Download Establishing a Nation-dominating Supporting Mechanism for the Small-middle Sized Enterprises

Establishing a Nation-dominating Supporting Mechanism for the
Small-middle Sized Enterprises
LI Hong Ling∗
. South-Central University for Natioanalities, P.R.China, 430074
Abstract: The small-middle sized enterprises (SMSE) are playing a more and more important role in the
nation economy. But they often meet difficulties in the development. Although our government has set
up some special polices for them, it is essential for the government to call for all the social institutes to
establish an all round environment for the SMSE.
Keyword: nation-dominating; supporting mechanism; small-middle sized enterprises (SMSE)
、Instruction
1
In the recent 20years, the SMSE in China developed so fast that they have been an important
part of the nation economy. Today, China has millions of SMSE and 95 percent of the enterprises are
SMSE. The SMSE are contributing 55.6 percent of the nation’s GDP, 40 percent of the total tax and
75 percent of the employment positions. What’s more, today, 65 percent of China’s patents are owned
by the SMSE, more than 75percent technology innovations are completed by the SMSE and more
than 80 percent of all the new products are developed by the SMSE.1 The power of innovation of the
SMSE just is the necessary resource for us to construct our innovating country. On the other hand,
since the SMSE bring the free competitions which can optimize the distribution of the resource, the
SMSE are the important motivation for constructing our country’s market economy.
2. SMSE Need Government’s Help to Compete for Social Resources
Although the SMSE are so important, they are in an inferior position in competing for social
resources. There are many reasons for these but the main three are as follows:
First, a common characters of the SMSE is that they are often lack of a kind of standard criterions
in the operation, especially on the financial affairs, and the operation are not transparent enough; there
are maybe a lot of transactions between the bank and the SMSE, but the sum usually is not very high
but the cost of the dealing is not low and because. Since the credit of the SMSE often is hard to be
estimated, the bank often feels the risk of offering loan to them is high, too. Since a great part of the
SMSE are in the high tech field, they have higher technique risk and many of them can not last for
longer than 2.7year and only 1/3of the high tech SMSE can live through their original stage, the bank
often tend to invest to the big enterprises with lower risk to ensure the reward rate of its money.
According to the data offered by the Haitong Secrecy Corp, nearly 65.01% SMSE are refused when
ask for a loan from the banks at average and even the enterprises with staff less than 50,the refusal rate
is more higher even to 78.92%.
Second, the SMSE often get behind in the equipment and the skills, so they often in an inferior
position to get market information and person with ability and ask for a chance to cooperation。For
instance, though 75% employment are offered by the SMSE，people with high study and good structure
of knowledge often reluctant to take up an occupation in the SMSE.
Finally, since the nation’s policy on the SMSE is levity, the living environment of the SMSE is not
stable enough for them to develop at will. Before our country carry on the policy of Reforming and
Opening, we only regard the nation-owned big enterprises. Until in the spring of 1995, with the nation
∗
College of Management, South-central University for Nationalities, Wuhan, PRC, e-mail:[email protected]
All these data are from Mr. Liu Yan Hua’s address, the vice-minister of the Minister of Science and Technology of
China, on the Fifth Anniversary of the Innovation Fund for the S&T SMSE, which was held in Nov, 2004, Nanning
Guangxi, China.
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begin to recognize the importance of the SMSE and put forward the idea of “Grasp the Big While Free
the Small” the SMSE got a wider space. In the western country, when the state monopoly capitalism
prevail, some European and American countries believed that only the big enterprises could fulfill the
need of the development of the modern technologies and so let alone even discriminate the SMSE. It
was common that the governments usually encouraged and organized the big enterprises to swallow up
the SMSE. It was until the recent years that the living environment of the SMSE began to change for the
better.
From above, we can see that on one hand, the SMSE can not be substituted in promoting market
competition, adding the chance of employment, advancing the developing of the technology and the
economy and safeguarding the stability of the society; but on the other hand, the SMSE can not get
enough money, talents and technology resources just under market mechanism. Under this condition,
government, only the government should play a leading role and induct the social resource to flow to the
SMSE.
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、Our government’s main supporting policies for the SMSE
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Now, our government has done many treasures to support the SMSE.
The first is to safeguard the SMSE by legislation. In 2002,our country announced “the Promoting
Law for the SMSE” and regulated that our government protect the SMSE and the investor’s legal
invest and legal income. Any organization and person can not destroy the SMSE’s belongs and legal
incomes
the administrative department should protect the SMSE’s legal right and legal income,
protect its right to participate in the fair competition and fair transaction according to the law. The
SMSE should not be discriminated and be given some unfair term”.
The second is to offer financial help for the SMSE by setting up two national funds. One is in
charged by the Ministry of Science and Technology, together with the Ministry of Finance, the other is
in charged by the National Committee of Development and Reform. Now the two funds have been the
main channel for the SMSE to obtain financial supporting from governments of all the levels;
The third is to formulate some favorite policies especially for the SMSE in the revenue, the
fetching in talents and the approving of the ground. In 2003, our country had established nearly 1000
insurance organizations and offered insurance worthy 118 billion for the SMSE in the loan.
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、some deficiency of the supporting policy
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A. The SMSE and its Development Lack Complete Law System
Though the SMSE have exited in China for so long, they have no their own law until the
Promoting Law for the SMSE came on in 2002.Besides,the SMSE can get some protection from the
Intellectual Right Law and the Law of Development of S&T.
But in some other countries, the SMSE usually can get law protection from all rounds though the
complete law system. As early as in 1890, the USA had established its Sheman Act, the most famous
and earliest law of antimonopoly in the world. In 1958 the Congress announced the Law for the Small
Sized Enterprises ,which is the basic law of them Japan established its Basic Law for the SMSE in
1963.
Besides the basis law, there are some other laws to match the SMSE’s need in some other respects.
For example, in order to protect the SMSE’’s legal right when they cooperate with the big enterprises,
US has set up the Law of Cooperate in R&D In 1991,the Italy government announced the Law of
Supporting the Small Business’s Innovation and Development to give help to the small business by
offering policy and money; Japan also has established about 30 laws ,such as the Law of Directing the
SMSE, the Law of Accelerating the SMSE’s Modernization to serve the SMSE fully. By comparison,
China has fewer laws for the SMSE and the exiting ones is not clear in its contend and can not match
the need for the SMSE’s development.
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B.A unified Administrative Organization Need to Management the SMSE
Now, since the Ministry of Science and Technology, the Ministry of Finance, the National
Committees of Development and Reform all have its institutions to management the SMSE respectively
but the main three organizations haven’t enough communization, it is very hard for the SMSE to get
specialized management and service.
Many countries have their single administrative organization. The US established the Small
Business Administration SBA in 1953,which is in charge of the president directly and whose duty is
to give advice for the policy-making and to investigate the implementing of the policies Japan has its
Office of the SMSE, which is also the single management office for the SMSE and whose duty is to
support and direct the SMSE by economical means; In Korea, the SMSE can also ask help from the
Bureau of the SMSE to know the relevant policies for themselves and to solve some problem in time.
C. the Management of the National Funds for the SMSE Need to Be Improved
First, the relationship between the two funds, that is the fund charged by the Ministry of Science
and Technology and the Ministry of Finance and the fund charged by the National Committees of
Development and Reform, should be clearer.
In fact, the business of the former has been included by the latter. To setting up two funds means
that some business has been repeated, this is not very reasonable and can not ensure that the limited fund
can go to the right place.
Second, the total amount of the two funds is not big enough.
There are nearly 10 millions of SMSE in our country and most of them have difficulty in financing.
It is sure that the 3 billion RMB from the two funds can not match the millions of SMSE’s need.
Third, the management of the funds should be more efficient and correct. It is necessary for our
government to advocate fair competition and allocate the limited money to the place that needs the
money most.
D. the SMSE Need Not Only Money but More Service from the Nation
Although they lack standard criterions in the operation, our country now have not cultivated a batch
of credible agency to help the SMSE to improve their management. Besides, in fact many SMSE need
the chance to cooperate with the big enterprises. But the government usually omits to introduce them
each other.
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5 Measures to Accelerate the Development of the SMSE
A. Gives the SMSE Healthy and Full Protection by Law
Now our country is going all out to setting up the marketing economy which featuring competition.
No SMSE, no competition. It necessary for our government to establish healthy and full law system to
endow the SMSE the chance to compete for social resource with the big.
We should revise our Law for the SMSE and permit them to participate in some national important
project; to enjoy all the rights of exemption we should draw and announce the Law of Antimonopoly
and oppose all unreasonable combination we should set about to map out the laws such as the law of
investment in SMSE, the law of assurance of the SMSE, the law of co-innovation and so on, to protect
the SMSE in all stages and all respects.
B. Set up China’s Bureau of SMSE
We should set up the Bureau of SMSE which will be the only one bureau in this field and directly
under the charge of the State Department. Its main responsibility is:
First, to formulate the whole develop policy for the SMSE, to release the Yearly Report of the
SMSE, to workout the long-term plan for them and lead as many as the power of the social to give the
SMSE help in the management, money, technology and strategy-making.
Second to stand for the nation and run the national fund for the SMSE. We should merger the two
national funds as one and the Bureau of SMSE should allocate all the money to the place where need
money most.
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Third, to look for more chances of cooperation for the SMSE. The Bureau can not only introduce
the SMSE to big enterprises but also can introduce the SMSE to cooperate each other; the bureau can
not only in introduce the SMSE to the enterprises in China but also can introduce them to the overseas
ones.
C. Use the Entire Social Institutions to Widen Their Channel of Financing
It will never be enough if the SMSE only rely on the government to get financial support. The
proper way is to call for the banks, the enterprises and all other investment organizations to offer help to
the SMSE.
The center government should ask the governments of all levels to learn from itself and arrange
special fund for its local SMSE; the government can provide assurance for the SMSE when they ask for
a loan; as to the banks and the investment organizations, the governments can offer some tax-cut if they
are glad to invest to the SMSE.
By the way, since the SMSE have different develop stages, the government should help them in
different ways. For example, when if the SMSE is in its baby-stage, the government can give little
amount of money directly or give a loan; if the SMSE is mature, the government can call for some
other organizations to offer big amount of investment; if the SMSE want to innovation, what the
government should give is not money but chances and rights.
D. Cultivate a Batch of Excellent Agencies for the SMSE
The government can authenticate and recognize some agencies as Golden Agency according to
their achievements. Since the agencies have get honor from the government, they are asked to offer
reference and consultation to the SMSE; the agencies can establish a club for the SMSE and provide a
place or a website for the SMSE to communicate; they also can help the SMSE to financing, to recruit
and to exploit market, to export and to get information. Since the SMSE usually have poor credit, the
agencies can take a credit-evaluating and to improve the SMSE’s credit to the society. All these will be
greatly helpful for the SMSE’s development.
6. Conclusion
The Small and Middle Sized Enterprises (SMSE) are now playing a more and more important role
in the nation’s economy. Our government has already set up some supporting policies for them, but
they are facing many obstacles in the developing process. The key to the problem is to establishing a
supporting mechanism which is dominated by the nation and supported by all the social parties.
I am an optimist about the development of the SMSE.I think if our government, together with all
the social organizations, can offer a favorable environment for the SMSE, I am sure that they can
contribute much more to the society.
References
，
Wu Chuan Zhen. “Four Banks Offer Loans to the SMSE as a Test in Zhejiang Province” Nanfang
Weekend,2005,June 16, P21.
Ying Yi Xun. “The practice of Tailong Offering Loans to the SMSE”, Nanfang Weekend, 2005, June 23,
P21.
Zhou Xin Ling. “US’s and Japan’s Policy to the SMSE and the revelation to China”, Study and Research,
Mar, 2005.
Ma Li,Bi Ke Xin. “Comparison on the Ability of Innovation between the SMSE of China and of Foreign
Countries”, S&T and Management, April, 2005.
Xiong Yu Zhen. “Current Situation of Russia’s SMSE and Their Influence to the Nation’s Reform”,
Transaction of the Liaodong Institute, Mar, 2005.
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