The government is encouraging privately run small and medium-sized enterprises (SMEs) to put greater emphasis on technological innovation and play an increasingly important role in China's economic growth in the years to come.

Wang Liming, vice-director of the SME Department under the National Reform and Development Commission, said the nation is actually doing all it can to help SMEs expand at home and abroad.

He believes Chinese SMEs will certainly become a new force driving the future growth of the economy.

By the end of last year, more than 42 million SMEs had been registered in China, representing more than 99 per cent of the country's total number of enterprises. SMEs contributed more than 60 per cent of the country's gross domestic product (GDP) in 2006.

Many heavyweight Chinese companies have developed from SMEs in the past decades, including Haier, Lenovo, Hisense and Huawei.

Guangdong, which borders the Hong Kong and Macao special administrative regions, has the largest number of SMEs on the Chinese mainland. Its SMEs have played an increasingly important role in local economic growth in recent years.

By the end of June, Guangdong had registered around 400,000 privately run SMEs with a total investment of more than 500 billion yuan. The province's SMEs currently employ more than 3.8 million people from around the country.

"Chinese SMEs have now entered a new era of fast development," Wang noted.

He urged them to seize every opportunity for further upgrade and to try to increase their presence in both the domestic and international markets.

Preferential policies

To further spur the development of SMEs, a series of preferential policies are being drafted, according to Wang.

These policies involve taxation, land use rights, loans, financing, employment, foreign trade and the expansion of international cooperation.

"That means SMEs on the Chinese mainland will be able to enjoy many more preferential policies for development in the near future," Wang said.

SMEs from Hong Kong and Macao will enjoy the same policies as their mainland counterparts, he added.

The vice-director also urged SMEs to expand investments in technical innovation to improve the quality of their products, build their own brand names and further raise their competitive capacity.

He urged provinces, municipalities and regions across the country to further improve the business environment for SMEs. He hopes Chinese SMEs will be able to compete with State-owned enterprises, foreign-funded companies and joint ventures to assume a leading role in the country's economic development.

"China's SMEs can become even bigger and stronger through mergers, acquisitions and purchase of stocks," said Wang.

Meanwhile, he encouraged the enterprises to further expand cooperation with their foreign counterparts as well as their investments abroad, actively participate in international competitions and try to increase their presence in the world market.

Wang also urged government departments at all levels to do their best to help SMEs overcome their difficulties in financing and development.

Last year, the China Banking Regulatory Commission issued a notice urging banks and other financial organizations to revamp their policies about granting loans to SMEs, Wang pointed out.

By the end of June, governments at various levels in the nation had successfully helped 778,641 SMEs apply for bank loans.

(China Daily September 15, 2007)