Foreign banks are aggressively targeting small and medium-sized enterprises (SMEs), a sector their Chinese peers have traditionally been less enthusiastic about.

During a recent joint financing services fair in Shanghai, Standard Chartered Bank, the Bank of East Asia, Citigroup and HSBC made their presence felt for the first time as locally incorporated foreign banks, presenting a range of products and services to the city's approximately 36,000 small businesses.

They said their local incorporation would help them further penetrate the mainland market and gain a wider customer base.

During the two-day fair, 23 banks showcased their financial products and services to SMEs, discussing solutions with them face to face, introducing the latest financing information and soliciting opinion about their financing requirements.

Brenda Wong, general manager in charge of SME wealth management at Standard Chartered Bank, said: "The local incorporation status helps us open more outlets in second and third-tier cities, where we are able to provide renminbi and foreign currency services to our small business clients."

"We expect SME business to account for a very significant proportion of our lending in the next five years," Wong said.

Henry Zhang, commercial banking head for Citigroup in China, said: "Although SMEs have provided a powerful impetus to China's fast-growing economy, they still face difficulties in addressing various operational and financing issues."

Liu Fengzhi, deputy manager of Shanghai Diesongluan Grain and Oil Co, said she was attracted by the services provided by overseas lenders, which offer more flexible terms than domestic banks.

"As a small food logistics company, we can't meet the requirements of Chinese banks because we don't have real estate or equipment in Shanghai to mortgage," Liu said after talking to a dozen banks at the fair.

"You can't imagine how difficult it is for an SME to obtain a bank loan, so I'm glad we have more choices now from overseas lenders," she said.