As we know, China's venture capital industry has made great progress. Ever since the outbreak of the global financial crisis, changes have taken place in international private equity investment.

We will conduct more efficient financial supervision, expand financing channels for SMEs and offer more policy support for business startup investment by learning from international experience and lessons in this regard.

First,all work must be done under the framework of ensuring balance between financial stability and financial innovation.

For commercial banks, financial innovation has been a viable way to meet market demand, improve core competitiveness and reduce management risks.

Second, a risk firewall is necessary to protect deposit safety and depositor confidence.

Both commercial banks and supervisory bodies should take the following into consideration, namely, the risks of private equity investment and the diversification of SME financing channels.

We shall establish an efficient risk-prevention system to safeguard deposits.

We ask ourselves whose money the commercial banks should use to invest and support private equity investment.

Commercial banks, either as stakeholders or creditors, will never get around their relationship with depositors and the issues concerning the protection of investors' interests.

Third, critical issues need our attention, namely, sound legislation, the cultivation of qualified management sectors and investor teams, and a withdrawal mechanism for private equity.

Regarding the legal aspects of financing enterprises, the Corporate Law and the Securities Law revised in 2005 provide some fundamental rules for private equity investment, but a unified administrative regulation is not yet in place.

Upholding the principles of attaching equal importance to encouraging and regulation, cultivation and risk prevention, the CRBC will continue to play a guiding role in promoting the healthy development of China's private equity market.

Many Roads Lead to SME Financing

In addition, SMEs can turn to investors, including venture capital investors, strategic investors and sponsorship-like investment from the state, and seek financing by listing on the stock market.

Recently, the state began permitting SMEs to seek financing through bank-to-bank medium-term notes or bonds.

Up until now, few enterprises have tried this, but it did indicate a new way.

The method an enterprise uses to seek financing has much to do with its own development phase—startup, growth or mature phase.

Enterprises should also ask themselves for which projects the financing will be used.

If seeking financing for daily operations, the bank is undoubtedly the best way.

It is important for entrepreneurs to demonstrate their business strategies and try to win recognition and support from investors, investment institutions and banks.

They should convince their investors that their projects are safe and profitable, and they should also prove that their projects will generate more opportunities and more investment return than other projects.