems, increase capital for growth and expand from Shenzhen to other cities in China, where it also has offices in Beijing, Shanghai, Fujian, Changsha and Hong Kong.

Source: Shenzhen Daily