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Problems and Needs of Small and Medium-sized Enterprises in their Development ---- An analysis report on the questionnaire of small and medium-sized enterprises in Guangdong, Liaoning, Hubei and Yunnan Provinces

Lin Jiabin

Research Report No 231, 2000

I. General Description

In order to get a comparatively complete picture of the situation of the development of small and medium-sized enterprises in China and the problems facing them, and to provide the basis for formulation of policy measures to support their development, the Research Department of Development Strategy and Regional Economy of the Development Research Center of the State Council picked four provinces, Guangdong, Liaoning, Hubei and Yunnan, for a questionnaire of the problems and needs of small and medium-sized enterprises in the course of development. A total of 2,800 questionnaires were distributed in December 1999, and 1,121 valid ones were recovered. Covered in the questionnaire were enterprises of all kinds of ownerships in all major trades. Table 1 shows the distribution of the respondent enterprises covered in the questionnaire. The contents of the questionnaire included mainly the performance of these enterprises, their basic quality, their major problems in development, and their needs to be met by government and socialized services.

Table 1 Distribution of enterprises covered in the questionnaire

 

Number of enterprises

Percentage

Sum total

1121

100.0

By ownership

  State ownership

  Collective ownership

  Private ownership

  Sino-foreign joint venture

  Associated

  Others

  Blank

 

388

351

119

73

19

148

23

 

34.6

31.3

10.6

6.5

1.7

13.2

2.1

By industry

  Capital goods in the manufacturing sector

  Intermediary goods in the manufacturing

sector

  Consumer goods in the manufacturing sector

  The tertiary sector

  Others

  Blank

 

263

 

297

297

65

144

55

 

23.5

 

26.5

73

 
26.5

5.8

12.8

4.9

By region

  Guangdong Province

  Liaoning Province

  Hubei Province

  Yunnan Province

 

216

548

165

198

 

19.3

48.9

14.7

17.7

Notes:

1. The item “Others” in the ownership section includes shareholding companies, limited liability companies, Sino-foreign cooperative enterprises, exclusively foreign-owned enterprises, and enterprises with investment from Hong Kong, Macao and Taiwan.

2. The industries mentioned in the item “By industry” are synthesized from the 15 trades covered in the questionnaire. These industries cover the following segments: Capital goods in the manufacturing industry includes machinery and electronic and electric appliances. Intermediary goods in the manufacturing industry includes chemicals, building materials, textiles, construction and metallurgical product. Consumer goods in the manufacturing industry includes foodstuff and light industrial product. The tertiary sector includes transportation, telecommunications, commercial, catering, and other services.

Covered in the item “Others” are those other than mentioned above.

3. The figures are those for 1998. The same herein below unless otherwise indicated.

II. Operational Situation of Enterprises

We used three indexes -- business revenue, total profit, and asset-liability ratio – to study the operational situation of the respondent enterprises covered in the questionnaire and the changes in the situation. See Table 2 for the results.

Table 2 Operational situation of enterprises

 

Business revenue (RMB 10,000)

Total profit (RMB 10,000)

Asset-liability ratio (%)

 

1995

1996

1997

1998

1995

1996

1997

1998

1995

1996

1997

1998

Aggregate average

3398

3544

3756

3484

84

12

-58

-36

73

80

83

84

Average by ownership

State ownership

4591

4564

4572

4102

14

-58

-88

-188

68

76

81

87

Collective ownership

2478

2328

2808

2734

339

203

193

179

54

66

69

49

Private ownership

1431

2101

2104

1802

-925

-922

-876

-645

126

123

134

131

Sino-foreign joint venture

1157

2463

3343

3117

64

133

225

171

81

79

75

58

Associated

2373

1588

1218

1761

45

13

39

12

81

73

77

80

Others

4699

5324

5301

5540

295

260

-287

208

61

69

66

74

Average by industry

Capital

2028

2119

2211

2018

307

120

74

51

71

73

78

68

Intermediary

4870

5132

5456

4933

284

256

144

26

57

70

77

83

Consumer

2983

2629

2939

2971

-312

-344

-258

-284

99

97

100

98

Tertiary

2328

2534

2835

2833

108

79

85

48

83

91

92

79

Others

4492

5582

5280

4699

53

6.6

96

103

70

79

76

74

Average by region

Guangdong

2267

2388

2417

2765

438

206

-261

172

86

90

89

76

Liaoning

1871

1695

1579

1305

-226

-248

-208

-216

96

99

100

101

Hubei

4282

4280

5626

5718

301

319

327

313

42

60

58

57

Yunnan

6515

7117

7410

6489

424

277

200

-30

56

65

73

79

Notes: In the item “Average by industry,” “Capital” refers to capital goods from the manufacturing sector, “Intermediary” to intermediary goods from the manufacturing sector, “Consumer” to consumer goods from the manufacturing sector, and “Tertiary” to the tertiary industry.

The results of the questionnaire showed that the business revenue of the respondent enterprises increased year by year between 1995 and 1997, but it dropped in 1998. Changes in jointly-run enterprises, however, moved oppositely to that in the overall situation: dropping year by year between 1995 and 1997 and hit the bottom and bounced back in 1998. The profit of the respondent enterprises declined year after year between 1995 and 1997, and even went into red in 1997 when viewed as a whole. The amount of losses decreased somewhat in 1998. The situation differed much, however, between enterprises of different ownerships, in different trades, and in different regions. Of the enterprises of different ownerships, privately-run enterprises suffered the biggest loss, followed by State-owned enterprises. Among the enterprises specializing in different trades, only the consumer goods sector of the manufacturing industry suffered year-by-year losses, and the profit of those in all other trades remained positive. The profit of the capital goods sector and the intermediary goods sector of the manufacturing industry, however, kept falling year by year. Among the enterprises in different regions, those in Liaoning Province suffered losses year by year, the profit of those in Yunnan Province kept sliding down and was in deficit in 1998, those in Guangdong Province fell into red in 1997 but turned the situation of losses into one of profit in 1998, and those in Hubei Province maintained their normal level of profit all the time. The asset-liability ratio of the enterprises covered in the questionnaire kept rising year by year, hitting 84 per cent in 1998. This means a fairly high level of liability (According to “China Yearbook of Statistics, 2000”, the asset-liability ratio of China’s State-owned and State holding industrial enterprises was 62 per cent in 1999, while that of large and medium-sized industrial enterprises was 60 per cent). Among the enterprises of different ownerships, privately-owned enterprises had the biggest asset-liability ratio, standing at 131 per cent, followed by State-owned enterprises with an asset-liability ratio of 87 per cent. The asset-liability ratio of collectively-owned enterprises was the smallest, standing at 49 per cent. Among the enterprises specializing in different trades, the tertiary sector had the biggest asset-liability ratio of 97 per cent, and the capital goods sector of the manufacturing industry had the smallest of 53 per cent. By regional division, Liaoning ranked at the top with an asset-liability ratio of 101 per cent, and Hubei stood at the bottom with a ratio of 57 per cent.

III. Basic Quality of Enterprises

We made simple appraisal of the basic quality of the enterprises covered in the questionnaire by three indexes: the composition of the academic credentials of their employees, the proportion of those that had passed ISO9000 certification, and the ratio of compliance with State standards on the discharging of pollutants.

Viewed from the academic credentials of the employees, those who had received education at and above the polytechnic level (including education in technical, vocational and senior middle schools) accounted for 15.8 per cent of the total in 1995 and 19.1 per cent by 1998. Although this revealed a trend of elevation, the level was still fairly low (According to “China Yearbook of Statistics, 2000”, the number of employees in 1999 who had received education at and above the polytechnic level accounted for 15.7 per cent of the country’s total number of employees including those working in the rural areas).

Viewed from the proportion of those that had passed ISO9000 certification, only 201 or 17.9 per cent of the 1121 valid respondents passed the ISO9000 certification. Divided by ownership, those under the item “Others” boasted the biggest ratio of passage at 29.1 per cent, followed by Sino-foreign joint ventures at 28.8 per cent. Privately-run enterprises were in the rear at merely 14.3 per cent. Viewed from the ratio of compliance with State standards on the discharging of pollutants, the total ratio of compliance was 70.5 per cent. In other words, nearly 30 per cent of the enterprises covered in the questionnaire were not yet up to State standards so far as their discharge of pollutants was concerned. Among the enterprises of different ownerships, Sino-foreign joint ventures boasted the biggest ratio of compliance at 80.8 per cent, and private enterprises came the last once again with a ratio of 67.2 per cent.

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