Microfinance Case Study –Suitable model in China
Micromanage project in China, which can be concluded as implementation of government policy, working structure and lack of non-banking activities.
Take the essence and discard the dregs of Indian experience, China has to apply Garment model into Chinese model. According to analyzing exist data, I present three alternatives to solve the problem. Moreover, after recommendation of alternatives, I prove an Acton plan, Include out not Eliminate In Money loan, extra non-Dankly activities and new working structure, which can effectively work in China.
Action plan tart with basic information analysis, target choice and provide further detail of non- banking activities. 1 .
Problem Statement Micromanage, which can be described as an effective tool of poverty reduction, is successfully operated in Bangladesh. However, a controversial issue is that other developing countries are hard to keep pace with the Micro-model against poverty of society and burden of rural people, especially in China. In some way, China becomes a strange developing country which contains approximately $8. 227 trillion nominal GAP but still has roughly 55% rural people (The World Bank, 2008-2012).
As far as I know, implementation of government policy, working structure of financial institutions and lack of non-banking activities are three main problems in Micromanage of China.
Furthermore, complex social phenomenon and increasing fierce social competition are the reasons of stress of this situation cannot be solved in a short time even Micromanage projects in a rural area. China can be summarized as the following table: The result is still: “Although the payment rate is extremely high in some micromanage institutions (Miff), most are not running efficiently”(ABA Chemung, secretary general of he China Association of Micromanage). . Data Analysis l. Micromanage project in China is focusing on microcircuit.
In particular, it is often referred to simple microcircuit loans. People’s Bank of China (POOCH), China Rural Credit Cooperatives (ARC), and Agricultural Bank of China (BBC) or Agricultural Development Bank of China (ODBC) are four leading banks that provide micromanage project, which means only provide money loan. However, as we can confirm from the table following (next page), main customer and collateral are different from original Micromanage model, and most of the projects come from the commercial bank.
Chinese Micromanage project, unlike the Garment model, which operations are not separated from the commercial bank and only focus on rural people, because of strict government regulation. “Organizations are not allowed to operate as independent institutions”, (Heather Saleslady and Kcal Shah, 2013, Para.
4), Micromanage in China lack of legal capitals from the society. There is no denying that we need to change model to reach native environment, but we have to face the situation that Micromanage in China is not running efficiently ([email protected], Para 1 1, line 2, May 10, 2006).
Moreover, Women’s Federation which in Tannin noted, “Tannin is an enormous city, but the Federation reached less than 2,000 clients after more than seven years, says one analyst. It should have been 30,000. “(ABA Chemung, secretary general of the China Association of Micromanage). II.
Rural people occupy almost % total population In Canaan, as a result, Implementation AT government policy is indispensable to Micromanage project. From another perspective, relevant staff of mutual business organization is required in Micromanage.
Nevertheless, innovation, proper skills of work, management skills and education are the inundation of a successful business, but rural people do not have those comprehensive qualities. Those above can be concluded as non-banking activities, which be encouraged in Garment bank model. Ill. Working structure is another factor which takes into account.
In Garment model, hierarchical structure (branch office, Area office, Zonal office and Head office) is a positive effect to working efficiency. However, in China, working with governmental agencies and cooperating with commercial banks need to be very patient.
This fact leads to a serious issue that aces to a large population and complex government, business or structure has to meet the needs of politic. ‘V. Supervisory by the government, business environment in China are limited in some industries, especially in poverty area. Therefore, the point of Micromanage is not only loan money to rural people, but also makes Joint efforts, which means to teach people how to use the loan successfully.
To analyze the capacity of the business environment in China is one premise of this assumption. ‘V. Culture: China, unlike the Bangladesh, has no religion restriction in this project.
It goes not mean that there is no moral control but still becomes a material fact which cannot be ignored. At the poorest place in China, familial community, management is more effective than governmental management.
Furthermore, in Chinese culture, the major proportion of male clients reflects that women have no social position to run a business or lend money. (Proof. Du Shannon, the Current Supply of Micromanage Services in China, Rural Development Institute of SACS. ) 3. Key Decision Criteria A.
Effective working structure of Micromanage project, especially point to point workshop are necessary. B.
Implementation of government policy, obligatory intending and relevant organization are both required. C. Non-banking activities mean to help rural people reduce their poverty can not only by loan money but also acquire colligate service of business. 4.
Alternatives analysis Plan A: Convince government increase money loan to Micromanage project. This plan does not solve the bottleneck of Micromanage project fundamentally. Based on the key decision criteria, this plan is not sufficient. Plan B: Let MONGO institutions unite as one, and adopt an independent supervisory organization to make sure that clients re making full use of loans.
This plan only enhances supervisory of loan, therefore, is not sufficient.
Also, government will become barriers when MONGO institution provide loans. ( Since commercial bank is under controlled by government, capital will hard to raise) . Plan C: Except working with government, provide loan while increasing non- Dankly actively, winch Include ten trailing program, DSSSL coeducation Ana Dustless assistance. This plan is sufficient for key decision criteria and solves this problem in long-run. 5.
Recommendations Based on Plan C, which I selected above, those following recommendations are revived: l.
Private organizations are NOT recommended. Lack of protect policy of private sector into business, the best way, is use governmental organization instead, otherwise, like existing Chinese government-affiliated MONGO, China Foundation for Poverty Alleviation (CAP) is also a good choice. Al. Encourage non-banking activities and educate people while providing economic assistance.
The main point of Micromanage is reducing poverty and rising living standard, but profit should cover the daily operation. Ill. Lamentation of government policy and monitoring of loans is significant in
Micromanage project. Set reward and punishment system instead religion restriction. Moral blacklist is also effective in this situation.
Staff of the organization is also inclusive. Based on recommendations, I will present an action plan as following. 6. Action and Implementation Plan O: Choose a poorest province makes experiment, analyze local business environment and government policy. Find out if there exist MONGO, or similar organization, connect local bank.
If there is a MONGO branch organization, provide a corporate contract which contains a new working structure and dividend.
Roughly require one month) @: Staff has to account local population of poverty, classify them into three levels: poorest client, poor client and common client. Background research is also required. It can help organization confirm a possible client list and ensure the credit ranking in this client list. (Depends on cooperating with government, successful convince them will be the best.
) @ Start with poorest people. Considering may lack transportation (Some of the villages have no road, staff need to use proper vehicle). People who lack education need to see the actual example which have to provide by staff.