A credit system will be set up in Shanghai to help Taiwan businesses with financing.

"The system will be jointly established by the office, financial institutions and local government, providing credit reports for Taiwan companies in case they need a loan," said Yang Jianrong, director of the city's Taiwanese affairs office.

According to Yang, most of the 4,000 Taiwanese companies in Shanghai are operating normally despite the worsening global financial crisis.

But fundraising is always a problem for Taiwanese companies on the mainland, especially small and medium-sized enterprises (SMEs).

Banks are very cautious about approving loans to Taiwan businesses because they have difficulty in obtaining enough information about them.

"Many are unable to prove legal links with parent companies in Taiwan, and company names are also different," Yang said.

Under the coordination of the office, banks including Shanghai Pudong Development Bank, Huaxia Bank and Shanghai Bank currently provide loans to Taiwan companies.

But it takes a long time to get approval and the amount is limited.

Yang said that a previous agreement had been signed with Shanghai Bank in 2006 to loan 5 billion yuan to Taiwan companies over three years, but noted that this sum was used in less than two years.

Favorable loan policies are critical for Taiwan SMEs to survive in the current situation, according to Liu Jingfang, general manager of Nantong Quanyong Electronic Industry Company and chairwoman of the Taiwanese Business Association in Nantong.

"Most SMEs are maintaining their operations by cutting working hours although orders are being suspended or cancelled every day," she said.

"But, if the situation continues, more will have to close down because of the rupture of the cash chain. Upgrading business could help us survive, but it needs money."

Yang said that the office is trying to help more Taiwan businesses to get loans.

The office is proposing an extended agreement with Shanghai Bank.

"And we will try to get more banks to provide more loans to Taiwan companies," he said.

Taiwan business, with a total contracted capital of US$20.5 billion in 7,264 projects in Shanghai, have played a key role in the city's development in the Yangtze River Delta region over the past two decades, according to Yang.

More than 500,000 people from Taiwan now reside in the delta region, investing $80 billion yuan in more than 350,000 projects.

In 2007, nearly 25 percent of notebook computers and one-eighth of digital cameras in the world market were manufactured in Kunshan, Jiangsu province.

Wei Jen Tiao, chief representative of CSC International Holding Ltd in Shanghai, said that 90 percent of Taiwan's major enterprises have a presence on the mainland.

(China Daily December 13, 2008)