Although the financing for small-and medium-sized enterprises (SME) is "a global difficulty that never has been solved well", three measures "can be taken as possible solutions", said Fang Fang, vice-chairman of JP Morgan Asia Investment Banking, at the 21st Century Annual Finance Summit of Asia held last month in Beijing.

"The complex issues of cost, risks and repayment in financing for SMEs have always caused a dilemma for banks," said Fang. "But those companies are actually very important to the development and stability of the nation's economy."

Fang said the first solution is to diversify financing organizations.

"The government and the banking regulatory commissions are encouraging many forms such as bonding companies, micro-loan companies, village banks and trust institutions, but it's still not enough."

"The second solution is innovative financial products," he said.

"For example, e-business is a major trend in development of SMEs," he said. "One of the greatest advantages of this model is that no matter how big - or small - your company or shop is, you have a record for every deal that provides fundamental data when you seek loans from financial organizations."

"The development of mobile Internet and telecommunication has also made it easier to exchange information. The technology allows more information on deals to be recorded, which is good for financing organizations to communicate with SMEs."

And innovation in financial supervision is the third solution, said Fang. "The first priority for the financial supervision authorities is interest rate liberalization."

Many small city banks originally designed to provide services to companies in their own community are planning to open offices in big cities such as Beijing and Shanghai, but Fang said that is "not necessary" to earn money and provide dividends to shareholders.

"Rather we encourage them to stay and serve the companies in their own cities," he said.