Chicken or egg?

While China focuses on pursuing technological advancement, a shift to develop stronger soft skills is equally important compared to technological skills.

"Technology and/or the product are only a small piece of the puzzle to being profitable. It takes leadership, managerial skills and strategic planning skills to turn an invention into a product and a product into a profitable company," said Ge, who is also an entrepreneur.

For He, both technological and soft skills are important for Beijing OriginWater, but a skills shortage and rising labor costs stand in his way.

"These (issues) give me headaches every year."

SMEs also feel they are not equally protected by the law when compared to large companies such as State-owned enterprises. Damage claims or legal disputes involving SMEs, which usually entail small amounts, cannot be legally addressed, as China doesn't have a "small court" system.

(China Daily July 29, 2010)