Defining an SME is difficult. In theory it stands for small and medium enterprise. In fact, no one has ever put a precise definition on this.
According to the China Association of Small and Medium Enterprises, China’s registered small and medium-size enterprises (SMEs) exceeded 4.3 million in number and contributed to 58.5% of GDP, 50% of tax revenues, 68% of exports and 75% of new jobs every year.
But it would be fairly certain that not all small and medium enterprises belong to the association and even more certain that many of them do not report their full figures. So the percentages could be much larger than that.
The Minister of Industry and Information Technology Li Yizhong (seen in our illustration) said SMEs, as defined, accounted for 99% of China’s registered enterprises and their output during the January-September period this year equaled to about 60% of the country’s gross domestic product (GDP).
Chen Yongjie, a senior researcher with All-China Federation of Industry and Commerce said SMEs were often deterred from investment due to financing difficulties, as banks were often reluctant to lend to them out of risk concerns.
Chen said loans to SMEs from the start of the global downturn accounted for only 50% of the total lending, although SMEs were the companies most vulnerable in the financial crisis. Plainly a major discrepancy.
China View quoted Li Yizhong as saying China would enhance support to SMEs next year with preferential tax policy and easier channels to raise funds.