In­ad­e­quate aware­ness of SMEs’ im­por­tance

China Daily (Hong Kong) - - COMMERCE SPECIAL - By HAO NAN hao­nan@chi­nadaily.com.cn

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.”

PHO­TOS PRO­VIDED TO CHINA DAILY

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.

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