Liu Haitao, director of Wuxi IoT Industry Research Institute, believes that IoT technologies have the potential to help alleviate financing difficulties for private manufacturing businesses in China. [Photo provided to chinadaily.com.cn]

IoT technologies have the potential to help alleviate financing problems for private manufacturing businesses in China, according to Liu Haitao, director of the Wuxi IoT Industry Research Institute.

Capital is the key to boosting the development of China's real economy at a time when banks are reluctant to offer loans to small and medium-sized enterprises, which either have no real property for mortgage or have a bad credit rating.

"With the help of IoT technologies, the movable property of these companies is capable of turning into real property through continuous monitoring," noted Liu, adding that production lines can also be monitored via IoT technologies to guarantee the productivity of borrowing companies.

Therefore, credit risk has nothing to do with the credit of a legal representative, and banks can put their minds at ease when lending to SMEs.

Liu explains how movable property is monitored with the help of IoT technologies. [Photo provided to chinadaily.com.cn]

In 2017, the China Banking Regulatory Commission expressed interest in Liu's idea and started promoting the application of the IoT supervision system in certain banks.

It took nearly half a year for the commission to help a Chinese manufacturing company secure a bank loan.

In early 2018, the IoT supervision system was adopted by more banks. To date, more than 3,000 financing services have been offered to over 300 manufacturing companies, and no credit risk has occurred.

Compared to the six months required to process a normal loan application, under the IoT supervision system, businesses can get loans from banks in an average of 20 minutes, sometimes as fast as two minutes.

According to Liu, in addition to convenient financing, the IoT supervision system has also helped increase sales volume by 27 percent on average, based on annual financial statement analyses of 95 out of the total 300 borrowing companies.