China'S Small And Medium Enterprises: The Way To Survive And Reform

Hongkong Wen Wei Po published the article entitled "China's small and medium enterprises: the way to survive and reform" published in March 26th. As a social and economic power, small and medium-sized enterprises are playing a more and more important role in the socialist market economy with Chinese characteristics.

However, in spite of this, there are three problems that impede the development of SMEs in China.

The article is summarized as follows: after nearly thirty years of reform and opening up, small and medium-sized enterprises have emerged in China's social economy, and have become a dynamic and dominant force.

According to the latest information from the national development and Reform Commission, there are forty-two million small and medium enterprises in China, accounting for ninety-nine percent of the total number of enterprises. The gross national product accounts for sixty percent of the total output value of the country; the total amount of the total tax paid is fifty percent of the total national revenue; sixty-five percent of the national invention patents and eighty percent of the new products are developed by small and medium-sized enterprises.

Small and medium enterprises in China are mostly concentrated in light industry, such as textile, clothing, toys, footwear and food processing. In the modern service industry, there are retail, catering, advertising, design, creativity and so on.

In the past, small and medium-sized enterprises have been staying in the production of low-grade domestic products or the production of spare parts for large enterprises. The profit is relatively small. Now, the situation has changed greatly. Small and medium-sized enterprises have entered the production of medium and high grade products, and even exported to the international market.

The reason why small and medium-sized enterprises can achieve such a good performance is that they have their own way of development.

First of all, in the rapidly changing business world, they can adjust the type and scale of production at any time.

Secondly, in the highly competitive market, they can increase revenue and reduce expenditure, strive to reduce production costs, and exploit the market with "good quality and low price", which is highly competitive.

Moreover, in the integration of human resources, they can split laid-off workers, provide seventy-five percent of the non-agricultural jobs to the society, and have strong labor absorption, thus contributing to social stability and harmony.

In short, small and medium-sized enterprises, as a social and economic force, are playing a more and more important role in the socialist market economy with Chinese characteristics.

However, in spite of this, there are three problems that impede the development of SMEs in China.

In terms of administrative management, management lacks modern knowledge. In addition to frequent visits and learning, it is necessary for employees to consciously accept training and update knowledge.

It is a very good way for the relevant state organs and trade associations to publicize enterprises through multimedia management, television lectures and newspapers and magazines.

There is no collective strength in market promotion (independent brand).

Roughly estimated, in the mainland, it will take about fifty million dollars to build a brand with a wide range of popularity.

This is not the burden that ordinary SMEs can afford. Therefore, it is suggested to set up a semi official brand development agency to promote brands for SMEs.

The so-called collectives, that is, the brand belongs to the government or the subordinate body, and pays certain fees when the small and medium-sized enterprises are using it.

In this way, small and medium-sized enterprises can save the huge expenditure of developing the brand and reduce the financial risk.

Financial financing is the most common headache for SMEs.

The important thing is to give small and medium-sized enterprises more financing on the stock market.

Hongkong has gem (SME board) for many years, but its trading is poor and its performance is poor.

The reason for this is that investors do not know much about SMEs and dare not enter the market. This lesson should be taken as a warning.

In addition, the risk fund in the mainland is not active, which makes SMEs lose a financing channel.

The operation of venture capital is to find investment in some small and medium sized enterprises with a bright future. After a few years, no matter whether they earn money or not, they will automatically withdraw.

The mainland should regulate the risk fund, but it must give room for its development.

Taiwan has a small and medium sized bank which specializes in lending to small and medium-sized enterprises.

This type of bank is mainly concerned with the potential of SMEs and the ability of management, and collateral for borrowing is secondary.

There is no SME bank in the mainland, and the main channel for SME financing is to apply to commercial banks. Commercial banks are basically inclined to lend money to large enterprises, and the result is always small and medium enterprises.

In order to alleviate this situation, China should set up a small and medium-sized enterprise bank to serve SMEs' financing.