China's push to strengthen its SMEs is gaining momentum

According to the Global Entrepreneurship Monitor, Chinese companies see themselves as close to average in "perceived opportunities" and "entrepreneurial intentions." Conversely, they perceive themselves as significantly weaker than average in their "fear of failure," "entrepreneurship as a good career choice," and "high status to successful entrepreneurs."

These characteristics are not unique to China. Historically, such results have been typical for many industrializing economies in which the state has played a significant role, such as the French dirigisme, German planning and Japanese developmentalism.

Typically, these nations have all moved towards greater liberalization, including Germany's Mittelstand companies, France's privatization of state-owned enterprises and Shinzo Abe's proposed structural reforms in Japan.

While popular perceptions of Chinese entrepreneurship still tend to be low, both domestically and internationally, there is no reason why Chinese SMEs cannot thrive. In fact, they already play a big role in exports.

Earlier this decade, foreign multinationals and Chinese state-owned enterprises still accounted for 55 percent and 15 percent respectively of total exports. At the same time, SMEs accounted for about 30 percent of the total.

In some ways, these SMEs may actually be better positioned to succeed than their counterparts in other regions -- given the world's largest marketplace, advanced infrastructure, the presence of highly competitive foreign multinationals and an upgraded business environment.

In order to realize its full potential, China needs to boost its SMEs, including micro firms. Typically, SMEs employ more people than large capital-intensive corporations.

In China, innovation has taken off in foreign multinationals and Chinese state-owned enterprises, but over time it is likely to accelerate in these smaller firms.

It is the SMEs that make or break national economies and individual dreams. In order to realize the Chinese dream, China needs a thriving SME sector.

Dr. Dan Steinbock is Research Director of International Business at India China and America Institute (USA) and Visiting Fellow at Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more, see www.differencegroup.net

This article first appeared in the South China Morning Post print edition, and also on the paper's website.

Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.