Inadequate awareness of SMEs’ importance
A reform agenda unveiled by the Chinese government last month promises to further free up markets and build a fair system of market access for small and medium-sized companies, says an expert with the Chinese Academy of International Trade and Economic Cooperation.
SMEs are one of the main engines driving national economic development, said Zhou Mi, a professor with the Academy, which is affiliated with the Ministry of Commerce.
Government statistics show that China’s SMEs provide more than 80 percent of the country’s total jobs and the majority of all technological innovation. They also contribute more than half of the total tax revenues.
“Small and medium-sized enterprises fill in the gaps for the nation’s economic growth by entering into specific fields that large corporations are unwilling to get involved in,” Zhou said.
But, most Chinese SMEs have been hit by the sluggish economy, the high cost of financing and overcapacity.
In light of this, the government has made some moves to help SMEs, waiving the value-added tax and business tax for companies with monthly sales less than 20,000 yuan ($3,300) and, since 2012, canceling some 310 administrative fees.
“But the pressures are still there,” Zhou said.
“Traditional concepts for SMEs mainly focus on their business scale and their ability to deal with risks, as they are believed to be vulnerable to market changes.”
He said that inadequate awareness of their importance and huge potential may cause some entrepreneurs to lose their passion.
Lack of quality employees is another obstacle for Chinese SMEs seeking to enlarge their business scale.
Globalization has made many Chinese SMEs compete with international competitors for high-caliber
Small and medium-sized enterprises fill in the gaps for the nation’s economic growth by entering into specific fields that large corporations are unwilling to get involved in.” ZHOU MI PROFESSOR THE CHINESE ACADEMY OF INTERNATIONAL TRADE AND ECONOMIC COOPERATION
of the country’s total jobs and the majority of all technological innovation are provided by China’s
SMEs employees that not only know the market, but also cross-culture management styles and the laws of different countries.
Given the fact that many SMEs are family businesses, the quality of human resources is an unavoidable problem many of them face as they adapt to the challenges of marketization and internationalization, Zhou said.
Also, although special funds for Chinese SMEs are continuously increasing, the amount is still far from the adequate.
Out of more than 2,000 small and micro businesses, nearly half complained about financing and resoures, according to a recent survey by the Ministry of Industry and Information Technology.
So, accelerating the establishment of public platforms for SMEs has become an urgent task, Zhou said, adding these platforms should provide services related to information and technology, human resources and financing.
Financial institutions can also develop more tailor-made services for SMEs, he said, and the Chinese provincial and municipal governments can also help actively cooperate with their counterparts in other developing countries to achieve winwin results.
Zhou also suggested that the Chinese government needs to formulate more laws and regulations to support the development of small and micro businesses.
“China should learn from the experiences of other countries and improve the legal framework for SMEs. For example, the United States now implements more than 10 related laws and regulations.”
Exhibitions offer a good platform for SMEs to raise their profiles, analysts say.
Human resources will be a key issue for the development of SMEs in China.