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Updated Friday, July 30, 2010 11:15 am TWN, China Daily/Asia News Network

SMEs in China spend 7 percent of assets on building 'relationships'

BEIJING -- Small and medium-sized enterprises (SMEs) in China spent almost 7 percent of total assets on entertaining their key business contacts to develop “social capital.” Findings by the Globalization and Economic Policy Centre at University of Nottingham highlighted the continuing importance of guanxi - or informal networking - commonly practiced among Chinese businesses.

Continued discrimination by banks and a business environment that still heavily favors State-owned enterprises have made splashing out on entertainment vital to the survival of many SMEs, the report said. The study examined data from annual accounting reports filed with the National Bureau of Statistics by 65,551 firms from 2000 to 2006.

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