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October 26, 2009

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Innovation may not be costly

THERE may not be an immediate solution to the difficulties small businesses face in getting finance but innovation is not necessarily expensive, experts said at the Pujiang Innovation Forum yesterday.

Hans Christian Pfohl, chair of Management and Logistics at the Darmstadt University of Technology in Germany, said even small companies in Germany have problems trying to get financing from banks, private equity firms or from the capital market.

"The main barrier to innovation is the present lack of financial resources - a problem especially for small and medium-sized enterprise," Pfohl said at the Shanghai forum. "Self-financing is still the most important source for small business in Germany and will remain so in the future."

However, a lack of financial resources can push companies to use their limited funds efficiently and optimize their capability in countering financial crisis.

"In the current crisis, some small companies are less affected or even perform better because they are less reliant on others," said Lu Zhiyang, a professor at University of Southern California in the United States. In his opinion, innovation is not necessarily costly because it is much broader than new technological discoveries.

"We have to clear a misunderstanding that innovation needs huge amount of monetary input. The most important thing for innovative companies is to have new ideas and can realize them at a low cost," Lu said.

Wu Jinglian, an economist and researcher at the Development Research Center under the State Council, urged China's policy makers to offer more financial resources for small firms.


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