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Entering world industrial chain

(China Daily)
Updated: 2006-09-15 09:25
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With more and more multinational companies swarming into China, due to the country's rosy economic prospects, chances for China's SMEs to enter the multinational companies' worldwide industrial chain are expected to increase dramatically.

In 2005, 68.3 per cent of China's export turnover was contributed by SMEs, especially in the fields of clothing, handicrafts and toys.

According to the China Entrepreneur Association, 450 Fortune 500 companies have investment projects in China, which provide more chances for Chinese SMEs to involve themselves in the multinational companies' worldwide industrial chain.

Commonly, the establishment of co-operation networks and mechanisms with SMEs is one of the key measures that multinational companies took to achieve their global strategy.

For cost-saving considerations, many multinationals are now starting to increase their collaboration with SMEs.

In a recent forum, Vice-Minister of the National Development and Reform Commission Ou Xinqian encouraged more Chinese SMEs to expand their businesses in the overseas market and try to establish co-operative relations with multinational companies.

Currently, China has more than 4.3 million registered SMEs.

In the country's eastern coastal areas, many export-oriented SMEs have formed industrial clusters, which makes it easier for multinational companies to outsource production.

Thanks to the country's increasing support towards the development of SMEs, China's privately-run SMEs have entered a period of fast growth. The country's non-State-run economy is displaying increasingly stronger growth.

Experts forecast that by 2010, non-State-run SMEs may generate 40 per cent of gross domestic product in the industrial field, and contribute more than 60 per cent of the nation's total employment. Following on from the developing trend, China will form a corporate ownership structure with large State-owned enterprises taking the lead and non-State-run SMEs forming the main body, thus creating a permanent driving force for sustained and fast economic growth.

As one of the efforts to support the development of SMEs, five State ministries and Guangdong provincial government joined hands to sponsor the third China International Small and Medium Enterprise Fair (CISMEF).

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