Micro Connect founder urges domestic consumption to drive economic growth

 Micro Connect founder Gary Zhang has highlighted the importance of domestic consumption as a driver of economic growth at a recent conference.

According to People’s Daily, Zhang told the conference on national consumption that “finance is the lifeblood of economic development.”

Micro Connect, an asset exchange designed to pool funding for small businesses and start-ups, unveiled their operational workings in September this year.

The Micro Star, alongside a framework of rules and guidelines, was described as the backbone of a revenue-based system that has so far covered 13,000 businesses across 200 mainland Chinese cities.

“Innovation in income-based financing models is driven by widespread digitalisation trends, empowering more small and medium-sized enterprises to achieve high-quality development,” he added on Monday.

A company’s income, credit status, and technological level are closely associated with its level of digitalisation, he emphasised.

“Without digitalisation, it is difficult to conduct thorough income surveys for companies. As digitalisation progresses, company income can be used as a credit resource for financing,” he explained.

Unlike the three most common ways of attracting foreign investment to the country via foreign equity, overseas listings, and overseas bond issuance – financing methods more suited to large corporations, Zhang said that “small and medium-sized enterprises need more efficient financing methods to reduce financing costs and improve development efficiency.”

Under its revenue distribution system, Micro Connect requires issuers to allocate nearly all of their revenue as monthly cash payouts, or even more frequently if possible.

Additionally, issuers must provide monthly distribution forecasts, which will be recorded in a system for disclosure purposes.

Earlier this year, it transpired that Micro Connect had planned to dismiss or reassign a quarter of its employees in what was widely reported as a “leading sheep” episode, where staff were required to invest RMB1 million (US$140,000/MOP1.1 million) of their own money, with the company matching it with an injection of RMB9 million.

https://www.macaubusiness.com/micro-connect-founder-urges-domestic-consumption-to-drive-economic-growth/

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